9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 1579 - AT - Income TaxDisallowance u/s 14A - Held that - It is a fact that the relevant assessment year is 2007-08 under consideration is outside the scope of provisions of Rule 8D. The said provisions cannot be treated as applicable to the A.Y.2007-08 under consideration indirectly when the same is precluded by the Hon ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT, reported in (2010 (8) TMI 77 - BOMBAY HIGH COURT ) Bom). Ppercentage of the exempt income can constitute a reasonable estimate for making disallowance in the years earlier to the assessment year 2008-09
Issues: Disallowance u/s 14A
Analysis: The appeal was filed against the order of CIT (A) for the assessment year 2007-08, challenging the disallowance under section 14A of Rs. 2,28,944 made by the Assessing Officer (AO) and confirmed by CIT (A). The appellant contended that the disallowance was not justified as Rule 8D was not applicable for the relevant year as per the judgment of the Hon'ble Bombay High Court. The appellant argued that the disallowance should be restricted to 2% of the dividend income based on various decisions of the ITAT, Kolkata Benches. The Revenue Authorities, however, supported the disallowance. The ITAT considered the judgment of the Hon'ble Bombay High Court in the case of CIT vs. M/s. Godrej Agrovet Ltd, where it was held that the percentage of exempt income can be a reasonable estimate for making disallowance in years preceding the assessment year 2008-09. The ITAT noted that Rule 8D was not applicable to the assessment year 2007-08 based on the High Court's decision. Therefore, the ITAT directed the AO to quantify the disallowance at 2% of the total exempt income, in line with the High Court's judgment. Consequently, the grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly. In conclusion, the ITAT ruled in favor of the assessee, setting aside the disallowance made under section 14A and directing the AO to restrict the disallowance to 2% of the total exempt income, as per the judgment of the Hon'ble Bombay High Court. The decision emphasized the binding nature of the High Court's judgment in determining the appropriate disallowance for the assessment year in question.
|
