TMI Blog2018 (5) TMI 2118X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite satisfaction by the AO, no disallowance can be made under section 14A of the Act. We find that similar issue has been considered by the Tribunal in the case of KPIT Technologies Ltd [ 2018 (4) TMI 863 - ITAT PUNE] , wherein reliance was placed on the ratio laid down by the Hon'ble Supreme Court in Godrej Boyce Manufacturing Company Ltd. (supra) and also in Maxopp Investment Ltd. [ 2017 (5) TMI 403 - SUPREME COURT] In the facts of the present case, where the AO has failed to record satisfaction before invoking the provisions of section 14A(1) of the Act, we find no merit in the disallowance worked out by the Assessing Officer and we reverse the same. The disallowance made by the Assessing Officer in this regard, is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal is squarely covered by the ratio laid down by the Hon'ble Supreme Court in Godrej Boyce Manufacturing Company Ltd. Vs. DCIT (2017) 394 ITR 449 (SC) and Maxopp Investment Ltd. Vs. CIT (2018) 91 taxmann.com 154 (SC). He further referred to the decision of the Pune Bench of Tribunal in KPIT Technologies Ltd. Vs. ACIT in ITA No.594/PN/2015, relating to assessment year 2010-11, order dated 12.04.2018. 5. The learned Departmental Representative for the Revenue pointed out that no manner was prescribed for recording satisfaction under section 14A(2) of the Act. In this regard, he placed reliance on the decision of the Hon ble High Court of Gujarat in Devarsons Industries (P.) Ltd. Vs. ACIT (2017) 84 taxmann.com 244 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has to record satisfaction as per sub-section (2) of section 14A of the Act to come to a finding as to the applicability of provisions of section 14A(1) of the Act. In the absence of recording requisite satisfaction by the Assessing Officer, no disallowance can be made under section 14A of the Act. 10. We find that similar issue has been considered by the Tribunal in the case of KPIT Technologies Ltd. Vs. ACIT (supra), wherein reliance was placed on the ratio laid down by the Hon'ble Supreme Court in Godrej Boyce Manufacturing Company Ltd. (supra) and also in Maxopp Investment Ltd. Vs. CIT (supra) and it was held as under:- 14. We have heard the rival contentions and perused the record. The basic issue which ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is in non-equity scheme. In respect of investment in mutual funds, except for growth funds, the company receives tax free dividend. The amount of dividend received by the company is substantial. This is a clear case for application of Rule 8D. Hence, the contention of the assessee cannot be accepted. The disallowance u/s 14A is required to be made by applying Rule 8D. As per the working of disallowance u/s 14A as per Rule 8D, the amount of disallowance comes to ₹ 5,68,32,323/-. The assessee has already disallowed ₹ 50,00,000/- in the computation of income. 35. The requirement of section 14(2) of the Act is that the Assessing Officer is to record as to why the disallowance made by the assessee i.e. ₹ 50 lakhs under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is only thereafter that the provisions of section 14A(2) and (3) read with rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable. (underline provided by us for emphasis) 36. The ratio laid down by the Hon ble High Court of Delhi in Indiabulls Financial Services Ltd. Vs. DCIT (supra) is thus, not applicable. The ground of appeal No.3 raised by the Revenue is thus, dismissed. 16. The Hon'ble Supreme Court in Maxopp Investment Ltd. Vs. CIT (supra) has held as under:- 41. Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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