2023 (11) TMI 640

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....eless Appeal Centre Delhi) has erred in confirming the disallowance of expenses Rs. 41,17,215/- u/s 14A read with rule 8D without considering or giving effect to the suo-moto disallowance Rs. 6,14,286/- made by the appellant in the ITR. (ii) That the assessing officer having failed to record mandatory dissatisfaction in terms of section 14A(2) with regard to suo-motu disallowance of Rs. 6,14,286/- u/s 14A read with Rule 8D made by the appellant company, the Ld. CIT(A) is not justified in upholding the disallowance made in the assessment order. (iii) That there being no nexus between interest bearing funds and investment appearing in the Balance Sheet, there is no basis or justification for attributing any indirect interest expense under....

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....erefore recorded his dissatisfaction with the correctness of the assessee's claim and show caused the assessee why disallowance under section 14A of the Act r.w. Rule 8D be not made. The assessee submitted its reply before the Ld. AO, the gist of which is- (i) The assessee has not earned any exempt income during the year and on its own disallowed Rs. 6,14,286/-, amount equivalent to salary of an official looking after the activity of investment etc. (ii) The assessee had made investments in the subsidiary companies/Group Associates in earlier years without any intent to earn any dividend income but to have control inter-se over the affairs amongst each other. (iii) The assessee company's investment in equity shares is basically with i....

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....R no tax free (exempt) income has been earned during the year, hence provisions of section 14A r.w. Rule 8D cannot be applied. He urged that confirmation of impugned disallowance by the Ld. CIT(A) is not sustainable. 6. The Ld. Sr. DR supported the order of the Ld. AO/CIT(A). 7. We have carefully considered the submission of the parties and perused the record. It is not in dispute that during the year the assessee did not earn any exempt income. It is also not in dispute that the assessee on its own disallowed an amount of Rs. 6,14,286/- under section 14A of the Act. Sub. Section (2) of section 14A ordains that the Ld. AO, having regard to the accounts of the assessee, has to record reasons why he is not satisfied with the correctness of ....