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TMI Blog2019 (6) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ore proceedings to apply Rule 8D, it was incumbent on the part of AO in terms of Section 14A(2) to form an opinion as to why the disallowance offered by the assessee, having regards to the accounts of the assessee, was not satisfactory or correct. This would apply even in case wherein the assessee submits that no expenditure has been incurred to earn the exempt income. Therefore, the aforesaid satisfaction of AO, is sine-qua-non before clothing AO the power to acquire jurisdiction u/r 8D. In Maxopp Investment Ltd. Vs CIT [ . [ 2018 (3) TMI 805 - SUPREME COURT] has laid down certain vital propositions concerning disallowance u/s 14A as approved the applicability of disallowance u/s 14A to investments irrespective of motive to make such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-Tax (Appeals)-48, Mumbai [CIT(A)], Appeal No. CIT(A)-48/I.T.-63/DCCC- 2(4)/2015-16 dated 21/02/2018 on following grounds of appeal: - (1)(a) On the facts and circumstances of the case and in law the Ld. CIT Appeals has erred in confirming the disallowance of ₹ 40,55,723/- u/s 14A r.w.r. 8D and adding it to the total income of the appellant. (b) The Ld. CIT Appeals failed to appreciate the fact that the appellant had received dividend from investments made in subsidiary companies, which were for the purpose of business. (c) The Ld. CIT Appeals failed to consider that the appellant is a Real Estate Company all expenses claimed in its accounts were incurred for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss Account of the company to arrive at the Book Profit u/s.115JB of the Income Tax Act, 1961. (d) Ld. CIT Appeals failed to consider Special Bench decision which has decided the issue in favour of the appellant. As evident from grounds of appeal, the sole issue involved in the appeal is quantum of disallowance u/s 14A and adjustment thereof while computing Book Profits u/s 115JB. 2.2 Facts in brief are that the assessee being resident corporate entity stated to be engaged in Real Estate Development was assessed for impugned AY on 05/03/2015 in scrutiny assessment u/s 143(3) by Ld. Deputy Commissioner of Income Tax Officer-Central Circle 2(4), Mumbai [AO]. The income under normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has erred in confirming the disallowance of ₹ 46,00,410/- u/s 14A r.w.r. 8D and adding it to the total income of the appellant. (b) The Ld. ClT Appeals ought to have appreciated the fact that, the appellant has made no new investments during the year. On the other hand, there has been reduction in investments held by the appellant during the year. (c) The Ld. CIT Appeals failed to appreciate the fact that the appellant had received dividend on investments made in subsidiary companies, which were for the purpose of business. (d) The Ld. CIT Appeals failed to consider that the appellant is a Real Estate Company all expenses claimed in its accounts were incurred for the purpose of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest disallowance u/r 8D(2)(ii) for ₹ 430.96 Lacs and expense disallowance u/r 8D(2)(iii) for ₹ 46 Lacs. Since the assessee was following project completion method of accounting, the amount of disallowance of ₹ 476.97 Lacs was reduced from Work-in-Progress Account. Upon further appeal, Ld. first appellate authority deleted interest disallowance in view of the fact that the assessee s own funds were more than the investments. However, expense disallowance of ₹ 46 Lacs was confirmed and Ld. AO was directed to consider the same separately for taxation purposes. Aggrieved, the assessee is in further appeal before us. 4. The Ld. Authorized Representative for Assessee [AR], Shri Parkash Jotwani, drawing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry or correct. This would apply even in case wherein the assessee submits that no expenditure has been incurred to earn the exempt income. Therefore, the aforesaid satisfaction of Ld. AO, is sine-qua-non before clothing Ld. AO the power to acquire jurisdiction u/r 8D. 5.3 Proceeding further, we find that Hon ble Supreme Court in recent judgment titled as Maxopp Investment Ltd. Vs CIT [12/02/2018 91 Taxmann.com 154] has laid down certain vital propositions concerning disallowance u/s 14A. In the said decision, the Hon ble court, has, interalia, approved the applicability of disallowance u/s 14A to investments irrespective of motive to make such investments. Therefore, the said decision would have certain bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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