AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 312
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....ssment Year 2011-12 on the grounds inter alia that :- "1. That without appreciating the facts and circumstances of the case and in law, the Ld CIT (A) was not justified in upholding that the Ld AO had correctly noted his satisfaction for applying section 14A read with Rule 8D and that the disallowance made by him as per Rule 8D amounting to Rs. 4,11,355 is correct. It is prayed that appropriate orders be passed to delete the disallowances in the interest of justice. 2. That without considering the correct facts and circumstances of the case and in law the Ld CIT (A) has wrongly concluded that the appellant company had incurred expenditure for earning of exempt income and completely overlooked the ratios laid down by variou....
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.... charges are also charges as entry or exit load. Accordingly, the disallowance filed by the assessee is worked out as per the provisions of Rule 80 (2) as under :- ASSESSMENT YEAR 2011-12 Particulars Amount (Rs) i) Interest cost under clause (ii) of Rule 8D(2) [As per Working below] NIL ii) 0.5% of Average value of - Investment * - (0.5% of Rs. 8,22,70,927/-) 4,11,355 Total 4,11,355 Disallowance of Interest cost under Clause (ii) Particulars Amount (Rs) i) Total Interest cost (as per Profit & loss Account) (A) NIL NIL Disallowance of Interest cost under Clause (II) A X B 0 X 10,28,09,400 A X B 0 X 10,28,09,400 28,73,....
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.... funds; that in the earlier AY 2010-11, identical issue has been decided by the ld. CIT (A) in favour of the assessee and relied upon the cases of HT Media Limited vs. Pr. CIT in ITA No.548/2015 dated23.08.2017 and Godrej & Boyce Manufacturing Company Ltd. vs. DCIT - 394 ITR 449 (SC). 6. Ld. DR for the Revenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly explained at the page 3 of the assessment order; that section 114 of the Evidence Act, 1872 raises presumption in favour of the Revenue that there was non-satisfaction of the AO and relied upon the order of the AO and relied upon the decisions rendered by Hon'ble Ape....
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....he claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." 9. Hon'ble Delhi High Court in HT Media Limited (supra) decided the issue in controversy in favour of the assessee by returning the following findings :- "39. Turning now to the order of the ITAT in para 33, it recorded the submission of the AR that the AO did 1)0t record any satisfaction about the Assessee not properly offering expenditure incurred in relation to the exempt income at Rs. 3 lakhs. The ITAT reproduced the contents of para 3.3.1 of the assessment order, which has been extracted by this Court hereinbefore, whic....
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....good because when the assessee has come up with categoric plea that it has not incurred any expenses to earn the exempt income from mutual funds and that the assessee has itself made disallowance to the tune of Rs. 1,00,000/- which has been accepted by the AO without pointing out any defect, provisions contained u/s 14A read with Rule 8D cannot be invoked. Because sub-section (2) & (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. 11. AO has invoked provisions contained u/s 14A read with Rule 8D in mechanical manner ....