2026 (3) TMI 564 - SCH - Income Tax

Disallowance under Section 14A: deletion upheld where AO failed to record dissatisfaction and interest free funds covered investments.

Disallowance under Section 14A and the applicability of Rule 8D methodology were considered; the Court applied the principle that the Assessing Officer ... Disallowance u/s 14A - Rule 8D methodology - Assessing Officer's satisfaction having regard to the accounts - availability of interest-free funds - onus on revenue where assessee makes suo motu disallowance - inordinate delay of 710 days in filling SLP HELD THAT: - The Court examined the merits and concluded that the view taken by the Income Tax Appellate Tribunal [2018 (6) TMI 1522 - ITAT DELHI], which was affirmed by the High Court of Delhi [2023 (12) TMI 35 - DELHI HIGH COURT], did not warrant interference by this Court as confirmed deletion of the disallowance because the AO had not recorded any dissatisfaction, after examination of the assessee's accounts, with the correctness of the assessee's claim (including its suo motu disallowance) before invoking the prescribed method under Rule 8D. The record showed that the assessee had available interest-free funds in excess of the investments in the year under consideration, and the AO did not demonstrate that he had examined the accounts to reach a contrary satisfaction. Having considered the matter on merits, the Supreme Court declined to disturb the concurrent adjudications below and dismissed the Special Leave Petition on that basis. [Paras 2] The Special Leave Petition is dismissed for want of merit. Condonation of delay - The Court noted an inordinate delay of 710 days in filing the petition but stated that it was inclined to condone the delay. The condonation was therefore granted, and the petition was dealt with on its merits notwithstanding the delay. [Paras 2] Final Conclusion: The Court condoned the inordinate delay and, on merits, found no basis to interfere with the concurrent findings of the Income Tax Appellate Tribunal and the High Court of Delhi; the Special Leave Petition is dismissed and pending applications stand closed. Outcome: Special Leave Petition dismissed [No detailed order].