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आयकर अपीलीय अधिकरण, चण्डीगढ़ न्यायपीठ “B”, चण्डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “बी”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE श्री ललित कुमार, न्यायिक सदस्य एवं श्री कृणवन्त सहाय, लेखा सदस्य BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM आयकर अपील सं. / ITA No. 79 /Chd/2024 निर्धारण वर्ष / Assessment Year : 2018-19
Vardhman Special Steels Ltd. Vardhman Premises, Chandigarh Road, Ludhiana, Punjab-141010 स्थायी लेखा सं./ PAN NO: AADCV4812B अपीलार्थी/Appellant
बनाम The DCIT Cirlce-1, Ludhiana
प्रत्यर्थी / Respondent
निर्धारिती की ओर से/Assessee by : Shri Tejmohan Singh, Advocate राजस्व की ओर से / Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR
सुनवाई की तारीख/Date of Hearing : 06/03/2025 उदघोषणा की तारीख / Date of Pronouncement : 20/05/2025
आदेश/Order
PER KRINWANT SAHAY, A.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC Delhi dt. 29/11/2023 pertaining to Assessment Year 2018-
In the present appeal Assessee has raised the following grounds:
That the Order passed by the National Faceless Appeal Centre / Ld. CIT(A) is contrary to law and also have been passed without appreciation of facts of the case.
That the National Faceless Appeal Centre / Ld. CIT(A) erred in law and on facts in upholding the disallowance of Rs.1,78,870/- (though restricted to Rs.1,78,314/- after allowing credit of suo-moto disallowance of Rs.556/-) under Section 14A of The Income Tax Act, 1961 read with Rule 8D ignoring the contention of the assessee.
That the National Faceless Appeal Centre/Ld. CIT(A) erred in law and on facts in importing the disallowance made u/s 14A into the scheme of calculation of book profits as per Section 115JB of the Act.
That the National Faceless Appeal Centre /Ld. CIT(A) has erred in law and on facts while upholding the disallowance of interest expenditure on notional basis amounting to Rs.8,16,010/- on investments under the provisions of Section 36(1) (iii) of The Act.
Without pre-judice to ground no.4, the National Faceless Appeal Centre /Ld. CIT(A) has erred in not allowing the above mentioned interest expenditure under Section 57 of The Act and setting off the same against income from other sources.
That the appellant craves leave to add/alter/amend any ground of appeal on or before the due date of hearing of appeal.
Briefly the facts of the case are that Vardhman Special Steels Limited, a public limited company engaged in manufacturing and exporting steel billets, rolled bars, and rods, filed its original income tax return for the A.Y. 2018-19 on 09/10/2018, declaring a total income of "Nil," a long-term capital loss of Rs.29,69,207/-, and exempt income of Rs.1,41,656/-. A revised return was filed on 30/03/ 2019, maintaining the total income as "Nil," with a reduced long-term capital loss of Rs. 26,69,207/- and exempt income of Rs.1,42,194. Taxes of Rs.5,78,97,933/- were paid on book profits of Rs.27,12,91,436/- under the MAT provisions in both returns. The case was selected for complete scrutiny under the E-assessment Scheme, 2019, focusing on issues such as claims under Schedule BP, investments/advances/loans, ICDS compliance, and investment in immovable property. Notices under Section 143(2) were issued by the National e-Assessment Centre (NeAC) on 22/09/2019, and the case was later transferred to the Regional e-Assessment Centre (ReAC) on 15/10/2020, for faceless assessment. Further notices under Section 142(1) were issued on 27/01/2020, 24/12/2020, and 22/02/2021, to which the assessee responded with the required details.
1 Regarding disallowance under Section 14A read with Rule 8D, the AO noted that the assessee had investments of Rs.8,14,98,234, potentially yielding exempt income. The assessee disallowed Rs.556 under Section 14A, attributing it to expenses paid to PMS proportionate to the dividend income of Rs.1,42,194. However, the AO did not accept the assessee's explanation. He referred to Rule 8D changed from 02.06.2016 and a CBDT circular from 2014, which say that expenses must be disallowed if investments could give tax-free income, even if no such income was actually received. The AO calculated the disallowed amount as 1% of the average value of these investments amounting to Rs.1,78,86,781.75, which came to Rs.1,78,870/-. Since the assessee had already disallowed Rs.556/-, the remaining Rs.1,78,314/- was added back to the taxable income. The AO also started penalty proceedings under Section 270A for under-reporting income.
