DCIT CEN CIR 4(1), MUMBAI vs. GODAWARI CORPORATION LTD, MUMBAI

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ITA 4397/MUM/2016Status: DisposedITAT Mumbai23 April 2018AY 1998-993 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to estimate the disallowance at 2% of exempt income. They found this estimation reasonable, especially considering Rule 8D was not applicable for the assessment year in question.

What were the facts?

The Revenue appealed the CIT(A)'s order which estimated a disallowance under Section 14A at 2% of exempt income. The Assessing Officer had computed the disallowance under Rule 8D at ₹.52,55,534/-.

What were the issues?

Applicability of Rule 8D for AY 1998-99 and the reasonableness of estimating disallowance under Section 14A at 2% of exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI

Before: SHRI C.N. PRASAD, HONBLE & SHRI RAJESH KUMAR, HONBLE

For Appellant: Shri Arati Vissanji
For Respondent: Shri M.C. Omi Ningshen
Hearing: 26.02.2018Pronounced: 23.04.2018

PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the of the Ld. Commissioner of Income-tax (Appeals) – 2 Mumbai dated 01.03.2016 for the Assessment Year 1998 – 99.

2.

The only issue in the appeal of the Revenue is against estimation of disallowance under section 14A at 2% of the exempt income by the Ld.CIT(A).

1.

2 ITA.No. 4397/MUM/2016 (A.Y:1998-99) M/s. Godavari Corporation Ltd. 3. The Assessing Officer while giving effect to the order passed by the Tribunal u/s. 143(3) r.w.s. 254 of the Act computed the disallowance under Rule 8D (2) r.w.s. 14A of the Act at ₹.52,55,534/-.

4.

On appeal the Ld.CIT(A) in view of the decision of the Hon'ble Jurisdictional High Court in the case of M/s. Godrej Boyce Mfg. Co. Ltd. v. DCIT [328 ITR 81] held that provisions of Rule 8D have no application for the Assessment Year under consideration which is A.Y.1998-99 as the Hon'ble High Court held that provisions of Rule 8D are prospective and are applicable for the Assessment Year 2008-09 onwards. Having said that, the Ld.CIT(A) following the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. M/s. Godrej Agrovet Ltd. in ITA.No. 934 of 2011 dated 08.01.2013 directed the Assessing Officer to compute the disallowance at 2% of the exempt income.

5.

Before us, Ld. DR vehemently supported the orders of the Assessing Officer and on the other hand Ld. Counsel for the assessee relied on the orders of the Hon'ble Jurisdictional High Court and submitted that in the absence of Rule 8D the disallowance computed at 2% is reasonable and this was affirmed by the Hon'ble Jurisdictional High Court.

3 ITA.No. 4397/MUM/2016 (A.Y:1998-99) M/s. Godavari Corporation Ltd. 6. On hearing the both the sides and on perusing the orders of the Authorities below and the decision of the Hon'ble Jurisdictional High Court. We do not find any valid reason to interfere in the order of the Ld.CIT(A) in estimating the disallowance under Section 14A for the Assessment Year 1998-99 at 2% of the dividend income received by the assessee which in our view is reasonable.

7.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on the 23rd April, 2018.

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