TMI Blog2023 (4) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] had categorically held that the Ld. AO is bound to record objective satisfaction as to why the claim made by the assessee is incorrect. In the absence of mandatory objective satisfaction recorded by the Ld. AO in terms of section 14A(2)/14A(3) of the Act read with Rule 8D(1) of the IT Rules, we hold that the disallowance made u/s 14A of the Act would have no legs to stand in the eyes of law. Accordingly, we direct the AO to delete the disallowance of expenses u/s 14A - Grounds No.1, 2 and 3 raised by the assessee for AY 2010-11 are allowed. Chargeability to interest u/s 234C - The law is very well settled that interest u/s 234C of the Act could be done only on the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant. 2. That on the facts and in the circumstances of the case, the Ld. C1T(A) erred on facts and in law in upholding the disallowance of Rs. 9,74,876/- made by the Ld. AO under section 14A of the Income-tax Act, 1961 (hereinafter the Act ) as expenditure incurred in earning exempt dividend income. 2.1. I hat on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in upholding the order of the Ld. AO whereby expenditure has been disallowed by a mechanical application of rule 8D of the Income-tax Rules, 1962 (hereinafter the Rules ), without any proper recording of satisfaction as is required under section 14A of the Act. 2.2. That on the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld. AO whereby the Ld. AO has incorrectly imposed interest under section 234C of the Act. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in upholding the order of the Ld. AO whereby the Ld. AO has incorrectly imposed interest under section 220(2) of the Act. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in upholding the order of the Ld. AO whereby the Ld. AO has incorrectly computed interest under section 244A of the Act. 7. That the Appellant craves leave to add to, amend and/or alter, the grounds of appeal and also adduce evidence at or before the date of hearing ITA No.13/Del/2021 for AY 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Ld. AO whereby the order is passed without adhering to the instructions given by the Hon ble Indore Bench of the ITAT vide the order dated 14th July 2017 in the Appellant s own case in ITA Nos. 583 584/Ind/2013 for A.Y.s 2010-11 and 2011-12. 2.4 That on the facts and in the circumstances of the case, the Ld. C'IT(A) erred on facts and in law in upholding the order of the Ld. AO without appreciating that the Ld. AO has incorrectly applied CBDT Circular No. 05/2014 dated 11th February 2011. 2.5 That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in upholding the order of the Ld. AO whereby notional expenditure has been disallowed on the basis of surmises and conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Assessing Officer ( Ld. AO , for short) with the direction to the Ld. AO to record proper satisfaction, which is mandated in terms of section 14A (2) and 14A(3) of the Act read with Rule 8D(1) of the Income Tax Rules. We have gone through the assessment order wherein, the Ld. AO confronted with the assessee as to why disallowance of expenses could not be made u/s 14A of the Act in accordance with computation mechanism provided in Rule 8D(2) of the IT Rules. In response thereto, the assessee gave detailed submissions stating that no expenditure has been incurred by it for the purposes of earning exempt income. Accordingly, the assessee pleaded that no disallowance of expenses u/s 14A of the Act needs to be made in the instant case. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2010 66,99,61,000/- Average investment 75,26,85,000/- Disallowance 0.5% of average investment 37,63,425/- 4.2. We find that the aforesaid satisfaction recorded by the Ld. AO cannot be construed as an objective satisfaction recorded by the Ld. AO having regard to the accounts of the assessee. The mandate of section 14A(2) and 14A(3) of the Act read with Rule 8D(1) of the Rules clearly stipulates that the Ld. AO is supposed to examine the financial statements of the assessee and from the said examination arrive at an objective satisfaction as to what expenses could be attributed towards the investment activity of the assessee. This exercise has not been apparently done by the Ld. AO in the instant case as is evident from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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