TaxTMI 
TaxTMI 
2023 (10) TMI 1575
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.... raised is as under:- "1. The learned CIT(A) has erred in confirming addition of Rs 40,79,796 under Section 14A read with Rule 8D on the ground that the assessee has debited finance cost to profit and loss account in as much as the CIT(A) has ignored the submission made by the assessee by letter dated 28-12-2021 to the effect that the finance cost incurred is for the purpose of business and not for making the investment and that the investment is made out of interest free funds and that the assessee has suo moto disallowed Rs. 5,11,370 towards administrative expenditure on scientific basis at the time of assessment proceedings. 2. The learned CIT(A) has erred is not following Judicial precedents on the ground that there is....
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.... complete violation of the provisions of law as contained in section 14A of the Act. He contended that courts have interpreted the provisions of section 14A, particularly section 14A(2) of the Act, and held that prior to invoking Rule 8D for computing the disallowance to be made u/s. 14A of the Act, the Assessing Officer has to be satisfied that the claim of the assessee to expenses disallowable u/s. 14A of the Act is not correct and that dissatisfaction has to be arrived by the Assessing Officer considering the accounts of the assessee. He has pointed out that courts have interpreted section 14A of the Act to have imposed the condition of the Assessing Officer being dissatisfied with the claim of the assessee of expenses disallowable befor....
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....cial cost during the year. It was also pointed out that out of the total investments of 139.17 crores, 118.78 crores was the outstanding balance of preceding year which were made out of its internal accruals of Rs. 404.61 crores. The ld. counsel for the assessee pointed out that despite having stated so, the Assessing Officer noted that the assessee had indeed incurred intangible expenses which could not be easily quantified even though it is stated to be internal accrual. He drew our attention to para 5 of the Assessing Officer's order wherein he noted the fact that the assessee had submitted all investments,amounting to Rs. 139.17 crores, as being made out of internal accruals. He also drew our attention to para 6 wherein the Assessing Of....
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....isfied with the claim made by the assessee that no expenditure has been incurred in the background of the fact that there has been an interest cost claimed in the accounts vide under the provisions of rule 8D(2) of the Income Tax rules an amount equal to 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment is taken to be the cost which needs to be disallowed." The ld. counsel for the assessee contended that despite the assessee demonstrating that the entire investments were made out of internal accruals, the Assessing Officer still went on to record his dissatisfaction with the claim of the assessee without giving any basis and invoked rule 8D of the Rules which he contended was ....
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....High Court as also by various other High Courts that for invoking Rule 8D of the Rules for the purpose of computing expenses which are liable to be disallowed u/s. 14A of the Act, the Assessing Officer first has to be dissatisfied with the claim of the assessee of the expenses liable to be disallowed, which dissatisfaction has to be arrived at having regard to the accounts of the assessee. This is clearly brought out in section 14A(2) of the Income Tax Act and has been interpreted so by Hon'ble High Courts in various case laws as cited by ld. counsel for the assessee. The ld. Departmental Representative does not dispute this position of law. 7.1 The only matter in dispute before us is whether the Assessing Officer had duly recorded his d....