TaxTMI 
TaxTMI 
2016 (7) TMI 387
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....CIT(A) has erred on facts and circumstances of the case in confirming the addition made by the Assessing Officer (herein after referred to as "AO") amounting to Rs. 3,37,282/- u/s 14A read with Rule 8D 2. The CIT(A) has erred on facts and circumstances of the case in confirming the addition made by the AO u/s 14A read with Rule 8D without appreciating the fact that the Ld. AO proceeded to apply Rule 8 without recording his dissatisfaction on the correctness of the disallowance made by the appellant itself. 3.The CIT(A) has erred on facts and circumstances of the case in confirming the addition made by the AO u/s 14A read with Rule 8D without appreciating the submission of the appellant that while considering the average investment for t....
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....he recording of satisfaction has to be made by the AO and the CIT(A) cannot fill the gap by using coterminous powers and these powers cannot be extended to fill the perversity and illegality in the assessment order. 6. On a careful consideration of the above rival contentions at the outset, we note that undisputedly the assessee did not claim any exempt income during the period and the assessee also made suo moto disallowance of Rs. 31,553/-. However, the AO without alleging the correctness at the suo moto disallowance on expenditure claimed by the assessee made addition u/s 14A read with Rule 8D (2)(iii) of the Rules. In our humble understanding subsection (2) of section 14A of the Act mandates the manner in which the AO has to determine ....
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....ccept this analogy adopted by the CIT(A) because as per provision of subsection (2) of Section 14A of the dissatisfaction about the correctness of the claim of expenditure has to be recorded by the AO and this omission by the AO cannot be filed by the CIT(A) during first appellate proceedings . The sub-section (2) of Section 14A reads as follows :- "14A. Expenditure incurred in relation to income not includible in total income.-(1)For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in r....
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....at he is not satisfied with the correctness of the claim of the assesee in respect of such expenditure in relation to income which does not form part of total income under the Act. But this mandatory requirement, if not fulfilled by the AO, cannot be done, to fill - omission of the AO before the CIT(A). It is also pertinent to note that in the present case the assessee suo moto disallowed Rs. 31553/- and the AO has not recorded any finding to show that he is not satisfied with the correctness of the claim as well as suo moto disallowance, made by the assessee and thus the authorities below cannot validly make any disallowance and consequent addition u/s 14A of the Act. 9. It is also relevant to mention that in the present case the assessee....