TaxTMI 
TaxTMI 
2025 (6) TMI 718
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed by the Revenue are as under: "1. Whether on the facts and circumstances and in law the ld. CIT(A) was justified in not considering that as per the amended provisions of the Finance Act, 2022, section 14A shall apply to a case irrespective of whether exempt income has accrued or received during the previous year relevant to an assessment year and expenditure has been incurred during the said previous year in relation to such exempt income?" 2. Whether on the facts and circumstances and in law the ld. CIT(A) was justified in not considering that amended provisions of the Finance Act, 2022 has nullified several judgements as relied by the assessee wherein it was held that no disallowance u/s. 14A of the Act could be made in respect of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re attributable to earning of exempt income. Being of the view that the suo motu disallowance made by the assessee is not in accordance with section 14A read with Rule 8D, the A.O. proceeded to compute the disallowance by applying the methodology provided under Rule 8D. While doing so, he disallowed an amount of Rs. 2,46,08,240/- under Rule 8D(2)(ii). The assessee having made suo motu disallowance of Rs. 10,55,162/-, the A.O. made a net disallowance of Rs. 2,35,53,078/-. The disallowance so made was contested by the assessee before the first appellate authority inter alia on the ground that while rejecting the suo motu disallowance made by the assessee, the A.O. has not recorded proper satisfaction in terms with section 14A(2) of the Act. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t should be the average value of investment for computing disallowance of indirect (administrative) expenses under Rule 8D(2). Now, it is fairly well settled through a catena of judicial precedents that while computing disallowance under Rule 8D(2) based on average value of investment, only those investments can be considered, which have yielded exempt income during the year under consideration. In other words, the investments which have not yielded any exempt income during the year, cannot form part of average value of investment. Undisputedly, the first appellate authority, while deleting major part of the disallowance has followed the settled legal position. In fact, while considering the legality of identical view expressed by the first....