SHANUDEEP P.LTD,MUMBAI vs. DCIT 3(3), MUMBAI

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ITA 4110/MUM/2013Status: DisposedITAT Mumbai26 April 2017AY 2007-083 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the disallowance computed by applying Rule 8D was contrary to the Bombay High Court's judgment in Godrej & Boyce Mfg. Co. Ltd. vs. DCIT, as Rule 8D is applicable from assessment year 2008-09 onwards. The matter was restored to the Assessing Officer for fresh determination.

What were the facts?

The assessee's appeal pertains to the assessment year 2007-08. The sole issue was a disallowance of Rs. 4,67,405/- made under Section 14A of the Income Tax Act.

What were the issues?

Whether the disallowance under Section 14A for assessment year 2007-08 could be computed using Rule 8D, which was held to be prospective.

Which sections of the Income-tax Act were involved?

Section 14A

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

Before: SHRI G.S.PANNU & SHRI AMARJIT SINGH

For Appellant: Shri A.A.Patade
Hearing: 27/03/2017Pronounced: 26/04/2017

ORDER PER G.S.PANNU,A.M:

The captioned appeal filed by the assessee pertaining to assessment year 2007-08 is directed against an order passed by CIT(A)-7, Mumbai dated 17/12/2012, which in turn, arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 15/12/2009.

2.

In this appeal, the solitary issue raised is with regard to a disallowance of Rs.4,67,405/- made by the income tax authorities under section 14A of the Act.

3.

At the time of hearing, the singular plea of the assessee was that the disallowance under section 14A has been computed by applying the provisions of rule 8D of the Rules, which is explicitly contrary to the judgement of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT, 328 ITR 81(Bom). It was pointed out that as per Hon'ble Bombay High Court, rule 8D of the Rules is applicable w.e.f assessment year 2008-09 and does not retrospectively effect the prior assessment years. The Ld. Representative for the assessee pointed out that the instant assessment year being 2007-08, the manner of computing the disallowance by relying on rule 8D of the Rules is unsustainable. The Ld. Representative for the assessee submitted that the assessee will have no objection, if the matter is restored back to the Assessing Officer for redetermining the issue of the permissible disallowance under section 14A of the Act .

4.

The Ld. Departmental Representative had no objection to the prayer of the assessee for remanding the matter back to the file of Assessing Officer for examination afresh.

5.

Having considered the rival submissions and noticing that the invoking of rule 8D of the Rules in the instant assessment year is contrary to the judgment of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd.(supra), we deem it fit and proper to restore the matter back to the file of Assessing Officer, who shall revisit the issue of disallowance under section 14A of the Act after hearing the assessee and as per law.

6.

In the result, appeal of the assessee is partly allowed, as above.

Order pronounced in the open court on 26/04/2017

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