AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1153
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....Y.] 2022-23. 2. The grounds of appeal are as follows: "1. Whether the Ld. CIT(A) erred in not applying the principle laid down by the Hon'ble Supreme Court in Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC) that Section 14A is attracted where the expenditure is incurred in relation to exempt income, and the availability of interest-free funds is not a standalone defense unless proven to be directly used for investments?" 3. The brief fact of the case are that the assessee filed her return for A.Y. 2022-23 on 22.10.2022 declaring total income of Rs. 39,33,02,240/-. The case was selected for complete scrutiny for verification of several issues. After considering the assessee response, the ld. AO proposed to make disal....
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....al of the financials as furnished by the appellant clearly indicates that the total expenses occurred involves many administrative and miscellaneous expenses as well. Moreover, as per the computation as furnished by the appellant w.r.t the exempt income, the disallowance worked out at Rs. 21,95,734/- which is lesser than the suo-moto disallowance made by the appellant. The relevant calculation is as below- October November December January February March 7,39,37,235 7,39,37,235 7,39,37,235 7,39,37,235 7,39,37,235 7,34,07,000 6,10,97,575 6,10,97,575 6,10,97,575 6,10,97,575 6,10,97,575 6,04,70,645 2,87,63,306 2,87,63,306 2,87,63,306 2,87,63,306 2,87,63,306 2,82,27,441 ....
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....u/s 14A 21,95,734 4.8. Further perusal of ITR revealed that the appellant has earned total exempt income of Rs. 2,14,26,224/- and suo-moto disallowed the expenses of Rs. 49,08,657/- including 5% indirect expenses incurred to manage the investments. The relevant portion of ITR is as below- 4.9. Also reliance is placed on the decision of Hon'ble Supreme court in the case of Maxopp Investment Ltd .. vs Commr.Of I.T New Delhi, as below- "41) Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallo....
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.... 4.1 Ld. AR, on the other hand, has submitted that no proper satisfaction had been recorded by the ld. AO. In response to the show-cause notice, the assessee had submitted a detailed reply dated 09.03.2024 which has been reproduced in the assessment order by the ld. AO but it has been rejected without due consideration. Ld. AO has not given any findings on the merits of the assessee's submissions and no satisfaction has been recorded as to why the AO disagrees with the explanation of the assessee. Ld. AR has further pointed out that the total expenditure incurred by the assessee is only Rs. 2.48 cr as against which the disallowance of Rs. 4.60 cr has been computed by the ld. AO which is preposterous. Lastly, Ld. AR has also placed relia....
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....seen that the total expenses debited to the P&L account are only Rs. 2,48,11,639/- and thus the computation of disallowance of Rs. 4,60,63,38,863/- is devoid of any logic and clearly unreasonable. Thus it is clear that ld. AO has not considered the entire factual matrix of the case nor gone through the relevant accounts and the disallowance has been made without proper appreciation of facts in the light of the settled legal position. Accordingly, we are of the considered view, that the disallowance made by the ld. AO over and above the suo-moto disallowance made by the assessee is without any basis and deserves to be deleted. 6. In the result, the appeal of the revenue is dismissed. Order Pronounced in Open Court on 31.10.2025 ====....