Disallowance Under Rule 8D is Not Compulsory Or Mandatory: ITAT Mumbai

In the case of Shapoorji Pallonji & Co. Ltd vs. DCIT, ITAT Mumbai has held that:

Thus, Rule 8D is not attracted and applicable to assessee who have exempt income and it is not compulsory and necessary that an assessee must voluntarily compute disallowance as per Rule 8D of the Rules. Where the disallowance or ‘nil’ disallowance made by the assessee is found to be unsatisfactory on examination of accounts, the assessing officer is entitled and authorised to compute the deduction under Rule 8D of the Rules. This pre-condition and stipulation as noticed below is also mandated in sub Rule (1) to Rule 8D of the Rules.

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