Western India Regional Council of
The Institute of Chartered Accountants of India

(Setup by an Act of Parliament)

August 23, 2019

CA. Paras K. Savla, CA. Hemant R. Shah

Pr. CIT vs. Gujarat State Petronet Limited (Gujarat High Court)

Rule 8D does not apply automatically merely because there exist mixed fund for disallowance U/s 14A

Tax Appeal No. 208 of 2019, Date of Judgement/Order: 9/7/2019 A.Y.2010-11

The language of Section 14A of the Act is plain and clear. Before invoking Rule 8D, the Assessing Officer is obliged to indicate that having regard to the accounts of the assessee, he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to the income which does not form part of the total income under the Act. In other words, the condition precedent of recording the requisite satisfaction which is a safeguard provided in Section 14A should not be overlooked before going to the Rule 8. In such circumstances, the Hon. High Court was not impressed by the submission canvassed on behalf of the Revenue that once there are mixed funds, Rule 8D would be attracted automatically.