2018 (9) TMI 598

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.... Rs. 5,88,778/- u/s 14A of the I.T. Act. These appeals were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. 3. At the outset, Learned A. R. submitted that the Assessing Officer while making disallowance u/s 14A of the Act has not recorded proper satisfaction as required by the provisions of the law and as required by the judgment of Hon'ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT [2018] 91 Taxmann.com 154 (SC). Our attention was invited to the copy of assessment order where such disallowance u/s 14A were made. Learned A. R. submitted that after relying on a few judgments the Assessing Officer has made the disallowance by following Rule 8D without recording....

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....ee funds increased to Rs. 18,04,30,423/-. Learned A. R. in this respect relied on case law of PCIT vs. Sintex Industries Ltd. decided by Hon'ble Delhi High Court where the Hon'ble Court has held that where assessee had surplus funds against which minor investment was made, no question of making any disallowance or expenditure in respect of interest and administrative expenses u/s 14A arose. It was submitted that such order of Hon'ble Court has been confirmed by Hon'ble Supreme Court and is reported at 255 Taxman 171 (SC). 4. Learned D. R. placed his reliance on the orders of the authorities below. 5. We have heard the rival parties and have gone through the material placed on record. We find that Assessing Officer has ....

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....essee company. Hence the total disallowance u/s 14A read with Rule 8D (2) would be of Rs. 2,87,618/- (Rs.26,482/- + Rs. 2,61,136/-). This would be added to the total income. Since, the Assessee has filed inaccurate particulars on this issue, therefore, penalty proceeding u/s 271(1)(c) of the Income tax are being initiated." 5.1 The above findings made by the Assessing Officer do not suggest that he had made any satisfaction with respect to the claim of the assessee that no expenditure was incurred for earning of exempt income. Hon'ble Supreme Court in the case of Maxopp Investment Ltd. (supra) vide para 41 has categorically held that before applying the provisions of section 14A read with Rule 8D, the Assessing Officer needs to recor....

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....ficer recorded his non-satisfaction with regard to claim of the assessee that no expenditure has been incurred or about the correctness of claim of expenditure by the assessee. Therefore, the disallowance made by the Assessing Officer under section 14A was held to be not justified where he had simply observed that section 14A was applicable and that assessee's contention that no expenditure had been incurred was not acceptable without saying anything further." 5.3 On merits also we find that interest free funds available with the assessee for assessment year 2008-09 were Rs. 15.74 crore whereas in assessment year 2010-11 the figure of interest free funds is Rs. 18.04 crore. As against these interest free funds, the value of investmen....