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TMI Blog2022 (1) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... eing with such disallowance, deduction of the expenditure is not to be allowed which has been incurred by the assessee in relation to the income which does not form part of the total income under the Act as per Section 14A(1) of the Act. Such expenditure which has been incurred in respect of other income which has to be treated as part of the total income has to be considered under Section 14A(2) of the Act read with Rule 8D of the Rules, but suo moto disallowance under Section 14A of the Act made by the Assessing Officer is unwarranted. Recording of satisfaction by the Assessing Officer under Rule 8D(2) of the Rules is mandatory. In the light of these provisions, the Assessing Officer invoking Section 154(2) to rectify the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-15 which is under consideration. The assessee s case for the year under consideration was selected for scrutiny assessment and notice under Section 143(2) of the Act was issued by the Assessing Officer and an order was passed under Section 143(3) of the Act accepting the income declared by the assessee, wherein the assessee has computed the administrative expenses amounting to ₹ 3,55,660/- against the exempt dividend income and disallowed the same under Section 14A of the Act. Subsequently, the Assessing Officer initiated rectification proceedings under Section 154 of the Act and passed an order rectifying the assessment order by disallowing ₹ 41,48,681/- under Section 14A of the Act as against ₹ 3,55,660/- disallowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apparent on the face of the record and the same is amenable to the rectification under Section 154 of the Act. The Tribunal ignoring the material aspects of the matter vis- -vis the provisions of Section 14A of the Act and Rule 8D of the Income Tax Rules, 1962 ( Rules for short) reversed the finding of the authorities in allowing the appeal filed by the assessee. 5. Learned counsel for the assessee would submit that the Tribunal has placed on record the judgment of the Hon ble Apex Court in the case of Maxopp Investment Ltd., vs. CIT reported in 402 ITR 640 (SC) in arriving at a decision that the assessing officer was required to follow the mandates laid down under Section 14A(2) of the Act in the light of the books of accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h does not form part of the total income under this Act. 8. Section 154 of the Act reads thus:- Rectification of mistake. 154. [(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to, in section 1 16 may,- (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation or deemed intimation under sub- section (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A; (d) amend any intimation under sub-section (1) of section 206CB; (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in subsection (1), the authority pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessing Officer shall serve on the assessee or the deductor or the collector, as the case may be a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 156 and the provisions of this Act shall apply accordingly. (7) Save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. [(8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and closing balances of the value of investment, income from which does not or shall not form part of total income. Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee. 10. Reading of these provisions would make it clear that the assessee has to make a claim with regard to expenditure incurred for earning income which is not chargeable to tax, which requires to be examined by the Assessing Officer and satisfaction has to be recorded, more particularly, when the Assessing Officer has not agreed with the disallowance claim under Section 14A of the Act. For disagreeing with such disallowance, deduction of the expenditure is not to be allowed which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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