The Tribunal  held that The Assessing Officer was required to record his categorical dissatisfaction with the working of the disallowance given by the assessee and state that the working was not correct. The Assessing Officer had invoked the provisions contained under section 14A read with rule 8D on the basis of general principles, inter alia, that the earning of exempt income was not in the nature of passive activity having no input and that the assessee’s claim that he had not incurred any expenditure to earn dividend income was not acceptable .When the Assessing Officer had failed to comply with the mandatory requirement of section 14A(2) read with rule 8D(2)(ia) to record his satisfaction, the question of applying rule 8D(2)(iii) did not arise. Thus, the disallowance made by the Assessing Officer and confirmed by the Commissioner (Appeals) was not sustainable. As regards  claim under section 80IA of the Act , the issue was remanded to the Assessing Officer with a direction to verify the claim of the assessee by examination of the audited accounts of the industrial undertaking and then grant deduction under section 80IA in accordance with the law.( AY.2012-13)