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TMI Blog2022 (8) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(2)(iii) read with section 14A of the Act. Disallowance u/s 14A while computing book profits u/s 115JB - We observe that the issue in appeal is decided by the Special Bench of the Delhi Tribunal in the case of ACIT Vas. Vireet Investment (P.) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] where in held that the computation under clause (f) of Explanation (1) to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of Income Tax Rules, 1962. X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfaction recorded by the Assessing Officer in not accepting the suo moto disallowance made by the assessee. The ld. Counsel for the assessee further referring to page 10 of the Paper Book submits that the assessee has obtained accountant's report on expenses relating to exempt income wherein a detailed working was made by the accountant on the involvement of the employees of the assessee organization in decision making and implementation in respect of investments made by the assessee. Referring to page No. 16 para 6.3 of the report of the accountant, the ld. Counsel for the assessee submits that the assessee has identified the expenses that are directly incurred in relation to investments by way of cost on the personnel of FEAD of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that CIT (Appeals) sustained the action of the Assessing Officer for computing the disallowance at 0.5% of the average investments observing that if time and energy of employees including middle and top management invested is not ascertainable other than the only method left before the Assessing Officer to compute the disallowance is under Rule 8D(2)(iii). 6. On the other hand, the ld. DR strongly placed reliance on the order of the ld. CIT (Appeals). 7. Heard rival submissions perused the orders of the authorities below and the record placed before us. The Assessing Officer while completing the assessment invoking the provisions of Rule 8D computed the disallowance under section 14A of the Act at Rs. 67,14,698/- comprising of direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as under:- "Statement Showing allocation of Indirect Expenses (other than interest and emoluments) attributable towards section 14A 9. On perusal of the assessment order we find that the Assessing Officer did not accept indirect expenses allocated by the assessee stating that he is not satisfaction with the part expenses and also observed that the investment activities require involvement of assessee's employees and use of assessee's official machinery the Assessing Officer has not pointed out why the suo moto disallowance made by the assessee is inadequate to cover the expenses attributable for earning exempt income. We observe that the ld. CIT (Appeals) holds that the working submitted by the assessee is general and not specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the AO." 11. Ratio of the decision is applicable to the facts of the case. Following the said decision, we hold that the Assessing Officer has not recorded any objective satisfaction in not accepting suo moto disallowance made by the assessee. Thus, we direct the Assessing Officer to accept the suo moto disallowance made by the Assessing Officer in respect of disallowance under Rule 8D(2)(iii) read with section 14A of the Act. 12. Coming to ground No. 3 of grounds of appeal regarding d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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