K S Mohanraj, Bengaluru V. Deputy Commissioner of Income Tax, Circle-11(1), Bengaluru

ITA 794/BANG/2018

• Counselvise Citation: [2018] 129 COUNSELVISE.COM (IT) 9979 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 15-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D S VIVEK
• Keywords: Earning of tax free income
• Section: 14A; 260A

Judgement Text

ITA.794/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.794/BANG/2018) (ASSESSMENT YEAR : 2010-11) SHRI.K. S. MOHAN RAJ, UNIT NO. 306, 3 RD FLOOR, RICHMOND TOWERS, NO.12, RICHMOND ROAD, BENGALURU 560025 .. APPLICA NT PAN : AATPM0860D V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -11(1), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. D. S. VIVEK, CA REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT HEARD ON : 26.06.2018 PRONOUNCED ON : 18.09.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE CIT (A)-7, BENGALURU, DT.03.01.2018, FOR THE ASSESS MENT YEAR 2010- 11, ON THE FOLLOWING GROUNDS OF APPEAL : ITA.794/BANG/2018 PAGE - 2 02. THE FACTS OF THE CASE ARE, THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MUTUAL FUND DISTRIBUTION CARRIED IN THE NAME OF KUNCHAM INVESTMENT & FINANCIAL SERVICES. BESIDES THE ABOVE BUSINESS THE ASSESSEE ALSO CARRIED ON THE BUSINESS AS AN LIC AGENT AND ALSO MADE INVESTMENT IN SHARES AND MUTUAL FUNDS . THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR EACH O F THE BUSINESS CARRIED OUT BY HIM. DURING THE ASSESSMENT YEAR UND ER CONSIDERATION ITA.794/BANG/2018 PAGE - 3 THE ASSESSEE RECEIVED DIVIDEND ON THE SHARES AND MU TUAL FUNDS OF AN AMOUNT OF RS.45,00,417/-. THE DIVIDEND INCOME WAS CREDITED TO THE BANK ACCOUNT THROUGH ECS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE AO WAS NOT CONVINCED WITH THE EX PLANATION GIVEN BY THE ASSESSEE THAT NO EXPENSES WERE INCURRED IN R ELATION TO EARNING THE EXEMPT INCOME. THEREFORE THE AO INVOKED THE PR OVISIONS OF RULE 8D R.W. SECTION 14A OF THE ACT AND HAD DISALLO WED 0.5% OF THE INVESTMENT OF AN AMOUNT OF RS.4,65,757/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED BY THE ADD ITION MADE BY THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A ). 03. BEFORE THE CIT (A), THE REASONING GIVEN BY THE ASSESSEE WAS NOT ACCEPTED BY THE CIT (A) AND AS SUCH, HAS CONFIR MED THE ADDITION MADE BY THE AO. THE REASONING GIVEN BY THE CIT (A) IS MENTIONED IN PARAS 10 AND 11, TO THE FOLLOWING EFFECT : 10. THEREFORE, THE DISALLOWANCE TO BE COMPUTED SHOU LD ALWAYS BE WITH REFERENCE TO THE INVESTMENT MADE IN SUCH ACTIVITY AND THE EFFORT MADE THERE IN. ITAT DELHI I N CASE OF TECHNOPAK P LTD 18 TAXMANN.COM 146 HAS HELD THAT ACTUAL EARNING OF INCOME IS NOT SINE QUA NON FOR APPLICATI ON OF SECTION 14A AND RULE 8D. THE HONOURABLE P&H HC HAS HELD IN 78 COM 65 THAT THE AO IS JUSTIFIED TO PRESUME TH AT ADMINISTRATIVE EXPENDITURE IS INCURRED FREE DIVIDEND IS EARNED. THE ITAT CHENNAI IN THE CASE OF AH ARIND (P) LTD 64 COM 409 HAS DECIDED THAT WHERE THE ASSESSEE HAS ADMITTED AN D DISALLOWED EXPENDITURE TO EXEMPT INCOME, SUCH DISAL LOWANCE HAS TO BE CALCULATED UNDER RULE 8 D. THE HONOURABLE KARNATAKA HC IN THE CASE OF