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TMI Blog2023 (1) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts of the assessee if he is not satisfied with the claim of the assessee in respect of expenditure in relation to income which does not form part of total income. On reading of the assessment order, we find that the AO having regard to the suo moto disallowance made by the assessee has not recorded any objective satisfaction as to why the allocation of indirect expenses made by the assessee is not sufficient to meet the expenses attributable for earning exempt dividend income. Thus, AO has not recorded any objective satisfaction in not accepting suo moto disallowance made by the assessee. Thus, we direct the AO to accept the suo moto disallowance made by the Assessing Officer in respect of disallowance under Rule 8D(2)(iii) read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant in respect of such expenditure in relation to income which does not form part of the total income under this Act and such 'non-satisfaction' must be objective. Thus, to invoke Rule 8D the AO should provide a justifiable reason for not being satisfied with the claim of the Appellant that no expenditure has been incurred for earning tax-free income, which in the Appellant's case is absent 3. The Appellant humbly prays that the aforesaid disallowance of Rs. 54,98,682/- be deleted. 4. WITHOUT PREJUDICE TO GROUND NO I. GROUND II: The Appellant humbly prays that the Ld. AO be directed to compute disallowance u/s. 14A of the Act r.w.r. 8D of the Rules considering only those investments which actually yielded exempt income dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on its own accepted that expense of Rs. 17,57,748/- had been incurred directly in relation to investments yielding exempt income under rule 8D (2)(i) Income Tax Rules, 1962. The AO further noted that he was not satisfied with the disallowance calculated by the assessee under rule 8D(2) (ii) Income Tax Rules, 1962. The AO noted as under: Further, in relation to exempt income, it is observed that the investment decisions are important decisions in the general taken by the top management. Income resulting from investment, as well as investments themselves, is to be properly accounted for in the assessee's books of accounts. All these activities require allotment of the assessee's employees and use of assessee's official machinery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is year also. Hence, he submitted that the assessee deserves to succeed on this count itself. Without prejudice to the above submission, the ld. Counsel for the assessee has raised the ground that the Ld. AO be directed to compute disallowance u/s. 14A of the Act r.w.r. 8D of the Rules considering only those investments which has actually earned exempt income then also the assessee to succeed. 7. Per contra, the Ld. DR submitted that the AO has duly recorded the satisfaction and he relied upon the orders of the authorities below. Upon careful consideration, we note that in identical case this ITAT in assessee s own case for AY 2015-16 in ITA No. 3449/Del/2019 (Supra) has held as under:- 9. On perusal of the assessment order we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idend income. 10. In the case of Maxopp Investment Ltd. Vs. CIT [2018 402 ITR 640 the Hon ble Supreme Court held 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 AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO 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, nature of loan taken by the assessee for purchasing the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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