Invocation of rule 8D impermissible without recording non-satisfaction in terms of section 14A(2)

HDFC Bank Limited Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that in absence of recording of non-satisfaction in terms of section 14A(2) of the Income Tax Act, invocation of Rule 8D is not permissible. Accordingly, disallowance u/s. 14A read with Rule 8D cannot be sustained.

Facts- The assessee claimed an exempt income of Rs. 612,36,54,955/-while it had made disallowance under Section 14A of the Act as per its Accountant’s report amounting to Rs. 70,18,504/-. The assessee contended that when the securities were held as stock-in-trade, no disallowance u/s 14A

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