THE PR. COMMISSIONER OF INCOME TAX-4 vs. GUJARAT GUARDIAN LTD.

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ITA/1106/2017HC DelhiDLHC01182577201705 December 2017Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE SANJEEV SACHDEVA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue in the present appeal is covered by the Supreme Court's decision in Godrej & Boyce Manufacturing Co. Ltd. v. DCIT. The Supreme Court had confirmed that for disallowances under Section 14A and the application of Rule 8D, the Assessing Officer must record prima facie satisfaction that the assessee's claim is inadmissible. In the present case, the High Court found that no such satisfaction was recorded by the AO. Therefore, the ITAT's conclusions were justified. The Court concluded that no substantial question of law arises from the ITAT's order.

What were the facts?

The Revenue appealed the Income Tax Appellate Tribunal's (ITAT) order concerning a disallowance under Section 14A of the Income Tax Act, 1961. The Assessing Officer (AO) had disallowed certain amounts after rejecting the assessee's explanation regarding statutory disallowance, applying Rule 8D of the Income Tax Rules. The Commissioner (Appeals) granted relief to the assessee, which was upheld by the ITAT. The appeal before the High Court was filed by the Principal Commissioner of Income Tax-4 against Gujarat Guardian Ltd.

What were the issues?

1. Whether the ITAT's order upholding the relief granted by the Commissioner (Appeals) regarding disallowance under Section 14A (2) read with Rule 8D is correct in law? The Revenue contended that the AO had made the disallowance. The assessee argued that the ITAT's conclusions were justified. The High Court noted that the issue is covered by the Supreme Court judgment in Godrej & Boyce Manufacturing Co. Ltd. v. DCIT (2017) 394 ITR 449 (SC). The Supreme Court in that case held that the Assessing Officer must record prima facie satisfaction that the assessee's claim is inadmissible before applying Rule 8D for disallowance under Section 14A.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

ITA 1106/2017 Page 1

$~27 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA 1106/2017, CM APPL.44153-44154/2017

THE PR. COMMISSIONER OF INCOME TAX-4 ..... Appellant

Through: Mr. Ruchir Bhatia, Sr. Standing Counsel.

versus

GUJARAT GUARDIAN LTD.

..... Respondent Through: Mr. Neeraj Jain with Mr. Aniket D. Agrawal, Advocates.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE SANJEEV SACHDEVA

O R D E R %

05.12.2017

The Revenue’s appeal in this case concerns with the correctness of the ITAT’s order in regard to disallowance under Section 14A (2). The Assessing Officer (AO) disallowed certain amounts after rejecting the assessee’s explanation with respect to the statutory disallowance on an application of Rule 8D of the Income Tax Rules. The appellate Commissioner granted the relief which was confirmed by the ITAT.

The issue in the opinion of this Court is now covered by the judgment of the Supreme Court in Godrej & Boyce Manufacturing Co. Ltd. v. DCIT (2017) 394 ITR 449 (SC). In that judgment, the Court confirmed the opinion of various High Courts bringing to tax any amount under Section 14A and applying the Rule 8D, the

ITA 1106/2017 Page 2

Assessing Officer has to record prima facie satisfaction that the claim of the assessee is inadmissible. In the present case, no such satisfaction was recorded. The ITAT’s conclusions are, therefore, justified. No substantial question of law arises; the appeal is dismissed, accordingly, along with pending applications.

S. RAVINDRA BHAT, J

SANJEEV SACHDEVA, J DECEMBER 05, 2017 /vikas/

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