BAJAJ CONSULTANTS PRIVATE LIMITED,MUMBAI V. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 4(1), MUMBAI

ITA 2676/MUM/2025

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Bajaj Consultants Private Limited appealed against the disallowance of expenses related to earning exempt income, which was confirmed by the Commissioner of Income Tax (Appeals). The primary contention was that the disallowance under Section 14A read with Rule 8D was not warranted as the company had already made a suo motu disallowance covering all expenses related to exempt income. The Tribunal examined the validity of the Assessing Officer's dissatisfaction with the company's computation and the application of Rule 8D for calculating the disallowance. The Tribunal found that the Assessing Officer had recorded valid reasons for the disallowance, including the failure to account for indirect infrastructure costs and the use of common overheads for managing both taxable and exempt income streams.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835684 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 18-04-2025
• Other Referred Cases: Maxopp Investment Ltd. v. CIT, Godrej & Boyce Mfg. Co. Ltd. v. DCIT, Daga Capital Management (P) Ltd.
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: SRUSHTI CHAWDA
• Keywords: Depreciation; Capital Gains; Earning of tax free income; Rule 8D
• Section: 144; 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No.2676/MUM/2025 Assessment Year: 2017-18 Bajaj Consultants Private Limited, 24-B, Rajabahadur Compound, Hamam Street, Fort, Mumbai, MUMBAI. Vs. Dy. Commissioner of Income-tax, Central Circle – 4(1), 1916, 19th Floor, Air India Building, Nariman Point, MUMBAI-400021. PAN NO. AAACB 4417 H Appellant Respondent Assessee by : Ms. Srushti Chawda Department by : Shri Leyaqat Ali Aafaqui, Sr. DR. Date of Hearing : 17/12/2025 Date of pronouncement : 09/02/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order, dated 28.03.2025, passed by the Learned Commissioner of Income Tax (Appeals) – 52 Mumbai [in short ‘the Ld. CIT(A)’] for Assessment Year (in short A.Y) 2017 – 18, raising following grounds: Printed from counselvise.com “The following ground 1. On the facts and the circumstances of the appellant c the Ld. Commissioner of Income Tax (Appeals) the disallowance of Rs. Rule 8D without appreciating the fact that the appellant company had m disallowance of Rs.3,60,748/ expenses incurred for earning exempt income in employees involved in earning exempt income and charges paid for the demat account and accordingly no further disallowance was warranted. 2. On the facts and the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.36,15,769/- made by the Assessing Officer u/s 14A read with Rule 8D despite the fact that the appellant has made investments yielding exempt income from its own funds and while ignoring the decision of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi and upheld by the co Bench of Hon'ble Income Tax Appellant Tribunal, Mumbai, in the appellant's own case for the assessment year 2018 circumstances of the case and the legal grounds wherein it was held that the provision of Rule 8D cannot be invoked by the Assessing Officer as it is clear from the record of appellant that no borrowed funds were util by appellant from its own funds to 3. On the facts and the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) Rs.36,15,769/- made by the Assessing ignoring the fact that the expenditure related to earning exempt in Rs.3,60,748/- has been debited separately in the Profit & Loss A/c of the appellant company and separate le earn exempt income and which has been suo moto disallowed by the appellant company. 4. On the facts and the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax Rs.36,15,769/-made by the Assessing Officer u/s 14A read with Rule 8D disregarding the fact that all other expenditure debited to the Profit & Loss A/c of the appellant company are related to the main company and not investment activity. 5. The appellant craves leave to add to, alter, amend, modify and/or delete all or any of the foregoing grounds of appeal. The appellant prays before the Hon'ble Tribunal to delete made by the Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeals) or any other relief as the Hon'ble Tribunal may deem fit. Bajaj Consultants Private Limited, ITA No The following grounds of appeal are without prejudice to one another: 1. On the facts and the circumstances of the appellant company's case and in law, d. Commissioner of Income Tax (Appeals) - 52, Mumbai has erred in co the disallowance of Rs.36,15,769/- made by the Assessing Officer u/s 14A read with Rule 8D without appreciating the fact that the appellant company had m 3,60,748/- which was worked out by taking into account specific expenses incurred for earning exempt income in the form of salary expenses of employees involved in earning exempt income and charges paid for the demat account and accordingly no further disallowance was warranted. 2. On the facts and the circumstances of the appellant company's case and in law, d. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of made by the Assessing Officer u/s 14A read with Rule 8D despite the fact that the appellant has made investments yielding exempt income from its ile ignoring the decision of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi and upheld by the co Bench of Hon'ble Income Tax Appellant Tribunal, Mumbai, in the appellant's own case for the assessment year 2018-19 and 2020-21 on the identical facts and circumstances of the case and the legal grounds wherein it was held that the provision of Rule 8D cannot be invoked by the Assessing Officer as it is clear from the of appellant that no borrowed funds were utilized and investment was made by appellant from its own funds to earn tax free income. 3. On the facts and the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of made by the Assessing Officer u/s 14A read with Rule 8 ignoring the fact that the expenditure related to earning exempt in has been debited separately in the Profit & Loss A/c of the appellant company and separate ledger account is maintained for the expenses incurred to earn exempt income and which has been suo moto disallowed by the appellant 4. On the facts and the circumstances of the appellant company's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of made by the Assessing Officer u/s 14A read with Rule 8D disregarding the fact that all other expenditure debited to the Profit & Loss A/c of the appellant company are related to the main financial consultancy business of the company and not investment activity. 5. The appellant craves leave to add to, alter, amend, modify and/or delete all or any of the foregoing grounds of appeal. The appellant prays before the Hon'ble Tribunal to delete the impugned disallowance made by the Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeals) or any other relief as the Hon'ble Tribunal may deem fit. Bajaj Consultants Private Limited, 2 ITA No.2676/MUM/2025 s of appeal are without prejudice to one another: - ompany's case and in law, 52, Mumbai has erred in confirming by the Assessing Officer u/s 14A read with Rule 8D without appreciating the fact that the appellant company had made suo moto which was worked out by taking into account specific the form of salary expenses of employees involved in earning exempt income and charges paid for the demat account and accordingly no further disallowance was warranted. 2. On the facts and the circumstances of the appellant company's case and in law, d. