{"id":3797,"date":"2011-10-12T23:22:33","date_gmt":"2011-10-12T17:52:33","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=3797"},"modified":"2011-10-12T23:22:33","modified_gmt":"2011-10-12T17:52:33","slug":"dcit-vs-jindal-photo-limited-itat-delhi-ao-cannot-apply-rule-8d-without-showing-how-assessee-method-is-incorrect","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/dcit-vs-jindal-photo-limited-itat-delhi-ao-cannot-apply-rule-8d-without-showing-how-assessee-method-is-incorrect\/","title":{"rendered":"DCIT vs. Jindal Photo Limited (ITAT Delhi)"},"content":{"rendered":"\n\n
Click here to download the judgement (Jindal_14A_Rule_8D_AY_08_09.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nAO cannot apply Rule 8D without showing how assessee’s method is incorrect
\n<\/strong><\/p>\n

For AY 2008-09, the AO made a disallowance of Rs. 31 lakhs u\/s 14A by applying Rule 8D without recording any satisfaction as to how the assessee’s calculation of s. 14A disallowance was incorrect<\/em>. In appeal, the CIT (A) upheld the applicability of Rule 8D though he reduced the disallowance to Rs. 19 Lakhs. The department filed an appeal while the assessee filed a C.O. HELD by the Tribunal:<\/p>\n

It is a pre-requisite that before invoking Rule 8D, the AO must record his satisfaction on how the assessee\u2019s calculation is incorrect<\/strong>. The AO cannot apply Rule 8D without pointing out any inaccuracy in the method of apportionment or allocation of expenses<\/em><\/strong>. Further, the onus is on the AO<\/strong> to show that expenditure has been incurred by the assessee for earning tax-free income. Without discharging the onus, the AO is not entitled to make an ad hoc disallowance<\/strong>. A clear finding of incurring of expenditure is necessary. No disallowance can be made on the basis of presumptions<\/em><\/strong> (law laid down in assessee’s own case for AY 2007-08 reiterated<\/a><\/em>) <\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

It is a pre-requisite that before invoking Rule 8D, the AO must record his satisfaction on how the assessee\u2019s calculation is incorrect<\/strong>. The AO cannot apply Rule 8D without pointing out any inaccuracy in the method of apportionment or allocation of expenses<\/em><\/strong>. Further, the onus is on the AO<\/strong> to show that expenditure has been incurred by the assessee for earning tax-free income. Without discharging the onus, the AO is not entitled to make an ad hoc disallowance<\/strong>. A clear finding of incurring of expenditure is necessary. No disallowance can be made on the basis of presumptions<\/em><\/strong> (law laid down in assessee’s own case for AY 2007-08 reiterated<\/a><\/em>)<\/p>\n

Read more ›<\/a><\/div>\n

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