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In view of the aforesaid legal position with regard to disallowance u/s 14A of the Act, we are of the view that the issue before the AO was debatable and therefore, resort to proceedings u/s 154 of the Act was not appropriate.

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Sec. 154 of Income Tax Act, 1961— Rectification of mistake — The satisfaction contemplated u/.s 14A (2) is not merely restricted to rejecting the claim made by the assessee and the disallowance to be made u/s 14A but also includes substituting the claim made by the assessee on any other reasonable basis as the AO deems it fit, in such circumstances the correctness of the AO’s judgment can be reviewed but it cannot be said that the AO had no jurisdiction to do so and AO ought to resort only to the provision of Rule 8D of the Rules, in other words Rule 8D is not automatic and can be resorted to by the AO only as a measure of last resort, thus, the issue before the AO was debatable and therefore, resort to proceedings u/s 154 was not appropriate - MPHASIS SOFTWARE AND SERVICES (INDIA) PVT. LTD. V/s ASSTT. CIT - [2020] 27 ITCD Online 005 (ITAT-BANGALORE)