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of made by the Assessing Officer u/s 14A read with Rule 8D despite the fact that the appellant has made investments yielding exempt income from its ile ignoring the decision of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi and upheld by the co-ordinate Bench of Hon'ble Income Tax Appellant Tribunal, Mumbai, in the appellant's own case 21 on the identical facts and circumstances of the case and the legal grounds wherein it was held that the provision of Rule 8D cannot be invoked by the Assessing Officer as it is clear from the ized and investment was made 3. On the facts and the circumstances of the appellant company's case and in law, nfirming the disallowance of Officer u/s 14A read with Rule 8D while ignoring the fact that the expenditure related to earning exempt income of has been debited separately in the Profit & Loss A/c of the appellant dger account is maintained for the expenses incurred to earn exempt income and which has been suo moto disallowed by the appellant 4. On the facts and the circumstances of the appellant company's case and in law, nfirming the disallowance of made by the Assessing Officer u/s 14A read with Rule 8D disregarding the fact that all other expenditure debited to the Profit & Loss A/c of the financial consultancy business of the 5. The appellant craves leave to add to, alter, amend, modify and/or delete all or any the impugned disallowance made by the Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeals) or any other relief as the Hon'ble Tribunal may deem fit. Printed from counselvise.com 2. The core controversy in grounds raised pertains to the sustainability of the Tax Act, 1961 [hereinafter ‘the Act’] read with Tax Rules, 1962, amounting to 2.1 Briefly stated, the facts of the case are that engaged in the business of deposits, and investment activities. For the year under consideration, the assessee filed its return of income on 28.10.2017 declaring a total income of ₹19,01,34,770/ statutory notices under the Act, were duly issued and complied with. 2.2 During the course of scrutiny proceedings, the Assessing Officer noted that the assessee had made investments in shares amounting to ₹40,86,22,630/- ₹7,26,60,081/- as on 31.03.2016. The Assessing Officer further observed that during the year the assessee had earned the following income claimed as exempt (i) dividend income of section 10(34) of the Act; (ii) interest income of claimed exempt under section 10(15)(iv)(h) of the Act; and (iii) long term capital gains of 10(38) of the Act. 2.3 The assessee submitted that it disallowance under section 14A of the Act in respect of expenditure relatable to exempt income by adding back demat charges of Bajaj Consultants Private Limited, ITA No The core controversy in grounds raised pertains to the sustainability of the disallowance under Section 14A Tax Act, 1961 [hereinafter ‘the Act’] read with Rule 8D Tax Rules, 1962, amounting to Rs. 36,15,769/-. Briefly stated, the facts of the case are that engaged in the business of financial services, inter deposits, and investment activities. For the year under consideration, the assessee filed its return of income on 28.10.2017 declaring a total 19,01,34,770/-. The return was selected for scrutiny and notices under the Act, were duly issued and complied with. During the course of scrutiny proceedings, the Assessing Officer noted that the assessee had made investments in shares amounting as on 31.03.2017, as against investments of as on 31.03.2016. The Assessing Officer further observed that during the year the assessee had earned the following income claimed as exempt (i) dividend income of ₹21,41,195/ section 10(34) of the Act; (ii) interest income of claimed exempt under section 10(15)(iv)(h) of the Act; and (iii) long term capital gains of ₹4,73,00,987/- claimed exempt under section The assessee submitted that it had, on its own, made a disallowance under section 14A of the Act in respect of expenditure relatable to exempt income by adding back demat charges of Bajaj Consultants Private Limited, 3 ITA No.2676/MUM/2025 The core controversy in grounds raised pertains to the Section 14A of the Income Rule 8D of the Income Briefly stated, the facts of the case are that the assessee is financial services, inter-corporate deposits, and investment activities. For the year under consideration, the assessee filed its return of income on 28.10.2017 declaring a total . The return was selected for scrutiny and notices under the Act, were duly issued and complied with. During the course of scrutiny proceedings, the Assessing Officer noted that the assessee had made investments in shares amounting as on 31.03.2017, as against investments of as on 31.03.2016. The Assessing Officer further observed that during the year the assessee had earned the following 21,41,195/- under section 10(34) of the Act; (ii) interest income of ₹1,68,72,735/- claimed exempt under section 10(15)(iv)(h) of the Act; and (iii) long- claimed exempt under section had, on its own, made a disallowance under section 14A of the Act in respect of expenditure relatable to exempt income by adding back demat charges of Printed from counselvise.com ₹22,838/- and salary expenditure of handling investment- suo motu disallowance of expenditure incurred in relation to exempt income and that no further disallowance was warranted. The assessee also claimed that investments were made out of its were utilised. 2.4 The Assessing Officer, however, did not accept the assessee’s claim and recorded dissatisfaction with the correctness of the suo motu disallowance. The Assessing Officer observed that the assessee had not computed the disallowance in accordance with section 14A read with Rule 8D of the Income that expenditure relating to office infrastructure, rent, salaries, depreciation, and other administrative costs had not been cons It was further observed that investments, including those in subsidiary companies, were capable of yielding exempt income and thus attracted the provisions of section 14A. however rejected the claim of the assessee of the suo disallowance and he recorded dissatisfaction to the claim of the assessee observing as under: “4.3 The submission of the assessee is considered but not acceptable. It is to mention that assessee has itself disallowed certain expenditure amounting to Rs.3,14,000/- in the computation of total income. However, it is to mention here that assessee has not computed the disallowance as per provisions of section 14A r.w Rule BD of IT Rules, 1962. Further, the assessee failed to disallow such inadmissible deduc Bajaj Consultants Private Limited, ITA No and salary expenditure of ₹3,37,910/- -related activities. It was contended that the total suo motu disallowance of ₹3,60,748/- adequately covered all expenditure incurred in relation to exempt income and that no further disallowance was warranted. The assessee also claimed that investments were made out of its own funds and no borrowed funds The Assessing Officer, however, did not accept the assessee’s claim and recorded dissatisfaction with the correctness of the suo motu disallowance. The Assessing Officer observed that the assessee t computed the disallowance in accordance with section 14A read with Rule 8D of the Income-tax Rules, 1962 (“the Rules”), and that expenditure relating to office infrastructure, rent, salaries, depreciation, and other administrative costs had not been cons It was further observed that investments, including those in subsidiary companies, were capable of yielding exempt income and thus attracted the provisions of section 14A. The Assessing Officer however rejected the claim of the assessee of the suo disallowance and he recorded dissatisfaction to the claim of the assessee observing as under: 4.3 The submission of the assessee is considered but not acceptable. It is to mention that assessee has itself disallowed certain expenditure amounting to in the computation of total income. However, it is to mention here that assessee has not computed the disallowance as per provisions of section 14A r.w Rule BD of IT Rules, 1962. Further, the assessee failed to disallow such inadmissible