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TMI Blog2017 (1) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... d pay such lip service regardless of the substantial compliance with the provisions would, destroy the mandate of Section 14A. We dismiss the additional ground raised by assessee. In respect of the merits of the case it is observed that the assessee has submitted a calculation of disallowance under Section 14A read with rule 8D at page 4 of the paper book. As from the balance sheet and profit and loss accounts, it is observed that there is no fresh investment that has been made by the assessee during the year under consideration and that the dividend income has been earned from the old investments. We agre with the submission of Ld. AR that interest received on loans advanced is much more than the interest paid on the loans taken and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the grounds raised do not bring out the entire controversy, inasmuch as, grievance of the Appellant against making the disallowance under section 14A without recording the required satisfaction was not specifically raised and that no ground against disallowance under Rule 8D(3) was raised. In the circumstances, the Appellant seeks to raise the following additional grounds: 1. That on the facts and circumstances of the case, the CIT(A) having held that the requisite satisfaction was not recorded before making the disallowance under section 14A of the Act, has erred in upholding the disallowance made by the Assessing Officer? 2. That on the facts and circumstances of the case, the CIT(A) has erred in upholding the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an appeal before the Ld. CIT (A) who upheld the additions made by the Ld. AO. Aggrieved by the order of the Ld. CIT (A) the assessee is in appeal before us now. The additional ground raised by the assessee is in respect of satisfaction not being recorded by the assessing officer before making disallowance under section 14A of the Act. Ld.AR submitted that assessing officer has not assumed jurisdiction, as he has failed to record satisfaction as required under section 14A before calculating the disallowance of expenses for earning the exempt income. 5. Ld. AR submitted that disallowance under Rule 8D has been mechanically made by Ld.AO, as no part of administrative expenses could be directly attributable to the investments in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D has been inserted in IT Rules w.e.f. 24.03.2008 for purpose of determining the amount of expenditure in relation to exempt income, as envisaged in 14A. The AO ought to adopt the method of calculation as prescribed in Rule 8D, post the insertion. The language of Section 14A(1) directs AO to compute disallowance of expenses incurred by the assessee in relation to the earning of exempt income whereas section 14A(2) requires AO has to adduce some reasons if he is not satisfied with the amount offered by way of disallowance by the assessee . At the same time Section 14A (1) (2) read with Rule 8D(i), leave AO with no choice, and mandates a particular methodology enacted, should be followed. In other words, AO is under a mandate to apply the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 8D at page 4 of the paper book. As from the balance sheet and profit and loss accounts, it is observed that there is no fresh investment that has been made by the assessee during the year under consideration and that the dividend income has been earned from the old investments. We agre with the submission of Ld. AR that interest received on loans advanced is much more than the interest paid on the loans taken and that an amount of ₹ 4 crores advanced to Pearey Lal Sons (E.P) Ltd., maybe a excluded, as the interest earned from the advance cannot be attributed to the dividend income earned by the assessee. We therefore do not agree with the Ld.CIT(A), in confirming the entire disallowance made by Ld.AO, and restrict the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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