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TMI Blog2014 (7) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... , has proceeded to apply the provisions of rule 8D - The provisions of rule 8D can only be triggered for the purpose of disallowance, when the AO is not satisfied having regard to the accounts of the assessee the correctness of the claim of the assessee in respect of such expenditure in relation to exempt income – thus, the matter is to be remitted back to the AO and directed to examine the nature of expenditure debited in the accounts, whether they are in any way attributable to the earning of exempt income or not – Decided in favour of Assessee. - ITA No. 7213/Mum./2012 - - - Dated:- 13-6-2014 - Shri D. Karunakara Rao And Shri Amit Shukla,JJ. For the Petitioner : Mr. Satish R. Mody For the Respondent : Mr. Sanjeev Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocated any expenditure for earning said exempt income and required the assessee to show cause as to why the disallowance under section 14A r/w rule 8D should not be made. In response to the same, the assessee submitted that there is no direct relationship between the expenditure claimed by the assessee and the investments made on which the tax free income has been earned. Further, there is no specific expenditure which can be held to be an allocable either on account of interest or on account of administrative expenses for the purpose of disallowance under section 14A. The Assessing Officer, after detail reasoning, held that he is not satisfied with the claim of the assessee that no expenditure has been incurred in relation to the earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt should be disallowed. 5. Before us, the learned counsel, Mr. Satish R. Modi, on behalf of the assessee, submitted that the assessee s tax free income is mainly from interest on tax free bonds, maturity from LIC and dividend income. For earning of this exempt income, no expenditure have been incurred and looking to the nature of expenses, as incorporated in the appellate order at Page 3, it can be seen that none of these expenses can be said to be remotely attributable to the earning of exempt income. The conditions mentioned in section 14A(2) and 14A(3) are not fulfilled in assessee s case as the Assessing Officer has not examined the assessee s nature of expenses and has simply proceeded to invoke the provisions of rule 8D. Provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the correctness of the claim of the assessee in respect of such expenditure in relation to exempt income. Under these facts and circumstances, we are of the considered opinion that the matter needs to be restored to the file of the Assessing Officer. Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and restore the issue back to the file of the Assessing Officer and direct him to examine the nature of expenditure debited in the accounts, whether they are in any way attributable to the earning of exempt income or not. The assessee is also directed to explain its accounts and the nature of expenditure to the Assessing Officer. After verifying the accounts and the correctness thereof, the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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