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TMI Blog2023 (6) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment under Section 143(3) read with Section 153A was completed on 28th March 2013 by determining assessee's income at Rs. 317,47,69,698/- and taxable income under Section 115JB of the Act was assessed at Rs. 726,11,02,264/-. Additions were made on account of disallowance of claim of assessee on capitalization of expenses of Rs. 68,15,702/- incurred during the year towards one M/s Gremach Infrastructure Equipments And Projects Ltd. Further disallowance of Rs. 59,34,74,860/- under Section 14A of the Act read with Rule 8(d) of Income Tax Rules 1962 (the said Rules) was made as against a disallowance of Rs. 13,59,67,318/- made by the assessee in the return of income under normal provisions of the Act and disallowance under Section 14A of the Act read with Rule 8(d) of the said Rules amounting to Rs. 59,34,74,860/- was made while computing under Section 115JB of the Act. 2. Aggrieved by the order of the Assessing Officer, assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT (A)]. By an order dated 24th December 2014 CIT(A) partly allowed assessee's appeal. Aggrieved by the order of CIT(A) revenue filed an appeal before the ITAT. The ITAT dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. Rule 8D of the said Rules that was inserted w.e.f. 24th March 2008 by the Income Tax (5th Amendment Rules) 2008, reads as under: "8D.-(1) Where the Assessing Officer, having regard to the accounts of the assesse of a previous year, is not satisfied with- (a) the correctness of the claim of expenditure made by the assessee; or (b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that the Assessing Officer had not recorded the necessary satisfaction for not accepting the disallowance offered by the assessee. As is well the amount of expenditure incurred in relation to income which is examined for tax if he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. The satisfaction of the Assessing Officer about the correctness of the expenditure offered for disallowance by the assessee therefore is a pre-condition. In the present case, we have perused the order of assessment in which the Assessing Officer had called assessee to justify the limited disallowances voluntarily offered. The assessee made detailed representation upon the inter alia pointed out that the assessee had not made any expenditure in the nature of administrative expenses. However, to avoid proceedings, a suo motu disallowance was made. The Assessing Officer did not in any manner reject this explanation of the assessee but merely proceeded to make disallowance by invoking Section 14A and applied Rule 8D which the Tribunal correctly reversed." Paragraph 9 of Bombay Stock Exchange (Supra) reads as under: "9. We note that it is evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO u/s 14A r.w Rule 8D. Consequently we hold that, the interest expenditure cannot be disallowed u/s 14A r.w. Rule 8D(2)(ii) under any circumstances." 10. Now let us examine the assessment order to see whether this mandatory conclusion that the Assessing Officer is not satisfied with the disallowance made by the assessee, has been arrived at. The only place where the Assessing Officer has come to his findings is at paragraph 5.2 of the assessment order, which reads as under: 5.2. The said submission has been considered. In the assessment order passed u/s 143(3) dated 20.10.2010, the AO has worked out the disallowance u/s 14A as per Rule 8D at Rs. 29,66,81,836/-. The assessee has also furnished working u/r 8D (though under protest) which amounts to Rs. 44,03,33,135/-. Rule 8D is to be applied in the present case based on the various discussions and findings of the AO in the original assessment order passed. However, since the amount worked out by the assessee is higher, the same has been considered for disallowance. 11. The Assessing Officer has not expressed his satisfaction in the way it should have been. The Assessing Officer does not say he is not satisfied and why he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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