2016 (2) TMI 119

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... decided in this appeal is as to whether the provisions of section 14A of the Act read with Rule 8D(2)(iii) of the IT Rules could be applied in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is engaged in the business of developing properties and partly selling them and partly giving them on rent. The assessee earned dividend income of Rs. 1,31,451/- from mutual funds during the assessment year under appeal. The assessee maintains a bank account with Standard Chartered Bank bearing Account No. 100997263. In the said bank, there is a facility of auto swap of surplus funds to the mutual fund and retransfer of fund when there is shortfall in balance. The bank automatically credits the dividend t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... that no expenses were incurred for earning exempt income is incorrect in the facts and circumstances of the case. He argued that without recording such satisfaction which is mandatory, the Learned AO is prevented from proceeding to invoke Rule 8D(2) of the Rules and hence pleaded for deletion of this disallowance. In support of this contention, he placed reliance on the decision of the co-ordinate bench of the tribunal in the case of DCIT vs REI Agro Ltd in ITA No. 1811/Kol/2012 dated 14.5.2013. In response to this, the Learned DR vehemently supported the order of the lower authorities and in addition with regard to non-requirement of recording of satisfaction, relied on the decision of this tribunal in the case of ACIT vs Champion Commerci .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... cating any cogent reasons for the same. We find that the Learned AO had straight away embarked upon computing disallowance under Rule 8D(2)(iii) of the Rules. We find that this issue has been elaborately dealt with in the following cases :- CIT vs Ashish Jhunjhunwala in G.A.No. 2990 of 2013 in ITAT No. 157 of 2013 dated 8.1.2014 rendered by Calcutta High Court "While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case, it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X