2018 (1) TMI 1512

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....at- 1.1 the AU has not recorded his satisfaction before rejecting the appellant's claim that it has not incurred any expenditure for earning exempt income and hence, should have deleted the disallowance of Rs. 22,37,456/- made U/s.14A of the Act by invoking the provisions of Sectionl4A read with Rule 8D(2)(iii). Without prejudice to the above and in the alternate, 1.2 if the provisions of Section 14A of the Act apply to the appellant, then, the disallowance should have been restricted to 5% of the exempt income or such lower rate as the case may be justified as against disallowing 20% of the exempt income. 2. It is humbly prayed that the reliefs as prayed and such other and further reliefs as may be j....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... not recorded his satisfaction before rejecting the appellant's claim that it has not incurred any expenditure for earning exempt income and hence, should have deleted the disallowance of Rs. 22,37,456/- made U/s.14A of the Act by invoking the provisions of Sectionl4A read with Rule 8D(2)(iii). 4. We have heard counsels for both the parties at length and we have also perused the material placed on record as well as the orders passed by revenue authorities. As per the facts of the present case, the assessee has received dividend income of Rs. 11,87,282/- which has been claimed exempt u/s 10(34) of the I.T. Act. As the assessee had not made any disallowance against the dividend income and the AO while invoking rule 8D(2)(iii) of I.T. R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....) Godrej & Boyce Manufacturing Co Ltd, 328 ITR 81 (Bombay High Court) (j) Wimco Seedlings Ltd. v. DCIT (2007) 107 lTD 267 (De) (TM) (k) Relaxo Footwears Ltd.,V. ACIT (2012) 50 SOT 102 (DEL); (I) Chanakya International Pvt. Ltd.v. ACIT (2013) 36 CCH 032 (Mum); (m) Justice Ram P Bharucha v. Addl. CIT (2012) 53 SOT 192. 5. Our attention was drawn to the judgments of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd, Hon'ble Kolkata Tribunal in the case of Champion Commercial Co. Ltd (2012) 139 ITD 108(Kol). Before we decide the merits of the case, it is necessary to evaluate the provisions of sub section (2) to section 14A of the I.T. Act which is as under:- "(2) The Assessing Officer s....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....egard is sine qua non for invoking the applicability of Rule 8D. Such satisfaction can he reached and recorded only when the claim of the assessee is verified. If the assessee proves before the AO that it incurred a particular expenditure in respect of earning the exempt income and the AO gets satisfied, then there is no requirement to still proceed with the computation of amount disallowable as per Rule 8D. From the assessment order, it is observed that the AO simply kept the assessee's submissions on record without appreciating as to whether these were correct or not. He proceeded on the premise as if the disallowance as per Rule 8D is automatic irrespective of the genuineness of the assessee's claim in respect of expenses incurre....