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TMI Blog2016 (6) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... pportive to the main Ground No. 2.1 which reads as under:- "2.1. That within the facts and circumstances of the case and law on the point, the Ld.CIT(A) has erred in disallowing the expenses of Rs. 2,50,674.00/- u/s 14A with w.r.t Rule 8D of the Income tax Act, 1961 (Act) without appreciating that the Appellant had earned dividend on investment made in 1996 and further dividend income was credited directly to the bank account without any manual intervention and no expenses were incurred by the Appellant to earn such dividend income and that for such reason no disallowance u/s 14A of the Act is warranted." 3. We have heard argument of both the sides and carefully perused the material available on record before us. The Ld. Assessee's Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dissatisfaction about the correctness of the suo moto disallowance of the assessee. 4. The Ld. Counsel drawn our attention towards recent judgment of Hon'ble Jurisdiction High Court of Delhi dated 24/9/2015 in case of CIT(A) Vs. I.P Estate Support Services India Pvt. Ltd passed in ITA NO. 283/2014 and submitted that the Hon'ble Jurisdictional High Court after considering its earlier decision in the case of Maxcopp Investment (P) Ltd. vs. CIT (2012) 347 ITR 272 (Del), categorically held that the Court disapproved of A.O invoking Section 14A Rule 8D (2) of the I.T Rules 1962 without recording his satisfaction and noted that the recording of satisfaction as to why " the voluntary disallowance made by the assessee was unreasonable and unsatisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant operative part of this judgment of Hon'ble Jurisdictional High Court reads as under: 8. Having heard the learned counsel for the parties, the Court finds that the AO has indeed proceeded on the erroneous premise that the invocation of Section 14A is automatic and comes into operation as soon as the dividend income is claimed exempt. In Maxopp Investment (P) Ltd. (supra) this Court held: "30. Sub-section (2) of section 14A of the said Act provides the manner in which the Assessing Officer is to determine the amount of expenditure incurred in relation to income which does not form part of the total income. However, if we examine the provision carefully, we would find that the Assessing Officer is required to determine the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en incurred in relation to exempt income. In both cases, the Assessing Officer, if satisfied with the correctness of the claim of the assessee in respect of such expenditure or no expenditure, as the case may be, cannot embark upon a determination of the amount of expenditure in accordance with any prescribed method, as mentioned in sub-section (2) of section 14A of the said Act. It is only if the Assessing Officer is not satisfied with the correctness of the claim of the assessee, in both cases, that the Assessing Officer gets jurisdiction to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under the said Act in accordance with the prescribed method. The prescribed method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Delhi in the case of Chemnivest Ltd Vs. CIT(A) (Supra) wherein their lordships speaking for the jurisdictional High Court held that when no exempted income was earned by the assessee in the relevant assessment year, and since the genuineness of the expenditure incurred by the assessee in not in doubt then no disallowance could be made u/s 14A of the Act. 7. Respectfully, following the dicta laid down by the Hon'ble High Court, we are inclined to hold that disallowance by the Assessing Officer and upheld by the CIT(A) is not sustainable as per provisions of the Act and ratio of the decision by the Hon'ble High Court of Delhi in case of Chemnivest Ltd vs. CIT (supra). Thus, we direct the A.O to delete the same. Accordingly, mai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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