No satisfaction, no disallowance—ITAT slams mechanical application of Rule 8D

Manipal Group Entities Vs ACIT (ITAT Bangalore) The main Issue involved in the appeals is the  Disallowance u/s 14A read with Rule 8D for expenditure allegedly incurred in relation to exempt income (primarily dividend income). AOs in each case invoked Rule 8D without recording proper satisfaction about the correctness of  Assessees claim that no (or minimal) expenditure was incurred for earning exempt income.  AO proceeded to apply Rule 8D mechanically, based on general statements like common pool of funds, expenses such as salaries/rent, & so on. Tribunal relied on certain  legal prec...