TaxTMI 
TaxTMI 
2018 (3) TMI 1757
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..... 2. Ld. CIT(A) has erred on fact and in law by relying upon the judgment in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. CIT (2010) 328 ITR 81 (Bom.) which pertain to the assessment year 2002-03 prior to introduction of Rule 8D w.e.f. A.Y. 2008-09. 3. Ld.ClT(A) has erred on fact and in law in ignoring CBDT Circular No.5 of 2014 dated 11.02.2014 clarifying that disallowance under Rule 8D read with Section 14A of the Income Tax Act is to be made even where taxpayer in a particular year has not earned any exempt income. 2. Ld. Sr.DR relying upon the grounds raised invited attention to the assessment order. Carrying us through the same it was his submission that in the peculiar facts and circumstances of the present case. The addition ....
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....fficer did not record satisfaction that already attributed expense is insufficient. b) The investment made in equity shares are out of own funds and no borrowed capital have been utilized to acquire such assets. c) The Assessing Officer applied Section 14A and Rule 8D mechanical manner thus resulting in disallowance far excess of tax free income. d) The equity shares of subsidiary has been acquired as strategic business investment thus all expenses are allowable. e) Disallowance under Rule 8D (2)(i) has been incorrectly worked out at Rs. 2,62,459/-. f) The calculation of interest made by the Assessing Officer is incorrect. g) Disallowance under Rule 8D (2)(ii) has been incorrectly worked out at Rs. 1,70,09,003/-. h) Dis....
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....ule 8D of the Rules. Where the disallowance or "nil" disallowance made by the assessee is found to be unsatisfactory on examination of accounts, the assessing officer is entitled and authorised to compute the deduction under Rule 8D of the Rules. This pre-condition and stipulation is also mandated in sub Rule (1) to Rule 8D of the Rules. However, in the present case there is no satisfaction recorded by the A.O that nil expense was not justified for a tax free dividend income of Rs. 6,84,337/- for the year under consideration. In T and T Motors Ltd. v. Add. CIT (2015) 37 ITR 682 (Delhi) (Trib.), it has been held that the deficiency left by the Assessing Officer in recording proper satisfaction, was made good by the Commissioner (Appeals). ....
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....e surely cannot swallow the entire amount as has happened in this case. In the present case, the large disallowance is on account of Rule 8D(2)(ii) which is related to calculation of disallowance of interest attributable to tax free income. However in the case of CIT .v. Taikisha Engineering India Ltd. (Delhi)(HC), (ITA No. 115/204 & 119/2014, dt. 25/11/2014), the court while deciding on application of rule held that the said Rule in sub Rule (2) specifically prescribes the mode and method for computing the disallowance under Section 14A of the Act. Thus, the interpretation of clause (ii) to sub Rule (2) to Rule 8D of the Rules by the CIT(A) and the Tribunal is not sustainable. The said clause expressly states that where the assessee has ....