deduction in its computation of income which shows the wilful Bajaj Consultants Private Limited, 4 ITA No.2676/MUM/2025 incurred for staff s. It was contended that the total adequately covered all expenditure incurred in relation to exempt income and that no further disallowance was warranted. The assessee also claimed that own funds and no borrowed funds The Assessing Officer, however, did not accept the assessee’s claim and recorded dissatisfaction with the correctness of the suo motu disallowance. The Assessing Officer observed that the assessee t computed the disallowance in accordance with section 14A tax Rules, 1962 (“the Rules”), and that expenditure relating to office infrastructure, rent, salaries, depreciation, and other administrative costs had not been considered. It was further observed that investments, including those in subsidiary companies, were capable of yielding exempt income and The Assessing Officer however rejected the claim of the assessee of the suo-motu disallowance and he recorded dissatisfaction to the claim of the 4.3 The submission of the assessee is considered but not acceptable. It is to mention that assessee has itself disallowed certain expenditure amounting to in the computation of total income. However, it is to mention here that assessee has not computed the disallowance as per provisions of section 14A r.w Rule BD of IT Rules, 1962. Further, the assessee failed to disallow such tion in its computation of income which shows the wilful Printed from counselvise.com intention of the assessee for such non disallowance. As far as investment by the assessee company in its subsidiary company is concerned also earn dividend income for the assessee which is not chargeable to tax and will attract the provision of section 14A of the IT Act. Further, perusal of the balance sheet and profit & loss account submitted reveals that the assessee has been maintaining office pr debiting expenditure in the nature of office, rents, salary and depreciation against such infrastructure which cannot be said to be used exclusively for the purpose of its business. Therefore, keeping in view, the amoun assessee and expenditure claimed against utilizing such infrastructure, it will be valid to say that assessee has utilized his infrastructure in making such investments earning exempt Income. Therefore, provisions of section 14 8D are clearly attracted in this case. 4.4 In view of the above discussion, I am fully satisfied that though the assessee has not claimed actual expenditure directly attributable to the exempt income, it has, nevertheless, incurred expenditure taxable income and are relatable to the business infrastructure maintained by the assessee and used in its business as well as making investment in share. It is pertinent to note that the assessee has claimed to have inc expenditure in relation to investments from which exempt income is earned, the assessee could not have invested or earned any exempt income from such investments without maintaining such infrastructure, expenses of which are claimed in the profit and loss would be relevant to quote section 14A and Rule BD at this juncture. Section 14A read as under Expenditure incurred in relation to income not includible in total income 14A 1. For the purpose of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. 2. The Assessing Officer s relation to such income which does not form part of the total income under this Act, in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the as the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. 3. The provisions of sub section (2) shall also apply in relation to assessee claims that no expenditure has been incurred by him/his in relation to income which does not form part of the total income under this Act. Bajaj Consultants Private Limited, ITA No intention of the assessee for such non disallowance. As far as investment by the assessee company in its subsidiary company is concerned, that investments will dividend income for the assessee which is not chargeable to tax and will attract the provision of section 14A of the IT Act. Further, perusal of the balance sheet and profit & loss account submitted reveals that the assessee has been maintaining office premises, staff, etc. Assessee is also debiting expenditure in the nature of office, rents, salary and depreciation against such infrastructure which cannot be said to be used exclusively for the purpose of its business. Therefore, keeping in view, the amount of investments made by the assessee and expenditure claimed against utilizing such infrastructure, it will be valid to say that assessee has utilized his infrastructure in making such investments earning exempt Income. Therefore, provisions of section 14 8D are clearly attracted in this case. 4.4 In view of the above discussion, I am fully satisfied that though the assessee has not claimed actual expenditure directly attributable to the exempt income, it has, nevertheless, incurred expenditure which are otherwise claimed against taxable income and are relatable to the business infrastructure maintained by the assessee and used in its business as well as making investment in share. It is pertinent to note that the assessee has claimed to have inc expenditure in relation to investments from which exempt income is earned, the assessee could not have invested or earned any exempt income from such investments without maintaining such infrastructure, expenses of which are claimed profit and loss account. Before making disallowance u/s. 144 r.w. would be relevant to quote section 14A and Rule BD at this juncture. Section 14A read as under: Expenditure incurred in relation to income not includible in total income 14A For the purpose of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. 2. The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act, in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. 3. The provisions of sub section (2) shall also apply in relation to assessee claims that no expenditure has been incurred by him/his in relation to income which does not form part of the total income under this Act. Bajaj Consultants Private Limited, 5 ITA No.2676/MUM/2025 intention of the assessee for such non disallowance. As far as investment by the assessee company in its subsidiary company is concerned, that investments will dividend income for the assessee which is not chargeable to tax and will Further, perusal of the balance sheet and profit & loss account submitted reveals emises, staff, etc. Assessee is also debiting expenditure in the nature of office, rents, salary and depreciation against such infrastructure which cannot be said to be used exclusively for the purpose of t of investments made by the assessee and expenditure claimed against utilizing such infrastructure, it will be valid to say that assessee has utilized his infrastructure in making such investments earning exempt Income. Therefore, provisions of section 14A r.w. Rule 4.4 In view of the above discussion, I am fully satisfied that though the assessee has not claimed actual expenditure directly attributable to the exempt income, it which are otherwise claimed against taxable income and are relatable to the business infrastructure maintained by the assessee and used in its business as well as making investment in share. It is pertinent to note that the assessee has claimed to have incurred merger any expenditure in relation to investments from which exempt income is earned, the assessee could not have invested or earned any exempt income from such investments without maintaining such infrastructure, expenses of which are claimed account. Before making disallowance u/s. 144 r.w. Rule 8D, it would be relevant to quote section 14A and Rule BD at this juncture. Expenditure incurred in relation to income not includible in total income 14A For the purpose