2 The AO disallowed interest under Section 36(1)(iii), stating that the assessee's investment of Rs.8,14,98,234/- in shares and mutual funds was not for business purposes, as the company's main business was steel manufacturing. Although the assessee claimed it used its own funds and cited various decisions to support this, the AO argued that it was unclear whether borrowed or own funds were used. The AO referred to a Supreme Court decision and said that interest can only be claimed as a deduction if the borrowed money is used for business. Since that wasn't clearly shown, the AO disallowed Rs.8,16,010/- calculated at 12% for one month and also started penalty proceedings under Section 270A.The AO added this disallowance, along with Rs. 1,78,314/-under Section 14A, to the revised returned income of Rs.14,69,49,564/-, resulting in a total income of Rs.14,79,43,888/-. However, after setting off earlier year losses of Rs.87,88,41,731/-, taxable income became nil. For MAT purposes, book profit was revised to Rs.27,14,69,750/-. The assessment was completed under Section 143(3), and a demand notice was issued.
Against the order of the AO the assessee went in appeal before the Ld. CIT(A) who has since dismissed the appeal of the Assessee.
Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.
During the course of hearing the Ld. Counsel for the Assessee submitted brief submissions which read as under: Ground No. 1 - General in nature Ground No. 2 That the National Faceless Appeal Centre/Ld. CIT(A) erred in law and on facts in upholding the disallowance of Rs.1,78,870/- (though restricted to Rs.1,78,314/- after allowing credit of suo-moto disallowance of Rs.556/-) under Section 14A of The Income Tax Act, 1961 read with Rule 8D ignoring the contention of the assesse.
AO's Action That Ld. AO disallowed a net amount of Rs.1,78,314/- u/s 14A of the Act after deducting suo-moto disallowance of Rs.556/- made by the assesse.
Breakup of Disallowance made by the AO Disallowance u/s 14A r.w Rule 8D(2)(ii) Less – Suo-moto Disallowance by the assesse Balance Disallowance
Rs.1,78,870/- Rs.556/- Rs.1,78,314/-
CIT(A)'s Action - That Ld. CIT(A) / National Faceless Appeal Centre upheld the disallowance made u/s 14A of the Act by simply relying on AO's order.
Assesse's Submission:
Brief Facts:
The assessee during the year under consideration earned dividend income of Rs.1,42,194/- by making investments through PMS (Portfolio Management Service) / AIF(Alternative Investment Fund) only.
Since, the assessee, earned both exempt income and taxable income during the year under consideration through PMS/AIF, accordingly, the assessee had disallowed Rs.556/- u/s 14A by allocating the expense paid to PMS/AIF in the ratio of income received from it. Calculation of disallowance made by assessee is enclosed vide separate Paperbook at page 30. Thus, Out of total PMS/AIF expenses of Rs.1,20,116/-, the assessee allocated Rs.556/- in proportionate manner.
Submissions:
No satisfaction recorded based on cogent reasons before invoking Rule 8D.
- That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had been made directly, it had disallowed expenses of Rs.50,000/- while in relation to those investments made through PMS, it had worked out the proportionate amount of expenses incurred on PMS in the ratio of taxable income to non-taxable income generated by - That the Ld. AO before invoking the provisions of Rule 8D simply quoted that the only method prescribed is as per Rule 8D. There is no attempt on the part of the Ld. AO to give cogent reasons against the methodology adopted by the assesse in making suo-moto disallowance. The AO ignored the fact that the provisions of the Act/Rule provide that before invoking Rule 8D, there must exist reasons for not accepting the assessee's claim. The law nowhere provides that Rule 8D is mandatorily to be applied. He simply proceeds to invoke Rule 8D simply by stating as reproduced hereunder: "3.2 The submissions of the assesse have been considered and found to be unacceptable. The assesse itself has disallowed Rs.556/- in its return of income, therefore provisions of section 14A read with Rule 8D are squarely applicable in the instant case. The provision of Rule 8D as amended and made effective from 02.06.2016 are clear and unambiguous in nature. The said provision lays down a mechanism as to how disallowance is to be made against the income should be calculated. There is no other method prescribed under the tax laws.”
The Ld. AO in compliance of section 14A(2) of the Act was required to evaluate the assessee's claim and only thereafter based on facts of the case & details reasons could have disallowed the said claim. The relevant extract of section 14A(2) is reproduced as under for your reference; "(2) The assessing officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if assessing officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act."
The assesse's aforesaid method of allocation of expenses was also based on and upheld in various judicial pronouncements either in assessee's own case and in case of assesse's associate companies, as quoted hereunder: (a) Judgment of Hon'ble Juri ictional ITAT in ITA No. 1510/2017 AY 2013-14 in assessee's own case i.e in the case of Vardhman Special Steels Limited vs. ACIT, Ludhiana dated 20.12.2018, wherein, the Hon'ble Tribunal held that – “(13)......During assessment proceedings, the assesse had explained the basis for making the impugned disallowance submitting a calculation of the same also. The assesse had explained that it had made certain investments directly while others had been made through Portfolio Mangement Services. In relation to those investments which had