2015 (10) TMI 2466 - HC - Income Tax

Disallowance u/s 14A r.w.r. 8D - Whether on the facts and the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance made as per sub clause (ii) of Rule 8D(2) r.w.s. 14A of the Act? - Held that - As is evident from the proposed questions of law the impugned order of the Tribunal placed reliance upon the decision of this Court in Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT and held that Rule 8D of the Income Tax Rule, 1962 (the Rule ) would not be applicable for the purposes of disallowance under Section 14A of the Act for assessment prior to Assessment Year 200809. In the above view the impugned order holds the disallowance has to be made on reasonable basis and not on application of Rule 8D of the Income Tax Rules for the subject Assessment Year 200607. It is an agreed position between the parties that the issues arising herein stands concluded by the decision of this Court in Godrej & Boyce Mfg. Co. Ltd. (supra) and the same has been followed by the impugned order. - Decided against revenue

Summary

Issues:
Challenge under Section 260A of the Income Tax Act, 1961 on order passed by the Income Tax Appellate Tribunal for A.Y. 2006-07. Questions of law raised regarding the deletion of disallowance under Rule 8D(2) r.w.s. 14A of the Act and reliance on a specific court decision.

Analysis:

1. Disallowance under Rule 8D(2) r.w.s. 14A of the Act:
The Tribunal's order was challenged on the grounds of deleting the disallowance made under sub clause (ii) of Rule 8D(2) r.w.s. 14A of the Act. The High Court noted that the impugned order relied on the decision in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT (2010) 328 ITR 81 (Bom.) to hold that Rule 8D would not be applicable for disallowance under Section 14A of the Act for assessments before A.Y. 2008-09. The Court observed that the disallowance should be made on a reasonable basis rather than applying Rule 8D for the relevant Assessment Year 2006-07. The issues were considered concluded by the decision in Godrej & Boyce Mfg. Co. Ltd., and the questions raised did not give rise to any substantial question of law, leading to the dismissal of the appeal.

2. Reliance on Specific Court Decision:
The Tribunal's reliance on the decision in Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT (2010) 328 ITR 81 (Bom.) was a significant aspect of the challenge. The High Court acknowledged that both parties agreed that the issues in question were settled by the mentioned court decision, which was followed by the impugned order. Consequently, the Court found that the framed questions did not present any substantial question of law for consideration, resulting in the dismissal of the appeal without any order as to costs.

In conclusion, the High Court's judgment in the present case addressed the challenge under Section 260A of the Income Tax Act, 1961 concerning the Tribunal's order for A.Y. 2006-07. The analysis focused on the disallowance under Rule 8D(2) r.w.s. 14A of the Act and the reliance on a specific court decision, ultimately leading to the dismissal of the appeal based on the settled legal position established by the referenced court decision.