Rule 8D disallowance under section 14A requires prior Assessing Officer satisfaction before rejecting the assessee's apportionment.

Rule 8D can be invoked for disallowance under section 14A only after the Assessing Officer, having regard to the assessee's accounts and claim, records dissatisfaction with the correctness of the assessee's own apportionment or disallowance. Where no such prior satisfaction is recorded in the assessment order, the disallowance cannot be sustained and the assessee is entitled to relief.

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Issues: Whether the Assessing Officer had recorded the requisite satisfaction before invoking rule 8D for making disallowance under section 14A.

Analysis: The disallowance under section 14A can be made by applying rule 8D only where the Assessing Officer, having regard to the assessee's accounts and claim of disallowance, records dissatisfaction with the correctness of the assessee's own apportionment or claim. In the assessment order, no such satisfaction had been recorded before resorting to rule 8D.

Conclusion: The disallowance was rightly deleted and the issue was decided in favour of the assessee.

Ratio Decidendi: Invocation of rule 8D for disallowance under section 14A requires prior recording of satisfaction by the Assessing Officer that the assessee's own disallowance or apportionment is incorrect.

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