PRADEEP KAR 319 JTR 416 HAS HELD THAT EXPENDITURE TO EXEMPT INCOME IS NOT ALLOWABLE UNDER SECTION 14A. 11. AS IT HAS BEEN HELD AS PER DISCUSSIONS ABOVE TH AT PROVISIONS OF SECTION 14A AND RULE 8D ARE APPLICABLE IN THE CA SE OF THE APPELLANT, THE CONTENTIONS OF THE APPELLANT ARE HEL D TO BE NOT SUSTAINABLE. CONSEQUENTLY, THE DISALLOWANCE OF RS 4,65,757 ITA.794/BANG/2018 PAGE - 4 U/S 14A READ WITH RULE 8D OF THE ACT MADE BY THE AO IS UPHELD. THE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. AGGRIEVED BY THE ORDER OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 04. BEFORE US IT WAS SUBMITTED BY THE ASSESSEE THAT FOR THE PURPOSE OF INVOKING THE PROVISIONS OF SECTION 14A R .W. RULE 8D, IT IS ESSENTIAL FOR THE AO TO RECORD THE SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE PRESENT CASE IT IS NOT PERMISSIBLE FOR THE AO O R FOR THE CIT (A) TO INVOKE THE PROVISIONS OF RULE 8D AS NO SATISFACT ION WAS RECORDED BY THE AO VIS-A-VIS THE INCORRECTNESS OF THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN THIS REGARD THE ASSESSEE RELIES UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE MATTER OF SOUTH IN DIAN BANK LTD V. CIT [363 ITR 111]. CONSEQUENTLY IT WAS SUBMITTE D BY THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED AND THE E XPENSES WHATSOEVER INCURRED BY THE ASSESSEE WERE NOT ATTRIB UTABLE TO THE EARNING OF THE DIVIDEND INCOME. FOR THIS PURPOSE, THE ASSESSEE RELIES UPON THE FOLLOWING DECISIONS : CCI LTD V. JCIT [IT A.359 OF 2011 (KAR HC)] CANARA BANK V. ACIT [ITA.1397, 1416 OF 2006 (KAR HC )] CIT V. KARNATAKA BANK LTD [ITA.657 & 675 OF 2008 KAR HC] CANARA BANK V. JCIT, LTU [(2016) 4 TMI 429-ITAT, BA NG] PAGE INDUSTRIES LTD V. DCIT [(2016) 7 TMI 1012] KBD SUGARS AND DISTILLERIES LTD V. ACIT [(2016) 6 T MI 202] CIT V. AVON CYCLES LTD [(2012) 5 TMI 26- P & H C] KALYANI STEELS LTD V. ADDL. CIT [(2014) 2 TMI 661-I TAT, PUNE] NETMAGIC SOLUTIONS P. LTD V. DCIT [(2017) 3 TMI 131 ITAT, MUM] ITA.794/BANG/2018 PAGE - 5 IT WAS SUBMITTED THAT THE SALARIES, GENERAL AND ADM INISTRATIVE EXPENSES WERE RELATABLE TO LIC BUSINESS OF THE ASSE SSEE. THE AO HAS NOT MADE ANY COMMENT ON THE EXPENSES DETAILED A NALYSIS PROVIDED BY THE ASSESSEE EXPLAINING WHY THE EXPENSE S AND THE REASON OF INCREASE. THE AO DESPITE RECEIPT OF THE EXPLANATION HAD NOT DEALT WITH THE SUBMISSION AS TO WHY THE EXPLANA TION WAS NOT SATISFACTORY. ON THE BASIS OF THE ABOVE IT WAS SUB MITTED THAT THE ORDER PASSED BY THE AUTHORITIES BELOW IS BEREFT OF ANY SOUND REASONING AND IS THEREFORE REQUIRED TO BE REVERSED. 05. PER CONTRA, THE LD. DR RELIES UPON THE DECISION OF THE COORDINATE BENCH TRIBUNAL IN THE MATTER OF GE INDI A EXPORT [2017] 82 TAXMANN.COM 464 (BANGALORE - TRIB.) AND DELHI HIGH COURT IN INDIA BULLS FINANCIAL SERVICES LTD V. DCIT [395 ITR 242], AND HAS SUBMITTED THAT NO FORM OF SATISFACTION IS REQUI RED TO BE RECORDED BY THE AO. IN GE INDIA (SUPRA) IT WAS HELD AS UNDER : 10. