No specific format is provided U/s. 14A for recording satisfaction

The assessing officer while embarking upon calculating expenditure on the exempt income in terms of the provision of section 14A have only mentioned his satisfaction, in literally manner , however has not given the detailed reasons and has merely mentioned that he is not satisfied with the explanation offered by the assessee. In our view, it is the duty of the assessing officer to record the satisfaction for not satisfied with the explanation given by the assessee with respect to not incurring any expenditure by the assessee in respect of the extent income. In the present case, the assessing officer has merely mentioned that he is not satisfied with the explanation, therefore, in our view, the assessing officer has recorded the satisfaction for the ‘compilation of Rule 8D. No specific format is provided under the act for recording the satisfaction. Assessee has failed to discharge his primary onus of proving nexus of interest free funds available at the time of making the investment that has yielded the interest free income, in our view, in the absence of discharge of initial onus the burden is not shifted to assessing officer to establish nexus between the interest bearing funds and the investment made by the assessee. As the assessing officer has recorded his dissatisfaction regarding the correctness of the claim of the assessee in respect of expenditure (Nil) which the assessee claimed to have been incurred in relation to the income which does not form part of the total income. After recording dissatisfaction, the assessing officer is left with no other option but to adopt the methodology provided in Rule 8D row with section 14A(2) of the Act. In the present case, the assessing officer has only applied 0.5% of the total income as expenditure. In our view, the assessing officer has rightly applied the Rule 8D and no error has been pointed out by the learned Authorized Representative on working out of the expenditure by applying the Rule 8D. In our view, the assessing officer has worked out the expenses after due application of the methodology, therefore, the ground raised by the assessee is required to be rejected.

Full Text of the ITAT Order is as follows:-

ORDER

Laliet Kumar, JM

These appeals by the assessee are directed against the order passed by the Commissioner (Appeals)-IV, Bangalore dated 2-4-2013 for the assessment year 2008-09.

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