of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. hall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act, in accordance with such method as may be prescribed, if the Assessing Officer, sessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which 3. The provisions of sub section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him/his in relation to income which does not form part of the total income under this Act. Printed from counselvise.com Thus, limb 2 of the above section automatically comes into play if the assessee contends that no or very less expenditure if the expenditure disallowed by the assessee is not as per the working of under section 14A r.w.r 8D expenditure has been incurred by the assessee to earn the exempt income. Further, the assessee has taken plea that investme the IT Act. This argument of the assessee is not acceptable because no documentary evidence in this regard has been submitted by the assessee and in the assessment of earlier year also, such investmen 14A. Even otherwise, the groupism of investment can only be done in the same kind of investments only. Thus, the fact remains undisputed that the disallowance is to be worked out mandatorily as per Rule 8D of Inc reliance is placed on the following judgments: 4.5.1 The Hon'ble Bombay High Court in the case of work Manufacturing Co. Ltd. [328 ITR 81] disallowance u/s 14A with effect from 2008 officer is not satisfied with the correctness of the claim of the assessee. In the instant case, the undersigned is not satisfied with the claim of the assessee, hen the disallowance u/s 14A has to be calculated Income-tax Rule. 4.5.2 In the case of Daga Capital Management (P) Ltd. (2009) 117 ITD 169 Hon'ble ITAT (Special Bench. Mumbai) held that Sec. 14A of the IT Act has an overriding effect and applies to all expenditure in relation to exempted income, even though such expenditure would have been allowable under other provisions such as Sec. 36(1)(ii) It was further held that u/s 14A, not only direct expenditure, but also the indirect expenditure can be considered. It was also held that onus in this regard is upon the assessee to prove that a particular does not come under the ambit of Sec. 14A. The ratio of this judgment is squarely applicable to the facts of the instant case. 4.5.3 Further, CBDT, vide circular No. 5 of 2014 dated 11/02/2014 has clarified that the disallowance u/s 14A is to be made even if no exempted income had been earned by the assessee during the year under consideration. It has been further clarified that even if the assessee claims that no expenditure in respect of exempted income are made, such disallowance has to be made. In view of the above judicial pronouncements as well as the circular of CBDT. the contention of the assessee, if so raised, is not a that the fact remains undisputed that the disallowance is to be worked out mandatorily as per the norms prescribed under Rule 8D of the Income case of the assessee is covered under Rule 8D of Income method of working of disallowance of expenditure u/s.14A of the IT Act is laid. 2.4 Being dissatisfied with the assessee’s claim, the Assessing Officer invoked Rule 8D and computed disallowance under Rule Bajaj Consultants Private Limited, ITA No Thus, limb 2 of the above section automatically comes into play if the assessee at no or very less expenditure if the expenditure disallowed by the assessee is not as per the working of under section 14A r.w.r 8D expenditure has been incurred by the assessee to earn the exempt income. Further, the assessee has taken plea that investment cannot be considered for the disallowance u/s 14A of the IT Act. This argument of the assessee is not acceptable because no documentary evidence in this regard has been submitted by the assessee and in the assessment of earlier year also, such investments were considered for the disallowance u/s 14A. Even otherwise, the groupism of investment can only be done in the same kind of investments only. Thus, the fact remains undisputed that the disallowance is to be worked out mandatorily as per Rule 8D of Income-tax Rule. In this regard, reliance is placed on the following judgments:- 4.5.1 The Hon'ble Bombay High Court in the case of Godrej & Boyce applied to work Manufacturing Co. Ltd. [328 ITR 81] has held that Rule disallowance u/s 14A with effect from 2008-09 onwards where the assessing officer is not satisfied with the correctness of the claim of the assessee. In the instant case, the undersigned is not satisfied with the claim of the assessee, hen the disallowance u/s 14A has to be calculated within the provision of Rule 8D Daga Capital Management (P) Ltd. (2009) 117 ITD 169 Hon'ble ITAT (Special Bench. Mumbai) held that Sec. 14A of the IT Act has an overriding effect and applies to all expenditure in relation to exempted income, even though such expenditure would have been allowable under other provisions such as Sec. 36(1)(ii) It was further held that u/s 14A, not only direct expenditure, but also e indirect expenditure can be considered. It was also held that onus in this regard is upon the assessee to prove that a particular does not come under the ambit of Sec. 14A. The ratio of this judgment is squarely applicable to the facts of the instant 4.5.3 Further, CBDT, vide circular No. 5 of 2014 dated 11/02/2014 has clarified that the disallowance u/s 14A is to be made even if no exempted income had been earned by the assessee during the year under consideration. It has been further t even if the assessee claims that no expenditure in respect of exempted income are made, such disallowance has to be made. In view of the above judicial pronouncements as well as the circular of CBDT. the contention of the assessee, if so raised, is not acceptable. Thus, I am of the opinion that the fact remains undisputed that the disallowance is to be worked out mandatorily as per the norms prescribed under Rule 8D of the Income case of the assessee is covered under Rule 8D of Income method of working of disallowance of expenditure u/s.14A of the IT Act is laid. Being dissatisfied with the assessee’s claim, the Assessing Officer invoked Rule 8D and computed disallowance under Rule Bajaj Consultants Private Limited, 6 ITA No.2676/MUM/2025 Thus, limb 2 of the above section automatically comes into play if the assessee at no or very less expenditure if the expenditure disallowed by the assessee is not as per the working of under section 14A r.w.r 8D expenditure has been incurred by the assessee to earn the exempt income. Further, the assessee has nt cannot be considered for the disallowance u/s 14A of the IT Act. This argument of the assessee is not acceptable because no documentary evidence in this regard has been submitted by the assessee and in the assessment ts were considered for the disallowance u/s 14A. Even otherwise, the groupism of investment can only be done in the same kind of investments only. Thus, the fact remains undisputed that the disallowance is to tax Rule. In this regard, Godrej & Boyce applied to has held that Rule 8D has to out the 09 onwards where the assessing officer is not satisfied with the correctness of the claim of the assessee. In the instant case, the undersigned is not satisfied with the claim of the assessee, hence within the provision of Rule 8D of Daga Capital Management (P) Ltd. (2009) 117 ITD 169, the Hon'ble ITAT (Special Bench. Mumbai) held that Sec. 14A of the IT Act has an overriding effect and applies to all expenditure in relation to exempted income, even though such expenditure would have been allowable under other provisions such as Sec. 36(1)(ii) It was further held that u/s 14A, not only direct expenditure, but also e indirect expenditure can be considered. It was also held that onus in this regard is upon the assessee to prove that a particular does not come under the ambit of Sec. 14A. The ratio of this judgment is squarely applicable to