Satisfaction of AO before invoking section 14A must for disallowance

Nine Dot Nine Mediaworx (P) Ltd. Vs ITO (ITAT Delhi)

Once assessee had submitted that no expenditure incurred for earning dividend income, the AO was under legal obligation to demonstrate as to how he was not satisfied with the contention of assessee and only, thereafter, he could have proceeded to make a disallowance. As was evident from the assessment order, satisfaction of AO before invoking section 14A read with rule 8D was missing, therefore, disallowance could not be sustained.

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