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TMI Blog2021 (9) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act (the Act) without considering legislative intent of introducing section 14A of the Act by the Finance Act 2001 as clarified by the CBDT Circular No. 5/2014 dated 10.02.2014? 2. Whether on facts and in circumstances of the case, Ld. CIT(A) is legally justified in not holding that application of Rule 8D of the income Tax Rule, 1962 (the Rule) to compute quantum of disallowance u/s. 14A of the Act is mandatory? 3. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowance of Rs. 2,12,03,476/- u/s. 14A of the Act without considering ratio decidendi as upheld in cases of CIT vs. Wolfort Share and Stock Brokers P. Ltd. [2010] 326 ITR 1 (SC) and Maxopp Investment Vs. CIT (2012) 347 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed expenditure in accordance with provisions of section 14A of the Act which is justified. Further reliance is placed on the judgment of Hon'ble Supreme Court in the case of CIT vs. Wolfort Share and Stock Brokers P. Ltd. [2010] 326 ITR 1 (SC) and Maxopp Investment Vs. CIT (2012) 347 ITR 272 (Delhi) 7. Per contra, the Ld. Counsel for the assessee opposed the submission and submitted that there is no dispute with regard to the fact that the assessee has earned only a sum of Rs. 148/-. He submitted that no expenditure was incurred for earning exempt income. He submitted that even if any disallowance was to be made that ought to have been restricted to the extent of exempt income. In support of this contention, the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 378 ITR 240, while dealing this issue, Hon'ble jurisdictional High Court has held that it is erroneous premise that the invocation of Section 14A is automatic and comes into operation as soon as the dividend income is claimed as exempt. It is further held that for making disallowance u/s. 14A, the precondition is satisfaction of assessing officer that voluntary disallowance made by assessee is unreasonable and unsatisfactory and in absence of such satisfaction, disallowance is not justified. It is further held by Hon'ble Court in another case namely CIT Vs. Om Prakash Khaitan 376 ITR 390 that even if satisfaction is recorded, no disallowance can be made if no nexus between expenditure incurred and income not forming part of total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details of any exempt income earned by appellant and expenditure incurred against it with cogent reasons by rejecting the claim of assessee before computing the disallowance u/s. 14A of the Act. However, the same has not been done by him. He has not even cared to mention the figure of exempt income earned by appellant during the year. He has given only a general observation about the applicability of provisions of section 14A in the assessment order in the case of appellant and mechanically computed the disallowance on the basis of investment made by appellant in the shares during and preceding year. The AO has also not been able to establish any nexus between the exempt income, if any earned by appellant and any expenditure incurred to e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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