TaxTMI 
TaxTMI 
2015 (4) TMI 477
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed certain exempt income and did not offer any disallowance under Section 14A. During the course of assessment proceedings, the Assessing Officer called upon the assessee to furnish the details of exempt income and the corresponding disallowance under Section 14A of the Act. The assessee submitted the reasons for not making any voluntary disallowance under Section 14A in respect of the exempt dividend income of Rs. 18,09,961/-. The Assessing Officer, after reproducing the assessee's explanation dealt with the issue as under "The assesee's reply has been considered and found to be unacceptable. The assessee cannot deny involvement of human acumen for which an appropriate disallowance has to be made as per Rule 8D of the I.T. Act, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act". The provisions of sub-section (3) of Section 14A provide that the provisions of sub-section (2) shall also apply in relation to a case where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. A conjoint reading of sub-sections (2) and (3) of Section 14A makes it manifest that the Assessing Officer is fully empowered to compute disallowance under Section 14A as per Rule 8D where he is not satisfied with the correctness of the assessee's claim of expenses incurred or not incurred i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of sub-sections (2) and (3) of Section 14A and the learned CIT(A) makes good such deficiency by recording proper satisfaction, then there cannot be any embargo on the making of disallowance u/s 14A. If, however, neither the Assessing Officer nor the CIT(A) record such satisfaction as envisaged under sub-sections (2) and (3) of Section 14A, then the disallowance under this section cannot follow. 6. We have reproduced the relevant discussion made by the Assessing Officer in an earlier part of the order from which it is palpable that no satisfaction was recorded to satisfy the mandate of sub-sections (2) and (3) of Section 14A. The position continued to remain same before the learned CIT(A) as well, who also simply upheld the view taken by th....