2012 (2) TMI 572 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition u/s. 14A of the Income Tax Act, 1961.

Summary:

Issue 1: Deletion of addition u/s. 14A of the Act read with Rule 8D of the I. T. Rules, 1962

The appeal by revenue challenged the order of CIT(A) deleting the addition u/s. 14A of the Act. The assessee's total income was initially declared at &8377; 5,70,120/-, but the assessment increased it to &8377; 8,92,490/- by disallowing expenses u/s. 14A read with Rule 8D. The CIT(A) deleted the entire addition based on the decision of the Hon'ble Delhi High Court in a specific case. The revenue contended that the addition should have been restricted to a certain amount as per Rule 8D. The Tribunal referred to a decision by the Hon'ble Bombay High Court regarding the prospective applicability of Rule 8D from assessment year 2008-09. Following this, the Tribunal directed the Assessing Officer to restrict the disallowance u/s. 14A to 1% of total exempt income, in line with previous decisions on similar matters. Consequently, the appeal of the revenue was partly allowed.