the facts of the instant 4.5.3 Further, CBDT, vide circular No. 5 of 2014 dated 11/02/2014 has clarified that the disallowance u/s 14A is to be made even if no exempted income had been earned by the assessee during the year under consideration. It has been further t even if the assessee claims that no expenditure in respect of exempted In view of the above judicial pronouncements as well as the circular of CBDT. the cceptable. Thus, I am of the opinion that the fact remains undisputed that the disallowance is to be worked out mandatorily as per the norms prescribed under Rule 8D of the Income-tax Rule. The case of the assessee is covered under Rule 8D of Income-tax Rule wherein the method of working of disallowance of expenditure u/s.14A of the IT Act is laid. Being dissatisfied with the assessee’s claim, the Assessing Officer invoked Rule 8D and computed disallowance under Rule Printed from counselvise.com 8D(2)(iii) at 1% of the monthly ave amounting to ₹36,38,067/ disallowance, the net disallowance was determined at 3. On appeal, the Ld. CIT(A) rejected the assessee’s contention that no valid satisfaction had been recorded by the Assessing Officer. The Ld. CIT(A) held that the Assessing Officer had given cogent reasons for rejecting the assessee’s claim, including failur infrastructure and managerial costs. The Ld. CIT(A) observed that it was unrealistic to assume that no part of directors’ time, office space, or administrative resources was devoted to investment activities. relevant finding of Ld. CI “8.5. The first issue raised by the appellant is that the AO had not recorded adequate satisfaction. In this regard, I find that the AO had indeed discussed the issue in para 4.3 and subsequent paragraphs of the assessment or reasons as to why the claim of the appellant is not acceptable. He has brought out that the appellant had failed to consider the associated cost in the nature of office, rent, depreciation against such infrastructure which cannot be stated to exclusively for the purpose of business. In the case of Devarsons Industries P Ltd vs ACIT. Gujarat HC, 84 taxmann.com 244, dt. that where AO gave detailed reasons for making disallowance u/s.14A, mere fact that AO did not arrive at a satisfaction in a particular manner wou mandate of Section 14A. It was held that \"As long as there is sufficient material to enable the Assessing Officer to arrive at such a satisfaction and which is also recorded by him in the order of assessment, the requirements of the statute would be satisfied.” It was further held that the time taken by Board and Senior Management needs to be considered. In the present case, it is obvious that the appellant has not considered s appellant shows that the total expenditure is Rs.10,75,95,657/ Director's remuneration of Rs. part of Director's functions or time was sp appellant has spent Rs. appellant has only disallowed staff salary of Rs.3,37,910/ whatever has been disallowed. This holds true for other relat electricity expenditure, computer, stationary etc. The space and other associated Bajaj Consultants Private Limited, ITA No 8D(2)(iii) at 1% of the monthly average value of investments, 36,38,067/-. After reducing the suo motu disallowance, the net disallowance was determined at On appeal, the Ld. CIT(A) rejected the assessee’s contention that no valid satisfaction had been recorded by the Assessing Officer. The Ld. CIT(A) held that the Assessing Officer had given cogent reasons for rejecting the assessee’s claim, including failur infrastructure and managerial costs. The Ld. CIT(A) observed that it was unrealistic to assume that no part of directors’ time, office space, or administrative resources was devoted to investment activities. Ld. CIT(A) is reproduced as under: “8.5. The first issue raised by the appellant is that the AO had not recorded adequate satisfaction. In this regard, I find that the AO had indeed discussed the issue in para 4.3 and subsequent paragraphs of the assessment or reasons as to why the claim of the appellant is not acceptable. He has brought out that the appellant had failed to consider the associated cost in the nature of office, rent, depreciation against such infrastructure which cannot be stated to exclusively for the purpose of business. In the case of Devarsons Industries P Ltd vs rat HC, 84 taxmann.com 244, dt.25.07.2017, the Hon'ble HC has held that where AO gave detailed reasons for making disallowance u/s.14A, mere fact AO did not arrive at a satisfaction in a particular manner wou 14A. It was held that \"As long as there is sufficient material to enable the Assessing Officer to arrive at such a satisfaction and which is also y him in the order of assessment, the requirements of the statute would It was further held that the time taken by Board and Senior Management needs to be considered. In the present case, it is obvious that the appellant has not considered such expenditure. A perusal of the P&L A/c of the appellant shows that the total expenditure is Rs.10,75,95,657/ Director's remuneration of Rs.2,98,00,000/- It would be preposterous to hold that no part of Director's functions or time was spent on the investments. Similarly, t appellant has spent Rs.21,96,433/- on office repairs and maintenance. The appellant has only disallowed staff salary of Rs.3,37,910/- whatever has been disallowed. This holds true for other related expenditure such as electricity expenditure, computer, stationary etc. The space and other associated Bajaj Consultants Private Limited, 7 ITA No.2676/MUM/2025 rage value of investments, . After reducing the suo motu disallowance, the net disallowance was determined at ₹36,15,769/-. On appeal, the Ld. CIT(A) rejected the assessee’s contention that no valid satisfaction had been recorded by the Assessing Officer. The Ld. CIT(A) held that the Assessing Officer had given cogent reasons for rejecting the assessee’s claim, including failure to account for infrastructure and managerial costs. The Ld. CIT(A) observed that it was unrealistic to assume that no part of directors’ time, office space, or administrative resources was devoted to investment activities. The as under: “8.5. The first issue raised by the appellant is that the AO had not recorded adequate satisfaction. In this regard, I find that the AO had indeed discussed the issue in para 4.3 and subsequent paragraphs of the assessment order and given reasons as to why the claim of the appellant is not acceptable. He has brought out that the appellant had failed to consider the associated cost in the nature of office, rent, depreciation against such infrastructure which cannot be stated to be used exclusively for the purpose of business. In the case of Devarsons Industries P Ltd vs 25.07.2017, the Hon'ble HC has held that where AO gave detailed reasons for making disallowance u/s.14A, mere fact AO did not arrive at a satisfaction in a particular manner would not destroy the 14A. It was held that \"As long as there is sufficient material to enable the Assessing Officer to arrive at such a satisfaction and which is also y him in the order of assessment, the requirements of the statute would It was further held that the time taken by Board and Senior Management needs to be considered. In the present case, it is obvious that the uch expenditure. A perusal of the P&L A/c of the appellant shows that the total expenditure is Rs.10,75,95,657/-. This includes It would be preposterous to hold that no ent on the investments. Similarly, the on office repairs and maintenance. The and no rental charges whatever has been disallowed. This holds true for other related expenditure such as electricity expenditure, computer, stationary etc. The space and other associated Printed from counselvise.com cost used by such staff in the office has not been taken into account. Thus, in my view, the AO's action in rejecting the claim of the appellant and dr satisfaction is valid in the eyes of law. This part of the contention of the appellant is rejected. 