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TMI Blog2020 (1) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Assessee : Shri Beharilal For the Department : Kumar Padmapani Bora ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals) 2, Mumbai [hereinafter for short Ld. CIT(A) ] dated 15.01.2018 for the A.Y. 2009-10. 2. We find from the records that in the first round of appeal the Tribunal in ITA No. 2705/MUM/2013 dated 19.01.2015 restored the issue of disallowance made u/s. 14A r.w Rule 8D(2)(ii) of I.T. Rules to the file of the Assessing Officer with a direction to verify the correctness of the claim of the assessee as the assessee itself made suomoto disallowance of ₹.1,16,36,172/- u/s. 14A of the Act while computing its income. In the consequential assessment made by the Assessing Officer u/s. 143(3) r.w.s. 254 of the Act dated 05.03.2016 the Assessing Officer restricted the disallowance u/s. 14A of the Act to ₹.37,89,019/- as against ₹.60,01,670/- made in the original assessment, over and above the suomoto disallowance of ₹.1,16,36,172/- made by the assessee. In the consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d addition made by the AO towards disallowance of expenditure determined in accordance with Rule 8D(2) over and above the suo moto disallowance made by the assessee. The relevant portion of the order of the Ld.CIT(A) is extracted below:- Decision: The AO has added sum of ₹ 1,56,86,1627- u/s 14A read with Rule 8D of the Income-tax Act stating the reasons that disallowance made of ₹ 86,57,565/- is not proper. On the other hand, the AR of the appellant argues that following expenditure has been disallowed u/s 14A of the Act. I Interest ₹ 63,82,177/- ii. Legal and professional expenses ₹ 1,19,492/- iii Demat charges ₹ 2,45,276 iv Dividend collection Charges ₹ 18,80,620/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO over and above suo moto disallowance made by the assessee by holding that the AO has not recorded any satisfaction required u/s 14A(2) as to why disallowance offered by the assessee voluntarily is not a correct disallowance u/s 14A and the same needs to be discarded. The AO has mechanically applied rule 8D(2) to determine further disallowance without arriving at a satisfaction as to incorrectness of disallowance quantified, by the assessee. Facts being identical for the year under consideration, by following the earlier decision of the ITAT, the addition made by the AO needs to be deleted. 7. On the other hand, the Ld.DR fairly accepted that the issue is covered in favour of the assessee by the decision of the ITAT for earlier assessment year. 8. We have heard both the parties and perused the material available on record. The issue of disallowance of expenditure incurred in relation to exempt income u/s 14A has been considered by the ITAT. in assessee's own case for AY 2012-13 in ITA No.6414/Mum/2016 and after considering relevant facts deleted further disallowance made by the AO over and above suo moto disallowance made by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same needs to be discarded . The AO mechanically applied Rule 8D and arrived at disallowance of ₹ 2,41,07,023/- u/s 14A r.w.r. 8D notwithstanding that the assessee has incurred total expenses of ₹ 15,03,151/- during relevant year which was claimed as an expenses in profit and Loss Account (pb/page 40). Out of these total expenses of ₹ 15,03,151/- , the assessee voluntarily disallowed ₹ 4,13,486/- and never claimed the same as business deduction , while out of the balance remaining expenses of ₹ 10,89,665 , the assessee computed disallowance of ₹ 5,44,832/ u/s 14A towards indirect expenses relatable to earning of an exempt income while also the assessee voluntarily additional disallowed an expenditure of ₹ 143/- directly relatable to an exempt income, thus total disallowance of expenditure to the tune of ₹ 5,44,975/- was offered by the assessee suo motu voluntarily u/s 14A to have been incurred for earning an exempt income. The AO did not recorded any satisfaction u/s 14A(2) as to why disallowance offered by the assessee to the tune of ₹ 5,44,975/- u/s 14A which was worked out by the assessee having regards to its accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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