CIT-I vs. M/S. CONSOLIDATED PHOTO & FINVEST LTD

In our opinion no substantial question of law arises for our decision. The 2012:DHC:3947-DB

On appeal by the assessee, the CIT(Appeals) observed that the Assessing Officer did not point out any discrepancy in the disallowance offered by the assessee itself nor was there any material to show that further expenditure needs to be disallowed under Section 14A. He held further that Rule 8D of the Income Tax Rules was notified only on 24.3.2008 and therefore took effect only from the assessment year 2008-09. In this view of the matter and applying the judgment of the Bombay High Court in the case of Godrej & Boyce Manufacturing Company Ltd. Vs. DCIT in ITA 626/2010 where it was held that Rule 8D took effect only from the assessment year 2008-09, the CIT(Appeals) held that the disallowance worked out by the Assessing Officer was not justified. He accordingly, deleted the further disallowance made by Assessing Officer and allowed the assesses‟s appeal on this point.

The revenue carried the matter in appeal before the Tribunal. The Tribunal noticed the method adopted by the assessee in making a disallowance of 2012:DHC:3947-DB

The objection of the ld. standing counsel before us is that the Tribunal ought to have remitted the matter back to the Assessing Officer for re-computation of the disallowance made under Section 14A of the Act, since he had no occasion to examine whether the disallowance made by the assessee was sufficient or not because of the view he took, that is to say, that Rule 8D was applicable to the assessment year in consideration (2007-08). We are not able to uphold the objection. It was for the Assessing Officer to examine whether the disallowance offered by the assessee itself was sufficient on the facts and circumstances of the case, notwithstanding the view he took regarding the applicability of Rule 8D. It is not expected of him to take piecemeal decisions regarding the merits of the disallowance. In any case, when the disallowance was taken in appeal before the CIT(Appeals), the judgment of the Bombay High Court (supra) was available and it was for the Assessing Officer to take out a plea before the CIT(Appeals) that the disallowance offered by the assessee was not sufficient, even if Rule 8D was not applicable but this was not done. When the matter reached the Tribunal, the Tribunal specifically called upon the departmental representative to point out any error in the computation of the disallowance made by the assessee, but he was not able to point out any error in the same. In these circumstances, we are of the opinion that no strong grounds have been made out for 2012:DHC:3947-DB

The ld. standing counsel referred to the judgment dated 18th November, 2011 of this Court in the case titled Maxopp Investment Ltd. vs. CIT ITA No. 687/2009 and contended that in view of the directions given by the Court in this decision, it would be proper and more appropriate for the Assessing Officer to examine the disallowance to be made under Section 14A over again. Each case has to turn on its facts. We do not think that any broad generalization can be made in such a matter which is purely factual. As already noted, a substantial amount of the total expense incurred by the assessee, for earning both taxable and non-taxable income, has been offered for disallowance by the assessee itself. Neither the CIT(Appeals) nor the ld. Departmental representative who appeared before the Tribunal could point out any error or serious discrepancy in the basis adopted by the assessee for making the disallowance. In these circumstances, particularly having regard to the facts of the case before us, we do not think any substantial question of law arises for decision.

For the above reasons we find no merit in the appeal and the same is dismissed with no order as to costs.