9911796707
TMI Blog2021 (9) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year 2015-2016. 2. The assessee has raised the following grounds of appeal: The Appellant company object to the order U/s 250 dated 21.06.2019 passed by Hon Commissioner of Income tax (Appeals)-2, Baroda on following amongst other grounds of appeal. (1) (a) That the Hon C IT (APPEALS) has erred in confirming the applicability of section 14A r w rule 8D in the appellants' case. (b) That the Hon C IT (Appeals) failed to appreciate the fact that determination of disallowance u/s 14A r w rule 8D can only be undertaken if the Assessing Officer is not satisfied with the correctness of the appellants' claim in respect of such expenditure and that the rejection of such claim has to be for disclosed cogent reasons. (c) That on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpted u/s 10(34) of the Act. The assessee against such income has made the disallowance of Rs. 5,29,512.00 under the provision of section 14A of the Act. However, the AO during the assessment proceedings found that the disallowance has not been made by the assessee in pursuance of Rule 8D of the Income-Tax Rules. Accordingly, the AO invoked the same and worked out disallowance as under: Sr.No. Particulars Amount 1. Direct Expenditure 167718 2. Interest Expenses Nil 3. Administrative Expenses 1154191 4.1 In view of the above, the AO made the disallowance of Rs. 7,92,784/- (13,21,909.00-5,29,125.00) after adjusting the amount already disallowed by the assessee. 5. Aggrieved assessee preferred an appeal to the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of expenses against the exempted income before resorting to the provisions of Section 14A r.w.r. 8D of Income Tax Rule. In this connection we note that, the AO has clearly recorded in his order that he was not satisfied with the basis adopted by the assessee for making the disallowance under the provisions of Section 14A read with Rule 8D as the same was based on the estimation i.e. 0.5% of the dividend income. In our considered view, the primary onus lies upon the assessee to justify the stand taken based on the material facts or the provisions of law. Assessee has nowhere made any rational submission for adopting the disallowance on estimation basis. Thus, in absence of any material by the assessee, we reject the basis adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income by making a lump sum disallowance, which was debited in the profit and loss account." 19. We also note that, the ITAT in the own case of the assessee involving identical facts and circumstances has confirmed the disallowance made by the authorities below in ITA No. 2785/AHD/2012 vide order dated 21-06-2013. The relevant extract is reproduced as under: "6. We find that it is held by the Tribunal in the case cited by the learned AR and as per the provisions of sub-section 2 of section 14A also, it is required that AO must record that he is not satisfied with the correctness of the claim of the assessee in respect of the expenditure incurred by the assessee in earning exempt income. In the present case, the AO has given a clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the AO that the working of disallowance made by the assessee is not correct. 8. In a situation where the AO has recorded his satisfaction that the working of the assessee regarding expenditure incurred for earning exempt income is not correct, then the same has to be worked out as per Rule 8D of the IT Rules and the AO has worked out the disallowance on the basis of Rule 8D only. We, therefore, do not find any reason to interfere in the order of the learned CIT(A). 9. In the result, the appeal of the assessee is dismissed." 20. It is also important to note that the Ld. AR at the time of hearing cited various orders/judgments as mentioned above, but in our considered view these are distinguishable from the present facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew the principles of consistency should be followed by the Revenue. Accordingly, we direct the authorities below to extend the benefit of the assessee on account of diminution in the value of investments while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules. 23. In view of the above and after considering the facts in totality, the ground of appeal of the assessee is partly allowed. 9.1 The fact of the present case are identical to the fact of the case as discussed above. Before us, no material has been placed on record by the Revenue to demonstrate whether the above decision of Tribunal has been set aside / stayed or overruled by the Higher Judicial Authorities. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
