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TMI Blog2022 (4) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... s were made as a matter of Commercial Expediency and not with intention of earning exempt income. 4) The CIT(A) erred in not appreciating the fact that investments made during the year and in the earlier year were out of own funds and therefore disallowance under Rule 8D(2)(ii) is not attracted. 5) The CIT(A) erred in not appreciating the fact that the AO has applied Rule 8D without recording having regard to the accounts of the assessee as to why he was not satisfied with the correctness of the amount disallowed by the appellant of Rs. 4,900 u/s 14A. In this connection the appellant relies on the following decisions: 1. CIT Vs Taikisha Engineering India Ltd (229 Taxman 143) Delhi HC. 2. CIT Vs I P Support Services India P Ltd ( 378 ITR 240).Delhi HC 6) Without prejudice to the above grounds, the following grounds are raised: i) The CIT(A) erred in overlooking the following decisions wherein it has been held that investments from which no exempt income was received have to be excluded for the purpose of computation of disallowance u/s.14A Rule 8D. a) ITAT Chennai "C" Bench decision in the case of Shriram Ownership Trust in I.T.A. No.406 & 407/Mds/2017 dated 05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials available on record and gone through the orders of authorities below. In this case, the assessee is a non-banking finance company and has investments of Rs. 14,64,94,400/-. The assessee has received a dividend income of Rs. 29,98,544/- and has suo motu disallowed expenses to the tune of Rs. 4,900/- under section 14A as expenses pertaining to the exempt income. However, the Assessing Officer disallowed an additional amount of Rs. 75,16,020/-. However, while making additional disallowance under section 14A of the Act, the Assessing Officer has not recorded any satisfaction as to how the claim of the assessee was incorrect and had resorted to the provisions under section 14A r.w. Rule 8D. 6. Similar issue on identical facts was subject matter in appeal before the Tribunal in the case of Shriram Capital Limited v. DCIT in I.T.A. Nos. 3168 & 3255/Chny/2018 for the assessment years 2012-13 & 14-15 vide order dated 18.02.2022, wherein, by following Tribunal's order in that assessee's own case in which, the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra) has been followed, the Tribunal has observed and held as under: 5. We have heard both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no findings by the Assessing Officer as to the correctness or otherwise of the claim of the assessee that only an expenditure of Rs. 73,602/- was incurred. In this absences of any findings by the Assessing Officer, resort to provisions of Section 14A of the Act cannot be made as ruled by Hon'ble Bombay High Court in the case of Reliance Capital Asset Management Ltd (supra) and the SLP against this judgment was dismissed by Hon'ble Supreme Court in 259 Taxman 83. The Hon'ble Supreme Court in the case of Maxopp Investment Ltd (supra) has upheld this principle by holding as under:- "41. Having regard to the language of section 14A(2) of the Act, read with rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the Assessing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee per se cannot be accepted. This decision of Delhi High Court in the case of Moonstar Securities Trading and Finance Co. (P) Ltd, was affirmed by the Hon'ble Supreme Court in the case of dismissal of SLP in PCIT vs. Moonstar Securities Trading and Finance Co. (P) Ltd, 105 taxmann.com 274''. In the light of the above decisions, admittedly, in the present case, the Assessing Officer had not recorded any findings as to the correctness or otherwise of the claim of assessee company that only expenditure of Rs. 73,602/- was incurred to earn exempt income. Therefore, the Assessing Officer was not justified in resort to provisions u/s.14A of the Act. Accordingly, no disallowance can be made u/s.14A of the Act. 08. It is unnecessary for us to deal with other arguments made by the assessee since we had held that no resort can be made to provisions of Section 14A of the Act. 09. In the result, the appeal filed by the assessee stands allowed." 6. Admittedly, in the present case also, against the voluntary disallowance made under section 14A of the Act by the assessee, the Assessing Officer has not recorded any satisfaction as to how the disallowance voluntari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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