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TMI Blog2022 (4) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... s own funds and it was accepted by the CIT(A) resulted into deletion of disallowance under Rule 8D(2)(ii) - CIT(A) also held that the assessee failed to point out any error in respect of disallowance under Rule 8D(2)(iii) of the Rules, if that is so, a ground raising challenging the action of AO for non-recording of satisfaction concerning the accounts before us, is untenable. Therefore, we reject the arguments of ld. AR in respect of contentions raised in ground Nos. 1 to 4. Thus, ground Nos. 1 to 4 raised by the assessee are dismissed. Disallowance in respect of those investments which yielded exempt income - HELD THAT:- It is a settled principle to restrict the disallowance to the investment earned dividend income and this Tribunal has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee also given details of investments as standing on the date of Balance sheet and year prior to, which is reproduced by the AO in Para No. 4 of the assessment order. Having stating so, the assessee also submitted working of disallowance before the AO, basing on which the AO disallowed ₹ 25,71,313/- concerning the Rule 8D(2)(iii) of the Rules. During the First Appellate proceedings before the CIT(A) it was contended that the assessee had interest free funds and the disallowance made under Rule 8D(2)(ii) is not maintainable in terms of decision of Hon'ble High Court of Bombay in the case of CIT Vs. HDFC Bank Ltd. reported in 383 ITR 529 (Bom). The CIT(A) considering the same deleted the disallowance of ₹ 10,97,770/- mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Pvt. Ltd. Vs. DCIT in ITA No. 176/PUN/2016 for A.Y. 2009-10 and argued that the Co-ordinate Bench of this Tribunal held the assessment is bad when there is no recording of satisfaction before invoking the provisions of section 14A of the Act. On perusal of decision of Hon'ble High Court of Bombay in the case of Bajaj Finance Ltd. (supra), we note that the Hon'ble High Court was pleased to hold the order of Tribunal correct in deleting the disallowance on the ground that the AO has not recorded necessary satisfaction for not accepting the disallowance offered by the assessee. In the present case, as discussed above, the AO asked the assessee requested to give a working of disallowance u/s. 14A of the Act and the assessee vide its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternatively, the assessee raised ground No. 5 seeking a direction to restrict the disallowance in respect of those investments which yielded exempt income. It is a settled principle to restrict the disallowance to the investment earned dividend income and this Tribunal has been following in directing the AO to compute the expenditure for the purpose of section 14A in respect of those investments yielded exempt income. Following the same we direct the AO to compute the disallowance taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidences, if any, in this regard. Thus, the ground No. 5 raised by the assessee is allowed. 6. In the result, the appeal of assessee is partly allowed. Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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