TMI Blog2023 (11) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... n what the assessee itself disallowed has to be necessarily incurred. This is only a surmise and guess not based on any cogent reason whereas the assessee explained that the suo-moto disallowance made by it is equivalent to salary of an official looking after the activity of investment etc. A bald satisfaction of the Ld. AO is not envisaged under section 14A(2) of the Act. He has to record his satisfaction over the assessee s claim having regard to the accounts of the assessee which has not been done. In such a case disallowance made by the Ld. AO is not sustainable as held by the Hon ble Delhi High Court in Pr. CIT vs. Keshav Power Ltd. [ 2018 (11) TMI 645 - DELHI HIGH COURT] and Reliance Capital asset Management Ltd. [ 2017 (10) TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification for attributing any indirect interest expense under Rule 8D of the Income tax Rules, 1962. 2. That in absence of earning of tax free (exempt) income during the year under consideration, the provision section 14A read with Rule 8D is not applicable and as such the confirmation of disallowance by CIT(A) is misconceived and contrary to settle legal principle. 3. That the upholding of disallowance Rs. 41,17,215/- u/s 14A read with Rule 8D is not sustainable on facts and same is bad in law. 3. Brief facts are that the assessee company is engaged in the business of generation of power through gas, turbines and gas engines, running of multiplex theatres, providing facility management services and real estate developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (iii) The assessee company s investment in equity shares is basically with intent to acquire business. The investment in the subsidiary companies/Group Associates in turn had been utilised by the said concerns in their business activities and revenue generated therefrom has been subjected to tax under the head Business Income . (iv) Expenditure on acquiring shares out of commercial expediency and to earn taxable income cannot be disallowed as held by the Hon ble Delhi High Court in CIT vs. Oriental Structural Engineers Pvt. Ltd. 3.3 The explanation was not acceptable to Ld. AO. He calculated the disallowance of Rs. 41,17,215/- under section 14A r.w. Rule 8D and completed the assessment accordingly on 31.12.2018 under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of the assessee, has to record reasons why he is not satisfied with the correctness of the expenditure disallowed by the assessee suo moto. In para 1.1 of his order at page 2 the Ld. AO says only that for carrying out the activity of investment and to earn exempt income, some more expenditure than what the assessee itself disallowed has to be necessarily incurred. This is only a surmise and guess not based on any cogent reason whereas the assessee explained that the suo-moto disallowance made by it is equivalent to salary of an official looking after the activity of investment etc. A bald satisfaction of the Ld. AO is not envisaged under section 14A(2) of the Act. He has to record his satisfaction over the assessee s claim having reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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