2018 (3) TMI 1399

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....tion as well as under special provisions of the Act by ignoring the fact that expenses relatable to earning of exempt income have to be considered for disallowance as per Rule 8D of the l.T. Rules 1962 r.w.s.MA of the Act irrespective whether any exempt income has been earned by the assessee during the year or not. 2. The appellant craves leave for reserving the right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3. The assessee company is engaged in the business of promoting and investment telecom business. The A.O completed the assessment at an income of Rs. 7,74,95,320/- under provision of the I.T Act, 1961 and Book profit at Rs. 8,22,16,670/- as against....

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....llowance in terms of section 14A of the Act. The other argument of the appellant is that in terms of section 14A (2) the AO is mandated to determine the expenses incurred in relation to exempt income in terms of the method prescribed under Rule 8D only if the AO is not satisfied with the correctness of the claim of the assessee, having regards to the account of the assessee. It has thus been argued that since the AO has not recorded his satisfaction for invoking Rule 8D (having regard to the account of the assessee), therefore the disallowance calculated in terms of Rule 8D(2)(ii) amounting to Rs. 6,47,21,925/- is a mechanical exercise which is not in accordance with law. It has also been alternatively argued that at best the disallowance c....