2026 (1) TMI 992

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....als filed against the order of the Pr. Commissioner of Income Tax (A)-12, Mumbai (PCIT) dated 10th February 2017 exercising powers under Section 263 of the Act with Appeal No. 1835/MUM/2017 filed by the Assessee and Appeal No. 3364/MUM/2017 filed by the Revenue. By the impugned order, the Assessee's Appeal was partly allowed for statistical purposes whilst the Revenue's Appeal was dismissed. 2. In the cross appeals before the Tribunal, the Assessee had raised two grounds of appeal whilst the Revenue had raised three grounds. Insofar as the present Income Tax Appeal is concerned, the same only deals with the third ground raised by the Revenue which relates to deleting the disallowance by the PCIT of Rs.2,09,73,983/- under Section 14A of t....

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....said order dated 10th February 2017, the PCIT had partly allowed the Appeal filed by the Assessee. 4. Mr. Ashileshwar Sharma, learned Counsel for the Appellant - Revenue relied on the impugned order and submitted that the same is bad in law and liable to be quashed and set aside. He invited our attention to the following substantial question of law that is proposed in paragraph 4 of the present Income Tax Appeal viz. : "A. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting disallowance made under Section 14A r/w. Rule 8D stating that the AO has not recorded any satisfaction when AO has recorded his satisfaction in the order and has discussed the issue and then applied....

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....e ITO was done mechanically, without justification and contrary to the provisions of the Act. 8. Under Section 14A(2), the ITO is entitled to determine the amount of the expenditure incurred in relation to the income, which does not form part of the total income, in accordance with the method, as may be prescribed and in this regard, Rule 8D has been prescribed. However, the ITO can make such disallowance only if he is not satisfied with the correctness of the claim of the Assessee, having regard to the account of the Assessee, in respect of such expenditure in relation to the income, which does not form part of the total income. Therefore, it is necessary on the part of the ITO to record the satisfaction that the claim made by the Asses....