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TMI Blog2019 (6) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in making addition and CIT(A) erred by confirming the same. We set aside the orders of the lower authorities and allow this appeal of assessee. - ITA No. 3486/Mum/2018 - - - Dated:- 19-6-2019 - Sri Mahavir Singh, JM And Sri Rajesh Kumar, AM For the Appellant : Shri Jai Bhansali, AR For the Respondent : Shri Jacinta Zimik Vishai, DR ORDER PER MAHAVIR SINGH, JM: This appeal filed by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-49, in short CIT(A), in appeal No. CIT(A)-14/IT-11/15-16 vide dated 18.04.2018. The Assessment was framed by the Dy. Commissioner of Income Tax, Central Circle-7(1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to earn exempt income. Moreover, assessee has not given explanation on how the expenses debited in its accounts are related to its business. 4.6 Keeping in view the facts of the case and in view of the provisions of section 14A(2) and 14A(3), I am not satisfied with the genuineness of the claim made by the assessee with regard to the expenses related to earning of the exempt income. As the accounts prepared by the assessee does not give true picture about the correctness of expenditure with regard to the exempt income, provisions of sub-section (2) of section 14A is invoked to work out the disallowance under section 14A is invoked to work out the disallowance u/s 14A as per rule 8D(2)(iii) of the I.T. Rules 1962 as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Counsel for the assessee first of all argued that the AO has not recorded any satisfaction for making disallowance and for invoking the provisions of section 14A of the Act read with Rule 8D of the Rules. He stated that the AO has simply noted that the assessee himself have incurred expenses out of the same to earn exempt income. But the AO has not brought out how he satisfies that expenses are relatable to exempt income. In the absence of any satisfaction, according to the learned Counsel for the, the issue is covered in favour of assessee by the decision of Hon ble Bombay High court in the case of Godrej Boyce Mfg. Co. Ltd. CIT [2010] 328 ITR 81 (Bombay), wherein it is held that the AO simply states that he was satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40. Consequently on the aspect of administrative expenses being disallowed, since there was a failure by the AO to comply with the mandatory requirement of Section 14 A (2) of the Act read with Rule 8D (1) (a) of the Rules and record his satisfaction as required thereunder, the question of applying Rule 8D (2) (iii) of the Rules did not arise. The question framed in ITA 549 of 2015 is answered accordingly. 7. We noted that in the present case also, the facts are similar to the case of HT Media (supra) of Hon ble Delhi High Court. In this case also, the AO has simply made observations that there must be some expenses for earning of the exempt income. The AO could not pointed out which are expenses rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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