2017 (1) TMI 1441

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....egard to the fact of there being no net interest payment and no interest having been disallowed in the past. 2. That on the facts of the case, the addition sustained by the learned CIT(A) is highly arbitrary and excessive. 3. That the Appellant craves leave to add, alter or amend or forego any grounds of appeal at the time of hearing. 2. The assessee has preferred an application under rule 11 of the Income Tax Rules, 1963 for admission of additional ground as under: That the grounds raised do not bring out the entire controversy, inasmuch as, grievance of the Appellant against making the disallowance under section 14A without recording the required satisfaction was not specifically raised and that no ground against disallowance under....

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....ade under section 14A read with rule 8D of IT Rules 1962. After considering various submissions advanced by assessee's representatives Ld. AO completed assessment under section 143(3) making the following additions/disallowances: (i) disallowance of Rs. 26, 70, 398/-under section 14A read with rule 8D of IT Rules 1962; (ii) Addition of Rs. 1, 536/-on account of preliminary expenses. 4. Aggrieved by the assessment order, assessee preferred an appeal before the Ld. CIT (A) who upheld the additions made by the Ld. AO. Aggrieved by the order of the Ld. CIT (A) the assessee is in appeal before us now. The additional ground raised by the assessee is in respect of satisfaction not being recorded by the assessing officer before making disallo....

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....ubmitted that as assessee has failed to disallow expenditure suo moto, and assessing officer was right in computing the disallowance, as for the year under consideration, rule 8D was very much applicable. 8. We have perused the records placed before us in the light of the submissions advanced by both the sides. We shall 1st address the additional ground raised by assessee. Being a legal issue the same is admitted. Rule 8D has been inserted in IT Rules w.e.f. 24.03.2008 for purpose of determining the amount of expenditure in relation to exempt income, as envisaged in 14A. The AO ought to adopt the method of calculation as prescribed in Rule 8D, post the insertion. The language of Section 14A(1) directs AO to compute disallowance of expense....