TaxTMI 
TaxTMI 
2016 (6) TMI 1166
X X X X Extracts X X X X
X X X X Extracts X X X X
....- 2. It is observed that the tax effect involved in this appeal by the Revenue is below Rs. 10 lakhs. The CBDT in its Circular No.21/2015 dated 10th December, 2015 has revised the monetary limit for filing of the departmental appeals to the ITAT at Rs. 10 lakhs which is evident from paragraph 3 of the Circular, which reads as under:- "3. Henceforth, appeal/SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:- S.No. Appeals in Income-tax matters Monetary Limit (in Rs) 1. Before Appellate Tribunal 10,00,000/- 2. Before High Court 20,00,000/- 3. Before Supreme Court 25,00,000/- It is clarified that an appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal is above the tax limit as prescribed in this Circular, the same should be decided on merits. 6. Learned counsel for the assessee, on the other hand, stated that the Circular is squarely applicable to the facts of the assessee's case. 7. After considering the submissions of both the sides, we are of the opinion that there is no necessity for adjourning the appeal and calling the report from the Assessing Officer because, apparently, the tax effect involved in this appeal of the Revenue is below Rs. 10 lakhs. However, we add here that if on receipt of order the Assessing Officer finds that the tax effect is above Rs. 10 lakhs or, in any other manner, the Circular is not applicable, he will be at liberty to file the miscellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come because the investment was made through account payee cheque in mutual fund and dividend was accounted for on accrual basis at the year end. The Assessing Officer, without recording any satisfaction how the assessee's working is incorrect, worked out the disallowance under Rule 8D. She stated that in the absence of such satisfaction, the disallowance cannot be worked out under Rule 8D. 11. Learned DR, on the other hand, relied upon the order of learned CIT(A) and he stated that the assessee has not given the working how the disallowance has been made at Rs. 1,000/- u/s 14A. 12. We have carefully considered the submissions of both the sides and have perused the material placed before us. Section 14A of the Act reads as under:-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d with the correctness of the claim of the assessee in relation to the incurring of expenditure for earning of exempt income. As per sub-section (3), the Assessing Officer is empowered to determine the expenditure even when the assessee claims that no expenditure has been incurred by him in relation to earning of exempt income provided the Assessing Officer is not satisfied with the correctness of the claim of the assessee. From a combined reading of sub-section (2) & (3) of Section 14A, it is evident that first the assessee has to state whether any expenditure was incurred by him for earning of exempt income, if yes, then, he has to specify the expenditure which was incurred for earning of exempt income. Thereafter, the Assessing Officer i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture incurred in relation to exempt income is that the Assessing Officer must record that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure." 14. In view of the above language of Section 14A(2) and (3) and also relying upon the decision of Hon'ble Jurisdictional High Court in the case of Maxopp Investment Ltd. (supra), we hold that the Assessing Officer is required to record the satisfaction that he is not satisfied with the claim of the assessee with regard to incurring of no expenditure or the amount of the expenditure as specified by the assessee for earning of exempt income before embarking upon the determination of the amount of expenditure incurred in relation to exempt income ....