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE RECORDS. THE AO WHILE EMBARKING UPON CALCULATING EX PENDITURE ON THE EXEMPT INCOME IN TERMS OF THE PROVISION OF S EC. 14A HAVE ONLY MENTIONED HIS SATISFACTION, IN LITERALLY MANNE R , HOWEVER HAS NOT GIVEN THE DETAILED REASONS AND HAS MERELY MENTI ONED THAT HE IS NOT SATISFIED WITH THE EXPLANATION OFFERED BY THE A SSESSEE. IN OUR VIEW, IT IS THE DUTY OF THE AO TO RECORD THE SATISF ACTION FOR NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSE E WITH RESPECT TO NOT INCURRING ANY EXPENDITURE BY THE ASSESSEE IN RE SPECT OF THE EXTENT INCOME. IN THE PRESENT CASE, THE AO HAS MERE LY MENTIONED THAT HE IS NOT SATISFIED WITH THE EXPLANATION, THER EFORE, IN OUR VIEW, THE AO HAS RECORDED THE SATISFACTION FOR THE COMPIL ATION OF RULE 8D. NO SPECIFIC FORMAT IS PROVIDED UNDER THE ACT FO R RECORDING THE SATISFACTION. ASSESSEE HAS FAILED TO DISCHARGE HIS PRIMARY ONUS OF PROVING NEXUS OF INTEREST FREE FUNDS AVAILABLE AT T HE TIME OF MAKING THE INVESTMENT THAT HAS YIELDED THE INTEREST FREE INCOME, IN OUR VIEW, IN THE ABSENCE OF DISCHARGE OF INITIAL ON US THE BURDEN IS ITA.794/BANG/2018 PAGE - 6 NOT SHIFTED TO AO TO ESTABLISH NEXUS BETWEEN THE IN TEREST BEARING FUNDS AND THE INVESTMENT MADE BY THE ASSESSEE. AS T HE AO HAS RECORDED HIS DISSATISFACTION REGARDING THE CORRECTN ESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE (NIL) WHI CH THE ASSESSEE CLAIMED TO HAVE BEEN INCURRED IN RELATION TO THE IN COME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. AFTER RECOR DING DISSATISFACTION, THE AO IS LEFT WITH NO OTHER OPTIO N BUT TO ADOPT THE METHODOLOGY PROVIDED IN RULE 8D R.W.S 14A(2) OF THE ACT. IN THE PRESENT CASE, THE AO HAS ONLY APPLIED 0.5% OF THE T OTAL INCOME AS EXPENDITURE. IN OUR VIEW, THE AO HAS RIGHTLY APPLIE D THE RULE 8D AND NO ERROR HAS BEEN POINTED OUT BY THE LD AR ON W ORKING OUT OF THE EXPENDITURE BY APPLYING THE RULE 8D. IN OUR VIE W, THE AO HAS WORKED OUT THE EXPENSES AFTER DUE APPLICATION OF TH E METHODOLOGY, THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS REQ UIRED TO BE REJECTED. 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN THE RETURN OF INCOME HAS SUO MOTU NOT DISALLOWED ANY EXPENDITURE TOWARDS EXEMPT INCOME AND THEREFORE AO RECORDED THE SATISFACTION, IN THE ASSESSMENT ORDER, AFTER EXAMINING THE BOOKS OF ACCOUNT AND OTHER DETAILS FURNISHED BY THE ASSESSEE, THAT SUBMISSION OF THE ASSESSEE THAT NO COST WAS I NCURRED IN RELATION TO EARNING OF EXEMPT INCOME WAS INCORRECT HENCE AO INVOKED RULE 8D OF THE INCOME TAX ACT . FROM THE BARE READING OF THE PROVISIONS OF SECTION 14A R.W. RULE 8D, SHOWS THAT THE AO IS LEFT WITH LITTLE DISCRETIO N AFTER AO COMES TO THE CONCLUSION THAT THE EXPENDITURE INCURRED IN RELATION TO THE INCOME NOT INCLUDED IN THE TOTAL INCOME, HAS NOT BE EN CORRECTLY DISALLOWED BY THE ASSESSEE HENCE DUTY BOUND TO APP LY RULE 8 D ONCE AO REACHES SUCH CONCLUSION . EVEN THE PROVISI ONS OF RULE 8D(2)(II) IS AUTOMATIC AND NO DISCRETION IS GIVEN B Y THE RULES FOR THE APPLICATION OF RULE 8D TO THE AO. ITA.794/BANG/2018 PAGE - 7 RULE 8D READS AS UNDER : 8D. METHOD FOR DETERMINING AMOUNT OF EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (1) WHERE THE ASSESSING OFFICER HAVING REGARD TO TH E ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR, IS NOT SATISFIED