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TMI Blog2020 (11) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (in short 'Rules'). 3. Briefly stated facts are, the assessee, a partnership firm filed its return of income for the year under consideration on 14.09.2012 declared total income of Rs. 17,83,411/-. During the assessment proceedings, the Assessing Officer noticed that in the year under consideration, though, the assessee had earned exempt income by way of dividend amounting to Rs. 99,375/-, however, it has not made any disallowance under section 14A of the Act. After calling upon the assessee to explain as to why disallowance under 14A of the Act should not be computed by applying Rule 8D, the Assessing Officer proceeded to disallow an amount of Rs. 6,17,274/- comprising of disallowance of interest expenditure under Rule 8D(2)(ii) amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relied upon the observations of Assessing Officer and learned Commissioner (Appeals). 6. We have considered rival submissions and perused the material available on record. The first issue raised by learned AR is regarding non-recording of satisfaction by the Assessing Officer. Uundisputedly, the assessee has not disallowed any expenditure under section 14A read with Rule 8D in the return of income filed for the year under consideration. That being the case, there is no need for the Assessing Officer to record satisfaction under section 14A(2) of the Act regarding correctness of assessee's computation of disallowance under section 14A of the Act. Therefore, we are unable to accept the above said contention of the assessee. As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. Therefore, in our considered opinion, disallowance of administrative expenditure has to be made under Rule 8D(2)(iii) of the Act. However, such disallowance has to be computed by taking into consideration only those investments which have yielded exempt income during the year. In view of the aforesaid, we direct the Assessing Officer to compute the disallowance under Rule 8D read with section 14A should exceed the exempt income of Rs. 99,375/- earned during the year. Thus, with the aforesaid observations, issue is sent back to the file of the Assessing Officer for fresh adjudication keeping in view the observations made in the order. 7. In the result the appeal is allowed for statistical purposes. Order pronounced through circulati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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