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TMI Blog2020 (7) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of the assessment order nowhere shows that the AO has recorded any satisfaction as to why the suo-moto disallowance made by the assessee is not correct. Therefore, we find merit in the argument of assessee that in absence of recording of any satisfaction by the AO having regard to the accounts of the assesses as to why the claim of disallowance made by the assessee u/s. 14 A is not correct, no disallowance can be made. The various decisions relied by the Ld. DR are not applicable to the facts of the present case. We find both the decisions relied on by him are prior to the decision of Hon ble Supreme Court in the case of Maxopp Investment Limited (supra). In view of the above discussion we hold that no further disallowance u/s. 14 A r.w.r 8 D could have been made. Addition under the head income from capital gain - HELD THAT:- We find although the assessee has raised specific ground before the CIT(A), however, the Ld. CIT(A) has not adjudicated the same. Considering the totality of the facts of the case and in the interest of justice we deem it proper to restore the issue to the file of the AO with a direction to grant one more opportunity to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal the Ld. CIT(A) upheld the disallowance made by the AO. 7. Aggrieved with such order of the CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds of appeal :- 1. That order of lower authority is bad in law and is against the facts and circumstances of the case and total addition and tax on LTCG is unsustainable. 2. That Ld. CIT(A) erred in sustaining the disallowance of ₹ 11,48,724/- made u/s. 14A, without appreciating the fact that the same is without complying with the mandatory conditions of said provision, (a) Without recording satisfaction about incurring of expenditure relating to exempt income with regard to accounts. (b) Without even considering the disallowance made by assessee and demonstrating same as wrong etc. (3) That Ld. CIT(A) further erred in not considering the fact that assessee is having more interest free funds than the investment under dividend bearing securities. (4) That Ld. CIT(A) grossly erred in not even addressing the issue of wrongly taxing LTCG ₹ 70,99,681/- on STT paid shares which is exempt u/s. 10 (38) of the Act. 8. The Ld. Counsel for the assessee referring to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 13,80,70,375 13. Referring to the decision of Hon ble Bombay High Court in the case of HDFC Bank Limited reported in 366 ITR 505 and the decision of the Hon ble Supreme Court in the case of Reliance Industries Limited reported in 410 ITR 466 he submitted that when the interest free funds are more than the investments made, the dividend income of which is exempt from tax, no disallowance of interest expenses can be made. 14. So far as Rule 8 D (2) (iii) is concerned the Ld. Counsel for the assessee drew the attention of the Bench to the dividend received of ₹ 17,54,046/- the details of which are as under :- Sr. No. Particulars Amount (Rs.) 1. Reliance Mutual Funds 17,48,611 2. State Bank of India 3,500 3. Reliance Communication Limited 1,875 4. JSW 60 Total 17,54,046/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee in his rejoinder submitted that the decision in the case of India Bulls Financial Services (supra) was rendered on 29.11.2016 whereas the decision in the case of Punjab Tractors Limited was rendered in the year 2017. However, the decision of Hon ble Apex Court in the case of Maxopp Investment Limited (supra) was pronounced in the year 2018, therefore, the Hon ble Courts had no benefit of the decision of Hon ble Supreme Court and, therefore, the decisions relied on by the Ld. DR cannot be accepted. 20. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has earned dividend income of ₹ 17,54,046/- and made suo-moto disallowance of ₹ 86,351/- u/s. 14 A of the IT Act in the computation of the total income filed alongwith the return of income. We find the AO computed the disallowance u/s. 14A r.w. rule 8 D at ₹ 12,35,075/-. After deducting the suo-moto disallowance of ₹ 86,351/- the AO made addition of ₹ 11,48,724/- to the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty expenses and gratuity expenses at ₹ 2,93,206/- the total administrative expenses comes to ₹ 4,63,894/- against which the assessee has made suo-moto disallowance of ₹ 86,351/- which is approximately 18.61% of the administrative expenses. However, without recording any satisfaction the AO has made the disallowance u/s. 14 A read with Rule 8 D of the IT Rules 1962 which in our opinion is not justified. 23. The Hon ble Supreme Court in the case of Maxopp Investment Limited (supra) has held that when suomoto disallowance are shown by the assessee, without recording the satisfaction as to why the working shown by the assessee is not acceptable, disallowance cannot be made. The relevant observation of the Hon ble Supreme Court at para 41 of the order reads as under :- 41) Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo-moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grounds raised by the assessee are as under :- 1. That order of lower authority is bad in law and is against the facts and circumstances of the case and total addition and tax on LTCG is unsustainable. 2. That Ld. CIT(A) erred in sustaining the disallowance of ₹ 13,80,676/- made u/s. 14A, without appreciating the fact that the same is without complying with the mandatory conditions of said provision, (a) Without recording satisfaction about incurring of expenditure relating to exempt income with regard to accounts. (b) Without even considering the disallowance made by assessee and demonstrating same as wrong etc. 3. That Ld. CIT(A) further erred in not considering the fact that assessee is having more interest free funds than the investment under dividend bearing securities. 4. That Ld. CIT(A) grossly erred in not even addressing the issue of wrongly taxing LTCG ₹ 63,61,718/- on STT paid shares which is exempt u/s. 10 (38) of the Act. 2. After hearing both the sides we find ground of appeal No. 2 and 3 by the assessee are identical to ground appeal No. 2 and 3 in ITA No. 8202/Del/2018. We have already decided the issue and grounds rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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