TMI Blog2020 (7) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... not address the issue of computation of the third limb of Rule 8D. The finding recorded by the AO is sufficient and a clear indication of his compliance of the procedure under Section 14A(2), the AO at the first instance has considered whether the claim of the assessee is correct and thereafter only has proceeded to determine the amount by adopting the procedure under Rule 8D. For assessment year 2011-12 - it cannot be stated to be the case where there is a failure to follow the procedure under Section 14A (2) So far as the order passed for the assessment year 2012-13 on a closer reading of impugned order, we find that though the tribunal directs the assessee to work out the expenditure component towards administrative and manager ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether the Tribunal was right in observing that the Assessment Officer has not satisfied the mandatory requirement of Section 14A(2)? 3. The question to be decided in this case is as to whether the tribunal was right in coming to the conclusion that the Assessing Officer has not recorded his mandatory satisfaction as required under Section 14A(2) of the Act. 4. The respondent/assessee is a state owned undertaking which had filed its return of the income for the assessment years under consideration viz., 2011-12 and 2012-13. The assessee had received income by way of dividend for the assessment year 2011-12 which the assessee claimed it as exemption from tax. The Assessing Officer made a disallowance under Section 14A, by apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the appeal filed by the assessee was partly allowed. 8. Mr.M.Swaminathan, learned Senior Standing Counsel appearing for the appellant/revenue assisted by Mrs.Pushpa, learned Standing Counsel for the appellant/revenue submitted that the tribunal committed an error in holding that the Assessing Officer had not followed the procedure under Section 14A(2) when the Assessing Officer had rightly followed the procedure and reading of the assessment order dated 20.01.2014 will clearly show that before resorting to the procedure under Rule 8D, the Assessing Officer has rightly exercised his power under Section 14A(2) of the Act and recorded that he is not satisfied with the correctness of the claim of the assessee in respect of such expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 Taxmann 0179 (Delhi). 12. These decisions were referred to by the learned counsel in support of his submissions with regard to the mandate of Section 14A(2) of the Act. It is submitted that the Assessing Officer in terms of the said provision is bound to first record his satisfaction as to the correctness of the claim of the assessee in respect of such expenditure in relation to income, which does not form part of the total income under the Act. Without doing so, the Assessing Officer cannot proceed under Rule 8D. Therefore, it is submitted that by applying the above mentioned decisions, the order passed by the tribunal may be affirmed. So far as the order of the tribunal with regard to the assessment year 2012-13, it is not cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in relation to such income, which does not form part of the total income under the Act in accordance with such method as may be prescribed. 15. It is further pointed out that the jurisdiction of the Assessing Officer to determine the expenditure incurred in relation to such income which does not form part of the total income under the Act, in accordance with the prescribed method, arises if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not form part of the total income. 16. Further, the satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking under Rule 8D. The Assessing Officer after going through the submission made by the petitioner pointed out that the assessee had computed the disallowance of dividend by invoking the provisions of Rule 8D, but while doing so, ignored sub rule iii of the said rule. It appears that this was pointed out to the assessee. However, the assessee though filed a response on 09.01.2014, the Assessing Officer states that the assessee did not address the issue of computation of the third limb of Rule 8D. 20. The finding recorded by the Assessing Officer is sufficient and a clear indication of his compliance of the procedure under Section 14A(2), the Assessing Officer at the first instance has considered whether the claim of the assessee is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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