TaxTMI 
TaxTMI 
2017 (11) TMI 1220
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.... in this appeal is against confirmation of disallowance of Rs. 3,25,201/- made by the Assessing Officer u/s 14A of the Income-tax Act, 1961 (hereinafter also called 'the Act'). 3. Briefly stated, the facts as recorded in para 2 of the assessment order are that the assessee earned exempt dividend income of Rs. 45,73,350/-. No disallowance was offered u/s 14A of the Act. On being called upon to state the reasons for not offering any disallowance, the assessee furnished a reply, which has not been discussed in the assessment order. The Assessing Officer found the assessee's reply devoid of any merits in view of sub-section (2) and sub-section (3) of section 14A. He, thereafter, computed disallowance u/s 14A read with Rule 8D at Rs. 34,76,43....
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....atisfaction by the Assessing Officer is sine qua non for working out disallowance u/s 14A. 5. The Hon'ble jurisdictional High Court in CIT vs. Hero Management Services Ltd. (2014) 360 ITR 68 (Del), has held that: "Further to invoke Rule 8D, the Assessing Officer has to first record a finding that he was not satisfied with the correctness of the claim for expenditure made by the assessee in relation to income which did not form part of the total income under the Act. No such satisfaction has been recorded by the Assessing Officer." In the light of this categorical finding, the Hon'ble High Court deleted the disallowance made u/s 14A. Similar view has been taken in Maxopp Investments Ltd. (supra), in which it has been held that: "t....
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.... of investment, being, the last limb of rule 8D. When the pre-requisite condition for making disallowance u/s 14A, being the recording of the satisfaction by the Assessing Officer not accepting the correctness of the assessee's claim, was lacking, the ld. CIT(A) should not have come to the stage of computation of the amount of disallowance. As the jurisdictional condition for making disallowance u/s 14A was wanting, the ld. CIT(A) ought to have deleted the entire addition instead of restricting it to a lower level. The Revenue appears to have accepted the ld. CIT(A)'s order on the question of not recording of satisfaction by the AO inasmuch as nothing has been brought to our notice by the ld. DR to demonstrate that the Department has prefer....
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....e is nothing on record to suggest that such a view has been altered in the further appeal. The assessee's contention about bringing temporary structure into place during the year warranting full deduction, is not backed by any evidence whatsoever. In the given circumstances, we uphold the view taken by the ld. CIT(A) on this score. This ground is not allowed. Assessment Year 2012-13 10. The only issue raised in this appeal is against the confirmation of disallowance u/s 14A read with Rule 8D at 0.5%. 11. Both the sides are in agreement that the facts and circumstances of making disallowance u/s 14A and sustaining it partly in the first appeal are mutatis mutandis similar to those of the preceding year. Similar to the preceding year....