TaxTMI 
TaxTMI 
2022 (1) TMI 1502
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....ent Year 2010-11 and 2011-12, respectively. Both the impugned orders are of even date i.e. 27/08/2019. The assessee has filed Cross Objections No.49 & 50/Mum/2021 in the respective appeals of the Revenue. Since, the issue raised in both the appeals and the cross objections emanate from same set of facts, therefore, these appeals and cross objections are taken up together for adjudication and are decided by this common order. 2. For the sake of convenience the facts are narrated from the appeal of Revenue in ITA No.6726/Mum/2019 for Assessment Year 2010-11. ITANo. 6726/Mum/2019, A.Y. 2010-11 3. Shri Mayank Chouhan appearing on behalf of the assessee submitted that the assessee /respondent is a wholly owned subsidiary of National Sto....
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....2,965/- as dividend from mutual funds. The assessee made suo-motu disallowance of Rs. 26,11,925/- u/s 14A of the Income Tax Act, 1961 ( in short 'the Act'). In scrutiny assessment proceedings, the Assessing Officer recomputed disallowance u/s 14A r.w.r. 8D and made disallowance of Rs. 5,07,63,520/-. The ld. Authorized Representative for the assessee submitted that while recomputing disallowance u/s. 14A of the Act, the Assessing Officer has failed to record his dissatisfaction on suo-motu disallowance made by the assessee. The Assessing Officer has merely reproduced the submissions of the assessee and has held that the same are not acceptable. The provisions of Section 14A(2) of the Act mandate, that if the Assessing Officer having regard t....
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....e ld. Authorized Representative for the assessee submitted that in Assessment Year 2008-09 the assessee after being unsuccessful before the CIT(A) carried the issue before the Tribunal in ITA No. 706/Mum/2013. The Tribunal vide order dated 14/07/2017 held that the Assessing Officer has not recorded his dissatisfaction with regard to the books of account filed by the assessee. The Tribunal deleted the addition made by Assessing Officer u/s. 14A r.w.r. 8D on the ground of inappropriate satisfaction recorded by the Assessing Officer. In the instant case, the CIT(A) after having examined the manner in which the Assessing Officer has recorded his dissatisfaction in respect of suo-motu disallowance made by assessee u/s. 14A of the Act, rightly he....
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....ing Officer in para 4.5 of the assessment order. 7. We have heard the submissions made by rival sides and have examined the orders of authorities below. The solitary issue raised by the Revenue in its appeal is with respect to deleting of disallowance made u/s. 14A of the Act by the CIT(A) after rejecting the dissatisfaction recorded by the Assessing Officer and enhancing disallowance u/s. 14A of the Act. 8. In the instant appeal the short issue is whether the dissatisfaction recorded by the Assessing Officer for making disallowance u/s. 14A of the Act r.w.r 8D is in accordance with the mandate as envisaged u/s. 14A(2) of the Act. There is no specific prescribed format for recording satisfaction u/s. 14A(2) of the Act, however, the ba....
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....g of disallowance u/s.14A of the Act including the details of direct expenditure, salary cost of personnel involved in investment activities, proportionate administrative cost ( such as insurance, rates to taxes, telephone, printing and stationery, electricity charges, Auditors remuneration, depreciation, etc.) by applying ratio of said salary to the total salary, notional rent for the space occupied by the investment department. The Assessing Officer rejected the working of assessee without pointing specific expenditure that has not been considered or quantified by the assessee. The Assessing Officer has simply invoked the provisions of Rule 8D without pointing defects in the working of disallowance computed by the assessee. Thus, we ar....
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....e u/s 14A of the Act can be made on adhoc- rate. The CIT(A) after having rejected the manner of recording dissatisfaction by the Assessing Officer in respect of suo-motu disallowance made by assessee has erred in applying adhoc rate of 1% for enhancing disallowance u/s. 14A of the Act. Thus, in view of the settled position the adhoc rate of 1% adopted by CIT(A) for making disallowance of expenditure u/s 14A of the Act is legally unsustainable. We find merit in the ground raised by the assessee in cross objections. The adhoc disallowance of 1% u/s. 14A of the Act made by CIT(A) is directed to be deleted. The assessee succeeds in the Cross Objections. 13. In the result, appeal by the Revenue is dismissed and the cross objections by assesse....