TaxTMI 
TaxTMI 
2022 (7) TMI 293
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....n ITA No.499/Kol/2020 for the assessment year 2013-14. The Revenue has raised the following substabtial questions of law for consideration: (i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law to confirm the CIT(A)'s action of deleting the addition under section 14A of the Act made by the Assessing Officer on the ground that the assessing officer has failed to give cogent reasons of dissatisfaction regarding the computation of the disallowance? (ii) Whether on the facts and circumstances of the case the Tribunal was justified in law in not appreciating the fact that the disallowance under section 14A computed by the assessee was not done as per section 14A read with rule 8D of the Income....
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....ion 14A of the Act or we have to go by the theory of apportionment. We are of the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee-company. However, that does not appear to be a relevant factor in determining the issue at hand. The fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind section 14A of the Act i....
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....on to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the Assessing Officer." Two important issues have been pointed out in the aforementioned decision. Firstly that the provisions of section 14A has to be interpreted, particularly, the words that "in relation to the income" that does not form part of total income. Therefore, it was held that the principle of apportionment of expenses comes into play as that is the principle which is incorporated in section 14A of the Act. With regard to as to how the power under section 14A(2) read with rule 8D of the Rules could be invoked it was pointed out that the Asses....
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.... Officer that the claim made by the assessee cannot be accepted, the Assessing Officer can then proceed to apply computation mode as provided in rule 8D(2) of the Rules. we also take into consideration the decision of the hon'ble Supreme Court in Godrej and Boyce Manufacturing Co. Ltd. v. Dy. CIT [2017] 394 ITR 449 (SC); [2017] 7 SCC 421, wherein it was held that the law postulates the recording of satisfaction as the requirement ot be complied with by the Assessing Officer. The law on the subject as noted has been reiterated in several subsequent decisions as well, and, therefore, the issue has to be decided by the Tribunal, before the Tribunal can remand the matter to the Assessing Officer to do the computation as directed to be done ....