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TMI Blog2021 (1) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... mbarking upon determination of the amount of expenditure incurred in the light of the exempted income, has to record a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. The aforesaid mandatory requirement has not been fulfilled by the Assessing Officer before disallowing the assessee under Section 14A - Decided in favour of assessee. - I.T.A. NO. 318 OF 2016 - - - Dated:- 19-1-2021 - THE HON'BLE MR. JUSTICE ALOK ARADHE And THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY FOR THE APPELLANT : BY MR. V. CHANDRASEKHAR, ADV., WITH MR. S. ANNAMALAI, ADV., FOR MR. M. LAVA, ADV. FOR THE RESPONDENT : BY MR. JEEVAN J. NEERALGI, ADV. JUDGMENT This appeal under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals), who by an order dated 27.02.2013 affirmed the order passed by the Assessing Officer. Thereafter, the assessee filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short). The Tribunal sustained disallowance of ₹ 24,95,846/- made under Section 14A of the Act. However, the appeal preferred by the assessee was partly allowed. In the aforesaid factual background, the assessee has filed this appeal. 3. Learned counsel for the assessee submits that Section 14A of the Act mandates the Assessing Officer to first reject the claim of the assessee regarding the extent of such expenditure an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total income under this Act in accordance with such method as may be prescribed. If the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. Thus, from perusal of the aforesaid provision, it is axiomatic that if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Rules, with effect from asst. year 2008-09 there is a provision for disallowance to the extent of one-half per cent of the average of the value of Investment, income which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. The assets represent Bond Fund/Income Fund, State Govt. Undertaking Bonds and Shares in Co-operative Institutions and the average is worked out as under: Opening Balance ₹ 47,40,36,800 Closing Balance ₹ 52,43,01,677 ₹ 99,83,38,477 ₹ 99,83,38,477 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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