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2012 (11) TMI 332 - ITAT DELHIProceedings u/s 263 - tax payable u/s 115JB - rebate under section 88E - disallowance as per the provisions Rule 8D of the IT Rules r.w.s. 14A - erroneous order – Held that:- Prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue - Assessing Officer was also aware that assessee had claimed rebate u/s 80E in respect of securities transaction tax in return of income - AO accepted the method of working out the tax payable on the deemed total income u/s 115JB after providing rebate u/s 88E. - the order passed by Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count. Other issue on which the CIT invoked the provisions of section 263 is not disallowing u/s 14A read with Rule 8D. The assessee himself has disallowed expenses of Rs.3,000/- of peons, conveyance, postage, etc. The Assessing Officer accepted the quantum of disallowance. CIT takes a view that the disallowances should be as per Rule 8D. Various Courts had held that the provisions of Rule 8D cannot be invoked retrospectively. These provisions are applicable prospectively only and w.e.f. assessment year 2008- 09 onwards. In the assessee’s case, the year involved is assessment year 2006-07. Thus, the view taken by the Assessing Officer by accepting the reasonable disallowance by not invoking the applicability of Rule 8D is a sustainable view in law. The Assessing Officer accepted the disallowance as made by assessee - order of Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count also - CIT was not justified in invoking the provisions of section 263 of the Income-tax Act - appeal of the assessee is allowed.
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