Dismissing the appeal of the revenue the Court held that, non-satisfaction with the disallowance offered by the assessee has to be arrived at on the basis of the accounts submitted by the assessee. The AO needs to record his non-satisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise. AO discussing and not accepting is not sufficient . Followed Maxopp Investment Ltd. v CIT (2018) 402 ITR 640 (SC) , Godrej & Boycee Mfg Co Ltd v CIT ( 2018) 328 ITR 81 (Bom) (HC) (ITA No 1017 of 2017 dt 15 -10 -2019 )( AY.2008 -09)
PCIT v. Bombay Stock Exchange Ltd ( 2020) 185 DTR 390 /113 taxmann.com 303 ( Bom) (HC) Editorial : Notice issued in SLP filed by revenue , PCIT v. Bombay Stock Exchange Ltd ( 2021 ) 281 Taxman 365 ( SC)
S. 14A : Disallowance of expenditure – Exempt income – Recording of satisfaction – AO needs to record his non-satisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise- AO discussing and not accepting is not sufficient -Order of Tribunal is affirmed . [S.14A(2) , R.8D ]