The AO held that the assessee received dividend income and sought explanation.  The assessee explained that it had already disallowed an amount under S. 14A.  He was not satisfied with the explanation holding that the disallowance under S.   14A had to be mandatorily made under rule 8D.  Accordingly, he disallowed the amount and made an addition.  The CIT(A) deleted the addition.  On appeal the Tribunal held  that a duty was cast upon the AO to examine the claim of the assessee having regard to the accounts and only where the Assessing Officer was not satisfied, which should be on cogent grounds, with the claim of the assessee, could the AO follow the prescribed procedure under rule 8D.  Since the AO did not record any satisfaction regarding the claim of the assessee having regard to its accounts, he was not empowered to invoke rule 8D in the first place.  Accordingly, the action of the AO of making disallowance thereunder was not justified.  On the facts, the assessee had given details of interest expenses, none of which had any nexus with the dividend income.  Accordingly, no disallowance under rule 8D(2)(ii) was called for.  Evidently, the assessee had already made disallowance under sub-clauses (i) and (iii) of rule 8D(2).  Therefore, no further disallowance was called for under S.  14A.   (AY.  2006-07 2009-10, 2010-11, 2011-12).