WITH- (A) THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MAD E BY THE ASSESSEE ; OR (B) THE CLAIM MADE BY THE ASSESSEE THAT NO EXPENDIT URE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF T HE TOTAL INCOME UNDER THE ACT FOR SUCH PREVIOUS YEAR, HE SHALL DETE RMINE THE AMOUNT OF EXPENDITURE IN RELATION TO SUCH INCOME IN ACCORD ANCE WITH THE PROVISIONS OF SUB-RULE (2). (2) THE EXPENDITURE IN RELATION TO INCOME WHICH DOE S NOT FORM PART OF THE TOTAL INCOME SHALL BE THE AGGREGATE OF FOLLO WING AMOUNTS, NAMELY :- (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME ; (II) IN A CASE WHERE THE ASSESSEE HAS INCURRED EXPE NDITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR IS NOT DIRECTLY A TTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, AN AMOUNT COMPUTED IN ACCORDANCE WITH THE FOLLOWING FORMULA, NAMELY :- B A X--- C WHERE A =AMOUNT OF EXPENDITURE BY WAY OF INTEREST O THER THAN THE AMOUNT OF INTEREST INCLUDED IN CLAUSE (I) INCURRED DURING THE PREVIOUS YEAR ; B =THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPE ARING IN THE BALANCE-SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR ; ITA.794/BANG/2018 PAGE - 8 C =THE AVERAGE OF TOTAL ASSETS AS APPEARING IN THE BALANCE-SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR ; ONCE THE AO COMES TO THE OPPOSITE CONCLUSION ABOUT THE CORRECTNESS OF THE EXPENDITURE CLAIMED BY THE ASSES SEE, AS WELL AS THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS I NCURRED FOR EARNING THE EXEMPT INCOME, IN THAT EVENTUALITY RULE 8D(2) MANDATES THE AO TO COMPUTE THE EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME IN ACCORDANCE WITH THE FORMULA GIVEN IN RULE 8D(2)(II) AND DISALLOW THE SAID AMOUNT. T HE LANGUAGE USED IN THE PROVISION IS USUAL WHICH IS IN THE NATURE OF COMMAND AND IS TO BE MANDATORILY FOLLOWED BY THE AO WHILE CALCULATING THE EXPENDITURE IN RELATION TO THE EARNING OF EXEMPT IN COME. IN THE CONSIDERED OPINION OF THE BENCH, THE ARGUMEN T OF THE ASSESSEE THAT SATISFACTION IS REQUIRED TO BE RECORDED WITH R EFERENCE TO THE BOOKS OF ACCOUNT OF THE ASSESSEE IS NOT CORRECT. R ECENTLY THE HONBLE SUPREME COURT IN THE MATTER OF MAXOPP INVES TMENT LTD V. CIT [(2018) 402 ITR 640 (SC)] IN PARA 41 HAS HELD T HAT WHERE THE ASSESSEE IN HIS RETURN HAS HIMSELF APPORTIONED, BUT THE AO HAD NOT ACCEPTED THE SAID APPORTIONMENT, IN THAT EVENTUALIT Y THE AO IS REQUIRED TO RECORD HIS SATISFACTION TO THIS EFFECT VIS-A-VIS THE BOOKS OF ACCOUNT. FOR THE PURPOSES OF RECORD, WE REPRODU CE PARA 41 OF THE JUDGMENT OF THE HONBLE SUPREME COURT, HEREUNDER : 41. HAVING REGARD TO THE LANGUAGE OF SECTION 14A(2) OF THE ACT, READ WITH RULE 8D OF THE RULES, WE ALSO MAKE IT CLE AR THAT BEFORE APPLYING THE THEORY OF APPORTIONMENT, THE ASSESSING OFFICER NEEDS TO RECORD SATISFACTION THAT HAVING REGARD TO THE KIND OF THE ASSESSEE, SUO MOTU DISALLOWANCE UNDER SECTION 14A W AS NOT CORRECT. IT WILL BE IN THOSE CASES WHERE THE ASSESS EE IN HIS RETURN ITA.794/BANG/2018 PAGE - 9 HAS HIMSELF APPORTIONED BUT THE ASSESSING OFFICER W AS NOT ACCEPTING THE SAID APPORTIONMENT. IN THAT EVENTUALI TY, IT WILL HAVE TO RECORD ITS SATISFACTION