The Tribunal held that the AO had not raised any query with the regard to disallowance under S.14A in the entire assessment proceedings. It is the duty of the AO to record satisfaction in terms of S.14A(2) read with Rule 8D(1) of the Rules, before proceeding to make disallowance as per Rule 8D(2) of the Rules. It is the duty of the AO first to disturb the stand of the assessee of not making any disallowance under S. 14A by recording proper satisfaction having regard to the accounts of the assessee in terms of S. 14A (2) of the Act read with Rule 8D(1) of the Rules which was not present in the present case and hence deleted the disallowance made under S. 14A (ITA No. 2212/Kol/2014 dt. 10-01-2018) (AY. 2010-11)
IMC Ltd. v. Dy. CIT (2018) 191 TTJ 73 (Kol.)(Trib.)
S. 14A : Disallowance of expenditure – Exempt income – The AO has to first record satisfaction having regard to accounts of the assessee that the claim made by the assessee with regard to non-incurrence of any expenditure for the purpose of earning income is incorrect before proceeding to make any disallowance. [ R.8D ]