3.1 Further, the Ld. CIT(A) rejected the claim of the assessee of linkage of the net own fund for interest expenditure disallowance was made by the assessing officer. decision of the Income Tax Appellate Tribunal in the assessee’s one case the Ld. CIT (A) Rule 8D, while directing the Assessing Officer to recompute the disallowance strictly in accordance with the monthly average of investments furnished by the assessee 8.8. The appellant has relied on the decisions of Hon'ble ITAT in its own case the Hon'ble ITAT has observed in vide ITA No.2853/Mum/2023 for AY 2854/Mum/2023 for AY 2020 8.9. Having carefully perused the order of the Hon'ble ITAT, it is seen that the Department had challenged the alternative finding of the CIT(A) and not the finding related to section 14A disallowance. the Hon'ble Tribunal, wherein the Hon'ble Tribunal stated as under “...Thereafter, in paragraph 7.6 of the order impugned, the CIT(A) has accepted the alternative submission of the Assessee that even if pro contained in Rule 8D of the IT Rules were to be applied, only the investments yielding exempt income during the relevant previous year were to be taken into consideration. On perusal of the grounds raised by the Revenue, we find that the grievance the order of CIT(A) allowing the without prejudice contention raised by the Assessee.....\" 8.10. Thus, the ambit of the decisions of the Hon'ble ITAT is related to the disallowance of 14A on the during the year. Therefore, this decision of the Hon'ble Tribunal does not help the appellant in any manner as the issue addressed was different. 8.11. In view of the above discussion, I am of the view that drawn the satisfaction and proceeded to make a disallo Rule 8D. However, it is noticed that the appellant has indeed filed the working of Bajaj Consultants Private Limited, ITA No cost used by such staff in the office has not been taken into account. Thus, in my view, the AO's action in rejecting the claim of the appellant and dr satisfaction is valid in the eyes of law. This part of the contention of the appellant is the Ld. CIT(A) rejected the claim of the assessee of linkage of the net own fund for interest expenditure made by the assessing officer. After considering the decision of the Income Tax Appellate Tribunal in the assessee’s one case the Ld. CIT (A) upheld the invocation of section 14A read with Rule 8D, while directing the Assessing Officer to recompute the disallowance strictly in accordance with the monthly average of investments furnished by the assessee as under: 8.8. The appellant has relied on the decisions of Hon'ble ITAT in its own case the Hon'ble ITAT has observed in vide ITA No.2853/Mum/2023 for AY 2854/Mum/2023 for AY 2020-21 dt.27.03.2024. 8.9. Having carefully perused the order of the Hon'ble ITAT, it is seen that the Department had challenged the alternative finding of the CIT(A) and not the finding related to section 14A disallowance. This is evident from the para 8 of the order of the Hon'ble Tribunal, wherein the Hon'ble Tribunal stated as under ...Thereafter, in paragraph 7.6 of the order impugned, the CIT(A) has accepted the alternative submission of the Assessee that even if pro contained in Rule 8D of the IT Rules were to be applied, only the investments yielding exempt income during the relevant previous year were to be taken into consideration. On perusal of the grounds raised by the Revenue, we find that the grievance raised by the Revenue in the present appeal is restricted to the order of CIT(A) allowing the without prejudice contention raised by the 8.10. Thus, the ambit of the decisions of the Hon'ble ITAT is related to the disallowance of 14A on the investments which actually yielded exempt income during the year. Therefore, this decision of the Hon'ble Tribunal does not help the appellant in any manner as the issue addressed was different. 8.11. In view of the above discussion, I am of the view that drawn the satisfaction and proceeded to make a disallowance in accordance with . However, it is noticed that the appellant has indeed filed the working of Bajaj Consultants Private Limited, 8 ITA No.2676/MUM/2025 cost used by such staff in the office has not been taken into account. Thus, in my view, the AO's action in rejecting the claim of the appellant and drawing his satisfaction is valid in the eyes of law. This part of the contention of the appellant is the Ld. CIT(A) rejected the claim of the assessee of linkage of the net own fund for interest expenditure as no such fter considering the decision of the Income Tax Appellate Tribunal in the assessee’s one upheld the invocation of section 14A read with Rule 8D, while directing the Assessing Officer to recompute the disallowance strictly in accordance with the monthly average of 8.8. The appellant has relied on the decisions of Hon'ble ITAT in its own case the Hon'ble ITAT has observed in vide ITA No.2853/Mum/2023 for AY 2018-19 & 8.9. Having carefully perused the order of the Hon'ble ITAT, it is seen that the Department had challenged the alternative finding of the CIT(A) and not the finding This is evident from the para 8 of the order of the Hon'ble Tribunal, wherein the Hon'ble Tribunal stated as under- ...Thereafter, in paragraph 7.6 of the order impugned, the CIT(A) has accepted the alternative submission of the Assessee that even if provisions contained in Rule 8D of the IT Rules were to be applied, only the investments yielding exempt income during the relevant previous year were to be taken into consideration. On perusal of the grounds raised by the Revenue, we find raised by the Revenue in the present appeal is restricted to the order of CIT(A) allowing the without prejudice contention raised by the 8.10. Thus, the ambit of the decisions of the Hon'ble ITAT is related to the investments which actually yielded exempt income during the year. Therefore, this decision of the Hon'ble Tribunal does not help the appellant in any manner as the issue addressed was different. 8.11. In view of the above discussion, I am of the view that the AO has rightly wance in accordance with . However, it is noticed that the appellant has indeed filed the working of Printed from counselvise.com monthly average of investments vide letter dt. shows that the average investments in at least the initial few months is lower than what has been computed by the AO. In any case, since Rule 8D warrants adoption of monthly average of investments and the appellant has provided the same, the AO is bound to compute the disallowance in accordance with such balances. To this extent, the arguments of the appellant are agreed with and the AO is directed to rework the disallowance in accordance with Rule 8D. The disallowance u/s 14A stands sustained on the b disallowance of Rs.3,60,748/ 4. We have heard rival submissions of the parties and perused the relevant material on record, including the factual paper book containing pages 1-115 and case law compilation before us relates to the disallowance of 14A of the Act. The Assessee challenges the disallowance on three primary points: (i) Objective Satisfaction: tenable \"dissatisfaction\" with the Assessee’s computation as required by Section 14A(2). (ii) Sufficiency of Disallowance: adequately covered the specific salary and demat charges attributable to the exempt income. (iii) Judicial Consistency: 2018-19 and 2020 Rule 8D cannot be invoked when investments are made from interest-free own funds. Bajaj Consultants Private Limited, ITA No of investments vide letter dt.19.12.2019. A perusal of the shows that the average investments in at least the initial few months is lower than what has been computed by the AO. In any case, since Rule 8D warrants adoption of monthly average of investments and the appellant has provided the same, the AO nd to compute