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TMI Blog2017 (12) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... t ground and thereby in deleting addition of Rs. 76,62,074/- without appreciating that the AO has categorically recorded his satisfaction as required u/s. 14A(2) of the I.T. Act, 1961 to invoke the Rule 8D of the I.T. Rules, 1962, in para 3.2 at page 2 of the assessment order. 2. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 2. The brief facts of the case are that the assessee filed return of income declaring NIL income on 30.9.2010 and Rs. 2,94,51,024/- under the provisions of section 115JB of the Income Tax Act, 1961 (hereinafter referred as the Act). The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 30.8.2011. Again noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was not clear and as the interest expenses pertain to deposits taken by the assessee, which were invested in shares and mutual funds, the amount of interest expenses attributable to earning of dividend income should have been higher. The AO was also not agreed with the plea of the assessee that no expenses in respect of management and investment affairs of the appellant were incurred. Based on this, the AO applied the provisions of Rule 8D and thereby made disallowance of Rs. 8,55,587 under sub-clause (i), Rs. 64,89,681 under sub-clause (ii) and Rs. 20,37,152 under sub-clause (iii) aggregating to Rs. 93,82,420. In view of this, after giving allowance for the disallowance made by the assessee of Rs. 17,20,346/-, additional disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that its opening investments as on 31.3.2009 were duly explained and its own funds were 2½ times more than the investments as on that date. Further the assessee case for AY 2009-10 had undergo scrutiny assessment under section 143(3), in which the AO had not made disallowance under section 14A. Therefore, the same explains that brought forward investments were not made out of borrowed funds in respect of which the assessee may have made interest payment during the current year. So far as the current investments are concerned, on the strength of the bank statements, the assessee identified certain borrowings which had gone for making investments in shares and the assessee had made disallowance in respect thereof. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Hon'ble Mumbai High Court in the case of CIT Vs Godrej & Boyce Mfg Co ltd vs. DCIT, Mumbai and the Hon'ble Delhi High Court in the case of Maxopp Investment (supra) have held that such a lack of satisfaction should be on cogent grounds. Such provisions entailed in Section 14A are in the nature of safeguards with the intention to provide natural justice to the taxpayers before invoking the prescribed method which is only presumptive in nature. We find that in the instant case, even though the AO has given due opportunity to the assessee to explain its claim that only an amount of Rs. 17,20,346 was in the nature of expenses incurred for earning tax exempt income, however, he was not judicious in examining the claim and dismissed the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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