TaxTMI 
TaxTMI 
2016 (6) TMI 932
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....ding any satisfaction or relying on the evidence of expenditure so incurred on the scrutiny of the accounts. (b) Further the CIT(A) has further failed to appreciate that the assessee has not incurred any expenditure against the earning of exempted income and the expenditure can not be presumed as the entire investment has been made from the personal a/c of the appellant. 2. That the CIT(A) and AO both have failed to appreciate that all the investment have been made by the appellants out of the spare funds available with the appellants and there are no presumption of expenditure - reference ACIT vs. MAXXOP LTD 347 ITR 272 (DELHI) 3. The order of the CIT(A) and AO are bad in law and against the facts of the case." 2. The brief facts o....
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.... covered by the decision of Hon'ble Delhi High Court in the case of Taikisha Engineering Pvt. Ltd. Therefore, the disallowance is not sustainable. 4. Ld. DR relied on the orders of the lower authority. 5. We have carefully considered the rival contentions. On reading of the assessment, order we do not find that AO has recorded any satisfaction on the claim of the assessee that no expenditure has been incurred which is disallowable u/s 14A of the Act. Hon'ble Delhi High Court in case of CIT V Taikisha Engineering Pvt. Ltd. [ 370 ITR 338 (del) ] has held as under :- "11. Section 14A of the Act is relevant and reproduced below : "14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in re....
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....f the assessee and only when he is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to exempt income, the Assessing Officer can determine the amount of expenditure which should be disallowed in accordance with such method as prescribed, i.e., rule 8D of the Rules (quoted and elucidated below). Therefore, the Assessing Officer at the first instance must examine the disallowance made by the assessee or the claim of the assessee that no expenditure was incurred to earn the exempt income. If and only if the Assessing Officer is not satisfied on this count after making reference to the accounts, that he is entitled to adopt the method as prescribed, i.e., rule 8D of the Rules. Thus, rule 8D is....
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....table to any particular income or receipt, an amount computed in accord ance with the following formula, namely :- A * B - C Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the pre vious year ; B = the average of value of investment, income from which does not or shall not form part of the total income, as appearing in the bal ance-sheet of the assessee, on the first day and the last day of the previous year ; C = the average of total assets as appearing in the balance-sheet of the assessee, on the first day and the last day of the previous year ; (iii) an amount equal to one-half per cent. of the average of the value of investment, income from which does not....