the disallowance in accordance with such balances. To this extent, the arguments of the appellant are agreed with and the AO is directed to rework the disallowance in accordance with Rule 8D. The disallowance u/s 14A stands sustained on the basis of such reworking (after excluding the suo moto disallowance of Rs.3,60,748/- made by the appellant). We have heard rival submissions of the parties and perused the relevant material on record, including the factual paper book 115 and case law compilation before us relates to the disallowance of ₹36,15,769/ The Assessee challenges the disallowance on three Objective Satisfaction: That the AO failed to record a lega tenable \"dissatisfaction\" with the Assessee’s computation as required by Section 14A(2). Sufficiency of Disallowance: That the suo motu adequately covered the specific salary and demat charges attributable to the exempt income. Judicial Consistency: That for subsequent years (AY 19 and 2020-21), coordinate benches have accepted that Rule 8D cannot be invoked when investments are made from free own funds. Bajaj Consultants Private Limited, 9 ITA No.2676/MUM/2025 19.12.2019. A perusal of the same shows that the average investments in at least the initial few months is lower than what has been computed by the AO. In any case, since Rule 8D warrants adoption of monthly average of investments and the appellant has provided the same, the AO nd to compute the disallowance in accordance with such balances. To this extent, the arguments of the appellant are agreed with and the AO is directed to rework the disallowance in accordance with Rule 8D. The disallowance u/s 14A asis of such reworking (after excluding the suo moto We have heard rival submissions of the parties and perused the relevant material on record, including the factual paper book 115 and case law compilation. The sole issue 36,15,769/- under section The Assessee challenges the disallowance on three That the AO failed to record a legally tenable \"dissatisfaction\" with the Assessee’s suo motu suo motu disallowance adequately covered the specific salary and demat charges That for subsequent years (AY 21), coordinate benches have accepted that Rule 8D cannot be invoked when investments are made from Printed from counselvise.com 4.1 It is undisputed that the assessee earned exempt income the year and that it made a towards administrative expenditure. 4.2 At this juncture, it is apposite to recapitulate the settled legal position governing the recording of satisfaction under section 14A(2) of the Act. The Hon’ble Supreme Court in v. CIT (402 ITR 640) having regard to the accounts of the assessee, record a reasoned dissatisfaction that no or only a particular amount of expenditure was incurred in relation to exempt income. formation of such satisfaction is a prescribed method under Rule 8D, but the statute does not mandate any particular form or ritualistic language discernible nexus between drawn. 4.3 The Hon’ble Supreme Court further affirmed the ratio of the Bombay High Court in ITR 449), wherein it examination of the accounts, records reasons for rejecting the assessee’s computation, the statutory machinery under Rule 8D is triggered. Bajaj Consultants Private Limited, ITA No It is undisputed that the assessee earned exempt income d that it made a suo-motu disallowance of towards administrative expenditure. At this juncture, it is apposite to recapitulate the settled legal position governing the recording of satisfaction under section 14A(2) of the Act. The Hon’ble Supreme Court in Maxopp Investment Ltd. v. CIT (402 ITR 640) has held that the Assessing Office having regard to the accounts of the assessee, record a reasoned dissatisfaction with the correctness of the assessee’s claim that no or only a particular amount of expenditure was incurred in relation to exempt income. The Hon’ble Court clarified that formation of such satisfaction is a condition precedent prescribed method under Rule 8D, but the statute does not mandate any particular form or ritualistic language—what is required is a discernible nexus between the accounts examined and the conclusion The Hon’ble Supreme Court further affirmed the ratio of the Bombay High Court in Godrej & Boyce Mfg. Co. Ltd. , wherein it is held that once the Assessing Officer, upon the accounts, records reasons for rejecting the assessee’s computation, the statutory machinery under Rule 8D is Bajaj Consultants Private Limited, 10 ITA No.2676/MUM/2025 It is undisputed that the assessee earned exempt income during disallowance of ₹3,60,748/- At this juncture, it is apposite to recapitulate the settled legal position governing the recording of satisfaction under section 14A(2) Maxopp Investment Ltd. the Assessing Officer must, having regard to the accounts of the assessee, record a clear and with the correctness of the assessee’s claim that no or only a particular amount of expenditure was incurred in Court clarified that the condition precedent for invoking the prescribed method under Rule 8D, but the statute does not mandate what is required is a the accounts examined and the conclusion The Hon’ble Supreme Court further affirmed the ratio of the Godrej & Boyce Mfg. Co. Ltd. v. DCIT (394 once the Assessing Officer, upon the accounts, records reasons for rejecting the assessee’s computation, the statutory machinery under Rule 8D is Printed from counselvise.com 4.4 Tested on the anvil of the aforesaid binding precedents, we find that in the present case the Assessing Officer has duly discha statutory obligation under section 14A(2) examined the accounts and specifically noted that while the assessee had disallowed certain demat charges and a portion of salary, to apportion indirect infrastructu and senior management time portfolio of over Rs. 40 Crores. We find that the AO’s satisfaction was sufficiently grounded in the fact that the Assessee’s infrastructure supports both taxable and exempt streams, yet the disallowance remained silent on the common overheads. recorded are not vague or mechanical; rather, they are financial statements and the nature of the assessee’s operations 4.5 The dissatisfaction recorded is thus founded on the accounts explained by the Hon’ble Supreme Court in (supra). The Assessing Officer thereafter restricted the disallowa administrative expenditure under Rule 8D(2)(iii) alone, without making any disallowance in respect of interest expenditure approach that further evidences application of mind and proportionality. 4.6 In light of the authoritative pronouncements o Supreme Court in Maxopp Investment Ltd. Bajaj Consultants Private Limited, ITA No Tested on the anvil of the aforesaid binding precedents, we find that in the present case the Assessing Officer has duly discha statutory obligation under section 14A(2) of Act. The Assessing Officer examined the accounts and specifically noted that while the assessee had disallowed certain demat charges and a portion of salary, to apportion indirect infrastructure costs—such as rent, electricity, and senior management time—necessarily utilized in managing a portfolio of over Rs. 40 Crores. We find that the AO’s satisfaction was sufficiently grounded in the fact that the Assessee’s infrastructure able and exempt streams, yet the disallowance remained silent on the common overheads. recorded are not vague or mechanical; rather, they are financial statements and the nature of the assessee’s operations The dissatisfaction recorded is thus factual, reasoned, and founded on the accounts, satisfying the statutory requirement as explained by the Hon’ble Supreme Court in Maxopp Investment Ltd. . The Assessing Officer thereafter restricted the disallowa administrative expenditure under Rule 8D(2)(iii) alone, without making any disallowance in respect of interest expenditure approach that further evidences application of mind and In light of the authoritative pronouncements o Maxopp Investment Ltd.