2017 (2) TMI 1178

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....A) erred in deleting the addition of Rs. 123227834/- out of disallowance of Rs. 123427834/- made by the AO under section 14 A read with rule 8D by observing that prior to assessment year 2008 - 09 disallowance under section 14 A read with rule 8D could not be made whereas Hon'ble bench of Mumbai ITAT held that rule 8D is applicable retrospectively and is mandatory to adopt by the assessing officer as well as by the assessee. 2) That the order of the Ld. CIT A is erroneous and is not tenable on facts and in the law. 02. The brief facts of the cases that the assessee filed his return of income showing income of Rs. 1 688547067/- on 31/10/2005. Subsequently its revised return was filed on 6/02/2007 wherein income of Rs. 1664929730/- was show....

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....pite of this estimated amount of disallowance should have been made by the assessing officer and therefore the order of the Ld. assessing officer may be upheld. 06. Ld. authorized representative submitted that the provisions of rule 8D do not apply to the assessment year as there applicable from the assessment year 2008-09 and not for assessment year 2005 - 06 therefore there is no infirmity in the order of the law made CIT appeal. He further submitted that assessee itself has offered disallowance of Rs. 2 Lacs on estimated basis towards amount disallowable under section 14 A of the income tax act against the exempt income on by the appellant during the year. There is no satisfaction recorded by the Ld. assessing officer during the course ....

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....ng such expenditure which is new and which will operate prospectively. In other words, section 14A, even prior to the introduction of sub-sections (2) and (3) would require the Assessing Officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reasons. It is then that the question of determination of such expenditure by the Assessing Officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of sub-section (2) of section 14A. Prior to that, the assessee was free to adopt any reasonable and acceptable method. 43. Thus, the fact that we have held that sub-sections (2) and (3) of section ....

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....with regard to the expenditure or no expenditure, as the case may be, the Assessing Officer is to accept the claim of the assessee in so far as the quantum of disallowance under section 14A is concerned. In such even tuality, the Assessing Officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the Assessing Officer is not, on the basis of the objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the Assessing Officer will have to determine the amount of expenditure incurred in relation to income which does not form....