2018 (9) TMI 152

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....in this appeal. In the assessee's case, the assessing officer took the latter course while dealing with expenditure shown by the assessee towards exempted income, being income from dividend in this case. The assessee had sought disallowance of Rs. 26, 07, 177/- as expenditure incurred in connection with earning of the exempted income but the assessing officer had raised the amount to Rs. 36, 09, 734/-. Such disallowance shown by the assessee was under three heads and the assessing officer found the amount reflected under one head to be on the lower side. Otherwise, the clarification of the assessee in respect of such expenditure was found to be reasonable. The Commissioner in exercise of his revisional power under section 263 of the Act di....

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....the insertion of Rule 8D was subjectmatter of several decisions rendered by various Benches of the ITAT as well as the Hon'ble High Courts. The Hon'ble Delhi High Court in the case of Maxopp Investments Ltd. v. CIT (2011) 203 Taxman 364(Del) and the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. 328 ITR 81(Bom. ) have taken a view that Rule 8D of the I. T. Rules will apply only for A. Ys. 2008-09 and subsequent assessment years. It has also been laid down that the assessee has to make a claim (including a claim that no expenditure was incurred) with regard to expenditure incurred for earning income which is not chargeable to tax. Such a claim has to be examined by the AO and only if on an objective satisfaction arrive....

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....attributable or incurred in earning exempt income. It cannot therefore be said that once the AO rejects the mode of computation of disallowance u/s. 14A of the Act as made by the Assessee, he has no other option but to resort to Rule 8D of the Rules. 8. Besides the above, we are also of the view that the AO has adopted one of the possible course open to him in law. The CIT cannot invoke jurisdiction u/s. 263 of the Act just because he does not agree with the view of the AO. In other words u/s. 263 of the Act, the CIT cannot substitute his view with that of the AO. The decision relied upon by the learned counsel for the Assessee clearly supports the stand taken by the Assessee in this regard. 9. We therefore hold that the order of the ....