(supra) and Bajaj Consultants Private Limited, 11 ITA No.2676/MUM/2025 Tested on the anvil of the aforesaid binding precedents, we find that in the present case the Assessing Officer has duly discharged the . The Assessing Officer examined the accounts and specifically noted that while the assessee had disallowed certain demat charges and a portion of salary, it failed such as rent, electricity, necessarily utilized in managing a portfolio of over Rs. 40 Crores. We find that the AO’s satisfaction was sufficiently grounded in the fact that the Assessee’s infrastructure able and exempt streams, yet the suo-motu disallowance remained silent on the common overheads. The reasons recorded are not vague or mechanical; rather, they are rooted in the financial statements and the nature of the assessee’s operations. factual, reasoned, and satisfying the statutory requirement as Maxopp Investment Ltd. . The Assessing Officer thereafter restricted the disallowance to administrative expenditure under Rule 8D(2)(iii) alone, without making any disallowance in respect of interest expenditure—an approach that further evidences application of mind and In light of the authoritative pronouncements of the Hon’ble and Godrej & Boyce Printed from counselvise.com (supra), we hold that the satisfaction recorded by the Assessing Officer in the present case meets the legal threshold mandated under section 14A(2), and the consequent invocat faulted. 4.7 Once dissatisfaction is validly recorded, the Assessing Officer is statutorily mandated to compute the disallowance in accordance with Rule 8D. The Assessee’s reliance on having \"interest is misplaced in the context of the present disallowance. The AO has not made any disallowance on account of interest expenditure under Rule 8D(2)(i). The current disallowance is confined to and indirect expenses 02.06.2016). Therefore, the question of borrowed funds vs. own funds is rendered purely academic CIT(A) has also ensured that the computation is aligned with the monthly average of investments as required by law. 4.8 We have perused the orders for AY 2018 by the Assessee. We find those orders factually distinguishable, as they primarily dealt with the Revenue's challenge to the investment to be considered (yielding vs. non grant a blanket immunity from Rule 8D where the AO has identified a clear failure to apportion indirect costs. 4.9 We find that the Ld. CIT(A) has correctly identified that the Assessee's infrastructure, senior management, and utilities were Bajaj Consultants Private Limited, ITA No , we hold that the satisfaction recorded by the Assessing Officer in the present case meets the legal threshold mandated under section 14A(2), and the consequent invocation of Rule 8D cannot be Once dissatisfaction is validly recorded, the Assessing Officer is statutorily mandated to compute the disallowance in accordance with Rule 8D. The Assessee’s reliance on having \"interest n the context of the present disallowance. The AO has made any disallowance on account of interest expenditure under Rule 8D(2)(i). The current disallowance is confined to and indirect expenses under Rule 8D(2)(ii) (as amended w.e.f. 06.2016). Therefore, the question of borrowed funds vs. own funds is rendered purely academic and does not advance its case. CIT(A) has also ensured that the computation is aligned with the monthly average of investments as required by law. We have perused the orders for AY 2018-19 and 2020 by the Assessee. We find those orders factually distinguishable, as they primarily dealt with the Revenue's challenge to the investment to be considered (yielding vs. non-yielding). The grant a blanket immunity from Rule 8D where the AO has identified a clear failure to apportion indirect costs. We find that the Ld. CIT(A) has correctly identified that the Assessee's infrastructure, senior management, and utilities were Bajaj Consultants Private Limited, 12 ITA No.2676/MUM/2025 , we hold that the satisfaction recorded by the Assessing Officer in the present case meets the legal threshold mandated under ion of Rule 8D cannot be Once dissatisfaction is validly recorded, the Assessing Officer is statutorily mandated to compute the disallowance in accordance with Rule 8D. The Assessee’s reliance on having \"interest-free own funds\" n the context of the present disallowance. The AO has made any disallowance on account of interest expenditure under Rule 8D(2)(i). The current disallowance is confined to administrative under Rule 8D(2)(ii) (as amended w.e.f. 06.2016). Therefore, the question of borrowed funds vs. own funds and does not advance its case. The Ld. CIT(A) has also ensured that the computation is aligned with the 19 and 2020-21 cited by the Assessee. We find those orders factually distinguishable, as they primarily dealt with the Revenue's challenge to the quantum of yielding). They do not grant a blanket immunity from Rule 8D where the AO has identified a We find that the Ld. CIT(A) has correctly identified that the Assessee's infrastructure, senior management, and utilities were Printed from counselvise.com utilized for the investment activity. In the absence of a convincing alternative apportionment by the Assessee that includes these overheads, the statutory formula provided under Rule 8D becomes the mandatory guide. 4.10 However, we note that the Ld. CIT(A) has AO to rework the disallowance based on the of investments rather than a simple opening/closing average. This direction ensures that the disallowance remains proportionate to the period of investment. 4.11 Finding no infirmity in the principle of the disallowance sustained by the Ld. CIT(A), we uphold the impugned order. The AO is directed to complete the reworking as per the Ld. CIT(A)'s instructions. 4.12 All the grounds of the appeal of the assessee are dismissed. 5. In the result the appeal of the assessee is dismissed. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 09/02/2026 M. Ranganath Vittal , Sr. P.S. Bajaj Consultants Private Limited, ITA No zed for the investment activity. In the absence of a convincing alternative apportionment by the Assessee that includes these overheads, the statutory formula provided under Rule 8D becomes the mandatory guide. However, we note that the Ld. CIT(A) has already directed the AO to rework the disallowance based on the actual monthly average of investments rather than a simple opening/closing average. This direction ensures that the disallowance remains proportionate to the period of investment. g no infirmity in the principle of the disallowance sustained by the Ld. CIT(A), we uphold the impugned order. The AO is directed to complete the reworking as per the Ld. CIT(A)'s All the grounds of the appeal of the assessee are In the result the appeal of the assessee is dismissed. ounced in the open Court on 09/02/2026. KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Bajaj Consultants Private Limited, 13 ITA No.2676/MUM/2025 zed for the investment activity. In the absence of a convincing alternative apportionment by the Assessee that includes these overheads, the statutory formula provided under Rule 8D becomes already directed the actual monthly average of investments rather than a simple opening/closing average. This direction ensures that the disallowance remains proportionate to the g no infirmity in the principle of the disallowance sustained by the Ld. CIT(A), we uphold the impugned order. The AO is directed to complete the reworking as per the Ld. CIT(A)'s All the grounds of the appeal of the assessee are accordingly In the result the appeal of the assessee is dismissed. /02/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Bajaj Consultants Private Limited, ITA No Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Bajaj Consultants Private Limited, 14 ITA No.2676/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "