AI Drafter 
TaxTMI 
TaxTMI 
2016 (10) TMI 421
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.... genuine cause for delay in filing the appeal as enumerated by assessee in the affidavit dated 16.7.2013. The ld.counsel prayed that the delay be condoned and appeal be admitted for adjudication. 3. After hearing both the parties and on perusal of the affidavit filed by the assessee, we are of the considered opinion that the reasons stated in the affidavit for condonation of delay are appears to be genuine. Therefore, in the interest of justice, we condone the delay and admit the appeal for adjudication. 4. The issue raised in the grounds of appeal No.1 is against the confirmation of disallowance of Rs. 15,25,840/- by the ld. CIT(A) as made by the AO u/s 14A of the Income Tax Act, 1961(hereinafter called and referred to as the Act) r.....
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....lied with as mandated by provisions of section 14A(2) of the Act. The ld. AR argued that in view of the ratio laid down in the aforesaid decisions, the addition as confirmed by the ld.CIT(A) be deleted. In the alternative argument, the ld. Counsel submitted that the assessee has made investment in the subsidiary companies/group concern and therefore the disallowance made under section 14A was not called for in the said case as motive behind the investment was not to earn dividend but to control the subsidiary companies/sister concern. In support of his argument the ld. Counsel relied on the number of decisions as under : a) Cheminvest Ltd. v. CIT (Delhi)(2015) 378 ITR 0033 (Del). b) Gareware Wall Ropes Limited V Add.CIT(IT....
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....e the impugned disallowance is untenable in law. The relevant operative part of the order is reproduced below : "8. We have carefully considered the rival submissions. Section 14A of the Act contemplates that for the purposes of computing the total income, 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 the Act. Sub-section (2) of section 14A of the Act prescribes that the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income in accordance with such method as may be prescribed, such prescribed method being contained in rule 8D of the Rules. H....
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....ion 14A prescribes a uniform method for determining the amount of expenditure incurred in relation to income which does not form part of the total income only in a situation where the Assessing Officer, having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. It, therefore, merits emphasis that sub-section (2) of section 14A does not authorize or empower the Assessing Officer to apply the prescribed method irrespective of the nature of the claim made by the assessee. The Assessing Officer has to first consider the correctness of the claim of the assessee having regard to the accounts of the assessee. The satisfaction of the Assessing Officer has to be ob....
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....income. 71. Parliament has provided an adequate safeguard to the invocation of the power to determine the expenditure incurred in relation to the earning of non-taxable income by adoption of the prescribed method. The invocation of the power is made conditional on the objective satisfaction of the Assessing Officer in regard to the correctness of the claim of the assessee, having regard to the accounts of the assessee. When a statute postulates the satisfaction of the Assessing Officer "Courts will not readily defer to the conclusiveness of an executive authority's opinion as to the existence of a matter of law or fact upon which the validity of the exercise of the power is predicated". (M. A. Rasheed v. State of Kerala [1974] AIR 1974 ....