9911796707
TMI Blog2022 (12) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... grievance of the assessee is confirmation of disallowance u/s 14A. 2. The Ld. AR, at the outset, submitted that the issue is recurring in nature and similar issues stood adjudicated by Tribunal in assessee's own case for AYs 2012-13 & 2014-15 (ITA Nos. 3168/Chny/2018 & ors. order dated 18.02.2022). Similar view is stated to have been taken by the Tribunal for AY 2017-18, ITA No.941/Chny/2020 order dated 29.07.2022. The copies of the orders have been placed on record. The Ld. AR submitted that without recording objective satisfaction, Ld. AO could not have made disallowance u/s 14A r.w.r. 8D. The aforesaid facts could not be controverted by revenue. Having heard rival submissions, our adjudication would be as under. The assessee being resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the assessee is engaged in the business of investment promotion and during the year, the assessee has earned dividend income of Rs..17,10,42,084/-. In the return of income, the assessee has suo motu disallowed Rs..8,000/- under section 14A of the Act. However, the Assessing Officer disallowed an additional amount of Rs..34,28,05,564/-. However, while making additional disallowance under section 14A of the Act, the Assessing Officer has not recorded any satisfaction as to how the claim of the assessee was incorrect and had resorted to the provisions under section 14A r.w. Rule 8D. By relying upon decision of the Tribunal in assessee's own case for the assessment year 2013-14, wherein, the decision in the case of Maxopp Investment Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings by the Assessing Officer as to the correctness or otherwise of the claim of the assessee that only an expenditure of Rs.73,602/- was incurred. In this absences of any findings by the Assessing Officer, resort to provisions of Section 14A of the Act cannot be made as ruled by Hon'ble Bombay High Court in the case of Reliance Capital Asset Management Ltd (supra) and the SLP against this judgment was dismissed by Hon'ble Supreme Court in 259 Taxman 83. The Hon'ble Supreme Court in the case of Maxopp Investment Ltd (supra) has upheld this principle by holding 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 ITR 640 held that in the absence of the finding of the Assessing Officer resort to provisions of Section 14A of the Act r.w.r 8D of the Rules cannot be made. This decision was followed by the Co ordinate Bench of the Tribunal in the case of Karur Vysya Bank (supra) cited by holding as under:- "Ground No. 8 challenges the addition of Rs.3,88,882/- invoking the provision of Section 14A of the Act. It is the contention of the appellant that the appellant had not incurred any expenditure to earn exempt income. The Assessing Officer had not given any findings as to how the claim of the assessee bank that no expenditure was incurred to earn the exempt income was incorrect. In the absence of this finding resort to the provisions of rule 8D o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by the assessee stands allowed." 6. Admittedly, in the present case also, against the voluntary disallowance made under section 14A of the Act by the assessee, the Assessing Officer has not recorded any satisfaction as to how the disallowance voluntarily made by the assessee is not correct and moreover, the Assessing Officer has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. The ld. DR could not controvert the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), which was followed by the Coordinate Benches of the Tribunal in assessee's own case for the assessment year 2013-14 to decide the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceptable having regards to the accounts of the assessee as per the mandate of Sec.14A. This jurisdictional requirement was not satisfied by Ld. AO in the present case and Ld. AO straightway proceeded to compute disallowance as per Rule 8D. The application of Rule 8D, in our considered opinion, is not mechanical or automatic. 6. The Hon'ble Apex Court in the case of Godrej & Boyce Manufacturing Co. Ltd. V/s DCIT (2017 394 ITR 449) held that subsections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
