In absence of Reasons for invoking rule 8D Disallowance U/s. 14A not valid

Pr. CIT Vs Moonstar Securities Trading & Finance Co. (P) Ltd. (Delhi High Court)

In this case for both years, the assessee had offered amounts as disallowance claiming them to be expenditure for tax exempt income. The assessing officer merely proceeded to reject such amount as expenditure and straightaway applied rule 8D without adducing any reasons.

High Court held that Unless the assessing officer rejected the explanation or the rationale which induced the assessee to offer particular amount as expenditure with

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