TO THIS EFFECT. FUR THER, WHILE RECORDING SUCH A SATISFACTION, THE NATURE OF THE LO AN TAKEN BY THE ASSESSEE FOR PURCHASING THE SHARES/ MAKING THE INVESTMENT IN SHARES IS TO BE EXAMINED BY THE ASSESSING OFFICE R. FURTHER THE HONBLE DELHI HIGH COURT IN THE MATTER OF INDIA BULLS FINANCIAL SERVICES LTD (SUPRA) IN PARAS 6 TO 8 HELD AS UNDER : 6. THIS COURT IN THE CONSOLIDATED PHOTO AND FINVEST LTD. (SUPRA) FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN GODREJ AND BOYCE MFG. CO. LTD. V. DEPUTY CIT [2010] 328 ITR 81 (BOM) ; [2010] 194 TAXMAN 203 (BOM), HELD THAT THE ASSESSING OFFICER HAS TO TAKE AN OVERALL VIEW AND NOT A 'PIEC EMEAL DECISION' REGARDING MERITS OF THE DISALLOWANCE. A C LOSE ANALYSIS OF THAT JUDGMENT WOULD SHOW THE ASSESSING OFFICER'S VIEW WAS REVERSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS ) IN THAT CASE WHICH WAS ULTIMATELY AFFIRMED BY THE INCOME-TA X APPELLATE TRIBUNAL. THIS FACTOR SIGNIFICANTLY DISSUADED THE C OURT FROM EXERCISING ITS JURISDICTION UNDER SECTION 260A OF T HE ACT. 7. UNDOUBTEDLY, THE LANGUAGE OF SECTION 14A PRESUPP OSES THAT THE ASSESSING OFFICER HAS TO ADDUCE SOME REASONS IF HE IS NOT SATISFIED WITH THE AMOUNT OFFERED BY WAY OF DISALLO WANCE BY THE ASSESSEE. AT THE SAME TIME SECTION 14A(2) AS INDEED RULE 8D(2)(I) LEAVE THE ASSESSING OFFICER EQUALLY WITH N O CHOICE IN THE MATTER INASMUCH AS THE STATUTE IN BOTH THESE PR OVISIONS MANDATES THAT THE PARTICULAR METHODOLOGY ENACTED SH OULD BE FOLLOWED. IN OTHER WORDS, THE ASSESSING OFFICER IS UNDER A MANDATE TO APPLY THE FORMULAE AS IT WERE UNDER RULE 8D BECAUSE OF SECTION 14A(2). IF IN A GIVEN CASE, THEREFORE, T HE ASSESSING OFFICER IS CONFRONTED WITH A FIGURE WHICH, PRIMA FA CIE, IS NOT IN ACCORD WITH WHAT SHOULD APPROXIMATELY BE THE FIGURE ON A FAIR WORKING OUT OF THE PROVISIONS, HE IS BUT BOUND TO R EJECT IT. IN SUCH CIRCUMSTANCES THE ASSESSING OFFICER ORDINARILY WOULD EXPRESS HIS OPINION BY REJECTING THE DISALLOWANCE O FFERED AND THEN PROCEED TO WORK OUT THE METHODOLOGY ENACTED. 8. IN THIS INSTANCE THE ELABORATE ANALYSIS CARRIED OUT BY THE ASSESSING OFFICER AS INDEED THE THREE IMPORTANT STE PS INDICATED BY HIM IN THE ORDER, SHOWS THAT ALL THESE ELEMENTS WERE PRESENT IN HIS MIND, THAT HE DID NOT EXPRESSLY RECORD HIS D ISSATISFACTION ITA.794/BANG/2018 PAGE - 10 IN THESE CIRCUMSTANCES, WOULD NOT PER SE JUSTIFY TH IS COURT IN CONCLUDING THAT HE WAS NOT SATISFIED OR DID NOT REC ORD COGENT REASONS FOR HIS DISSATISFACTION TO REJECT THE ASSES SING OFFICER'S CONCLUSION. TO INSIST THAT THE ASSESSING OFFICER SH OULD PAY SUCH LIP SERVICE REGARDLESS OF THE SUBSTANTIAL COMPLIANC E WITH THE PROVISIONS WOULD, IN FACT, DESTROY THE MANDATE OF S ECTION 14A. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN T HE SUBMISSION OF THE ASSESSEE THAT NO SATISFACTION WAS RECORDED BY T HE AO INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D AND THE ADDITIONS MADE BY AO WERE WITHOUT ANY BASIS. . 07. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (INTURI RAMA RAO) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 18.09.2018 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.