Dy. CIT (LTU) v. EXL Service.Com (India) Pvt. Ltd. (2020) 83 ITR 11 (SN) (Delhi)(Trib.)

S. 14A : Disallowance of expenditure-Exempt income-No satisfaction recorded- Disallowance not sustainable. [R. 8D(2)(ii)]

Tribunal held that the Assessing Officer had failed to record any satisfaction with regard to the correctness of the claim of the assessee that it had not incurred any expenditure. The Assessing Officer did not cite any of the expenditure in the profit and loss account of the assessee, which was incurred by the assessee for earning of the exempt income. The satisfaction of the Assessing Officer as provided under sub-section (2) of section 14A is a preliminary requirement for invoking the provisions of rule 8D for making a disallowance under section 14A. Therefore, in the absence of any satisfaction recorded by the Assessing Officer with respect to the examination of the books of account of the assessee to verify the correctness of the claim of the assessee, the disallowance under section 14A could not be sustained. Accordingly the Assessing Officer was to delete the disallowance of Rs. 1,252,630 made under section 14A. Followed ACIT v. Vireet Investment P. Ltd. [2017 58 ITR (Trib) 313 (Delhi) (SB) (Delhi )(Trib.), (AY. 2011-12)

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