TMI Blog2013 (6) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... sment u/s 143(3) of the Act. (b) That on the facts and in the circumstances of the case and in law and also detailed submissions made at the time of first appeal, it ought to have been held that provision of rule 8D are not applicable in case of appellants and the addition of RS 246888/- made by the Appellants (by way of abundant cautious) ought to have been accepted and further addition of ₹ 1249432/- made by the Assessing Officer ought to be deleted. (2) (a) That the learned C I T (Appeals) failed to appreciate the fact that determination of disallowance u/s 14A r w rule 8D can only be undertaken if the Assessing Officer is not satisfied with the correctness of the appellant s claim in respect of such expenditure and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have considered the rival submissions, perused the material on record, have gone through the orders of the authorities below and judgment of the ITAT Mumbai cited by the learned AR. We find that the AO has given a clear finding that since some amounts are disallowed by the assessee suo motu, it is admitted by the assessee also that some expenditure has been incurred by the assessee, which has been debited in the profit loss account for earning exempt income. He has also given a finding that working of disallowance made by the assessee is not correct. He has further given a finding that under these facts, the AO is not required to prove nexus of such expenditure with exempt income since the assessee itself has admitted of having spent so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot considered the claim of the assessee at all and he has straightway embarked upon computing disallowance under Rule 8D on the presumption that port folio management involves at least 2% of charges. Disallowance under section 14A required finding of incurring of expenditure and where it was found that for earning exempted income no expenditure has been incurred, disallowance under section 14A could not stand. We notice that assessee itself disallowed the interest which is directly applicable, Dmat charges and administrative exp on estimation totaling to ₹ 1,55,44,610. Assessee is a hundred crore turnover company. AO has not examined any expenditure claimed in P L account so as to relate to exempt income, nor gave a finding that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001.] 6. We find that it is held by the Tribunal in the case cited by the learned AR and as per the provisions of sub-section 2 of section 14A also, it is required that AO must record that he is not satisfied with the correctness of the claim of the assessee in respect of the expenditure incurred by the assessee in earning exempt income. In the present case, the AO has given a clear finding in Para 3.5 of the assessment order that the working of disallowance made by the assessee is not correct. He ..... X X X X Extracts X X X X X X X X Extracts X X X X
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