TMI Blog2017 (1) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of animal feeds and trading of agricultural products filed its return of income on 8. 10. 2010, declaring total income at ₹ 15. 60 crores. The AO completed assessment, u/s. 143(3) of the Act, on 06. 03. 2013 determining its income at ₹ 18. 53 crores. 2. Effective Ground of appeal is about directing the AO to restrict the disallowance u/s. 14A of the Act r. w. r. 8D of the Income tax Rule 1962, (Rules ) to 0. 5% of the average investments. During the assessment proceedings, the AO found that assessee had received dividend of ₹ 72. 25 lakhs which had been claimed as exempt from tax u/s. 10(34) of the Act, that it had disallowed expenditure of ₹ 25. 24 lakhs on its own . The AO , after seeking an explanation in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f both the sides and also perused the relevant material on record. As held by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra), Rule 8D of Income-tax Rules, 1962 is applicable only from assessment year 2008-09. As further held by the Hon'ble Bombay High Court in the said case, disallowance u/s. 14A is required to be made for the years prior to assessment year 2008-09 by following some reasonable method after taking into consideration the facts and circumstances of the case. In the present case, this issue has already been examined on merit by the learned CIT(Appeals) and on such examination, he has found that the entire investment in shares made by the assessee company out of its own funds and no inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear and having regard to the specific findings, given by the learned CIT(Appeals) as discussed, above, we find no infirmity: in the impugned order of the learned CIT(Appeals) deleting the addition of Rs. l, 07, 74, 935/- made by the AO on account of disallowance u/s 14A and upholding the same on this issue, we dismiss the appeal filed by the Revenue. 9. In its cross objection, the assessee has raised the following grounds : 1. The Cross Objector submits that Rule 8D cannot be applied for computing disallowance under section 14A for the Assessment Year 2007-08. 2. Without prejudice, the disallowance under section 14A read with section 8D cannot exceed ₹ 80, 71, 204/- in any view of the matter. 3. The Cross Obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odrej (supra) has disallowed the expenditure only to the extent of 2% of the total exempt income earned by the respondent assessee on the basis it order dated 27. 02. 2009 for the 2002-2003 and order dated 10. 09. 2009 for assessment year 2003-2004 and 2004-05 wherein the disallowance was restricted to 2% of the exempt income. Further, the Tribunal has remanded the matter to the Assessing Officer to verify the disallowance claimed and restrict the disallowance only to the extent to 2% of the total exempt income. We find no fault with the order of the Tribunal. In the circumstances, we see no reason to entertain question (b) also. Accordingly, we, direct the AO to restrict the disallowance to 2% of the exempt income. As a result ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
