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TMI Blog2021 (12) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding depreciation allowance for disallowance u/s 14A of the Act. In view of our finding that the learned assessing officer has failed to record any satisfaction about the correctness of the claim of the assessee, orders of lower authorities are reversed. Therefore, we direct the learned assessing officer to delete the disallowance made under section 14A of the Act. Accordingly, we reverse the order of the lower authorities and allow the appeal of the assessee. - I.T.A. No.861 /Mum/2021 - - - Dated:- 23-12-2021 - Ms Suchitra Raghunath Kamblc (JM) And Shri Prashant Maharishi (AM) Assessee by : Shri Anuj Kisnadwala Department by : Smt. Surabhi Sharma (CIT DR) ORDER Per Prashant Maharishi (AM) : 01 This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is individual set of books maintained on consolidated basis and, therefore, there is no question of making any disallowance under section 14A of the Act. The learned assessing officer considered the explanation of the assessee and worked out disallowance for the reason that assessee has earned tax free income out of investments made in partnership firms as well as dividend income. He rejected the contentions of the assessee that all expenditure has been incurred for business only and separate books of account are maintained. Accordingly, he determined the annual average of monthly averages as per sub rule (2) of rule 8D as amended with effect from 01/06/2016 and worked out disallowance of ₹ 3,55,95,857/- but restricted it to total exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is incorrect, proceeded to quantify the disallowance under rule 8D(2) of the Income-tax Rules. He submitted that the recording of satisfaction about the correctness of the claim of the assessee is mandatory before jumping into quantify the disallowance under rule 8D (2). He, even otherwise submitted that the average value of investment should also be considered by only taking the amount of investments from which tax free income is earned. He submitted that the learned assessing officer has incorrectly worked out the average value after considering all the investments whether exempt income is earned from it during the year or not? He, therefore, submitted that the disallowance worked out by the learned assessing officer is incorrect. He fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessee has produced before us the audited accounts which show that assessee has incurred total expenditure as per its profit loss account of ₹ 2,97,99,176/- out of which ₹ 30,20,194/- is a depreciation allowance. A sum of ₹ 2,04,93,391/- is repairs and maintenance expenditure of the windmill. Accordingly, out of the above expenditure of ₹ 2,97,99,176/- only expenditure of ₹ 62,85,591/- could have been considered for the disallowance under section 14A r.w.r. 8D(2). Therefore, the finding of the learned assessing officer that assessee has incurred huge expenditure and, therefore, he made the disallowance of ₹ 2,97,99,176/- is devoid of merit. This shows that the learned assessing officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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