2025 (12) TMI 154

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....ssee's appeal was against the action of the ld. CIT(A) in confirming the addition made by the AO in respect of the disallowance of expenditure earned in respect of exempt income by applying the provisions of rule 8D read with the provisions of Section 14A of the Act. It was the submission that the there was no satisfaction recorded for the purpose of invoking the provisions of Section 14A of the Act. It was the submission that on identical circumstances the coordinate bench of this Tribunal in assessee's own case for the assessment year 2008-2009 in ITA No. 2500/Kol/2013 vide an order dated 14.12.2016 has in para 6 to 11 held as follows :- 6. We have gone through the record in the light of the law on the aspect. Observations in....

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....IT Versus Ashish Jhunjhunwala, ITA No 1809/Kol/2012 was placed. However, learned CIT(Appeals) observed that, "It may be mentioned that prior to introduction of Rule 8D, jurisdictional bench of Tribunal in a number of cases taken 1% of exempted income to be reasonable estimate for expenditure relatable to exempt income. Even by that yard stick the claim of having incurred expenditure of Rs. 8,050/- in relation to dividend income of Rs. 48,04,057/- and "Long Term Capital Gain" Rs. 3,24,18,990/- appears to be quite meagre. I am, therefore, satisfied that the claim of expenditure incurred and shown by the appellant with regard to the accounts is not correct". 8. Basing on this observation of the learned CIT(Appeals), learned D....

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...., Assessing Officer assumes jurisdiction to invoke section 14A of the Act read with Rule 8D of the Rules only when he reaches a conclusion that the claim of expenditure made by the assessee is not correct. He is required by law to record his non-satisfaction having regard to the accounts of the assessee of the previous year, failing which his assumption of jurisdiction under section 14A of the Act read with Rule 8D of the Rules becomes non est in the eye of law. 10. Our above understanding is fortified by a decision reported in Maxopp Investment Ltd. & ors. Vs. Commissioner of income tax (2012) 247 CTR 0162 (Del) for the principle that even prior to the introduction of sub-ss. (2) and (3), Section 14A would require the AO to first ....

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....pose of provisions under section 14A of the Act read with Rule 8D of the Rules, it is a sine qua non that the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income, which is conspicuous in this matter. We, therefore, have no hesitation to hold that it is the satisfaction of Assessing Officer and Assessing Officer alone that infuses life into the order of Assessment in respect of disallowance of deductions, and none other much less the learned CIT(Appeals) can substitute his opinion for that of the Assessing Officer to validate otherwise invalid order of Assessing Officer. With this view of the matter we hold that ....