2015 (4) TMI 224

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....isposed of. ITA 615/2014 1. Admit. 2. Mr. N P Sahni, Advocate accepts notice. 3. The question of law urged on behalf of the assessee is whether the decision of the ITAT as to the disallowance under Section 14A of the Income Tax Act, is in error of law in the circumstances of the case. For the assessment year 2008-09 the assessee - which is mainly engaged in the business of coal preparation, i.e. beneficiation of coal, transportation, loading of coal and related activities, had reported a tax exempt income to the tune of Rs. 18,26,360/- amongst other heads of income. The AO added back Rs. 19,96,242/- under Section 14A. While doing so, the AO applied Rule 8D by taking into consideration the total quantum of interest other than that invest....

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.... case was fulfilled. In such eventuality the AO is required by the mandate of Rule 8D to follow Rule 8D(2). Clauses 1, 2 and 3 detail the methodology to be adopted. Clauses are of importance, they read as follows : "Method for determining amount of expenditure in relation to income not includible in total income. 8D. (1) Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with- (a)the correctness of the claim of expenditure made by the assessee; or (b)the claim made by the assessee that no expenditure has been incurred, in relation to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relati....