2010 (12) TMI 1236 - AT - Income Tax

Summary

Issues involved: Appeal against disallowance made u/s.14A for assessment year 2004-2005.

The Appellate Tribunal ITAT Mumbai heard the appeal regarding the disallowance made u/s.14A for the assessment year 2004-2005. The assessee, engaged in trading in shares, debentures, and venture capital contributions, contested the disallowance of &8377;20,64,825 computed by the Assessing Officer. The Commissioner of Income-tax (Appeals) directed the AO to compute the disallowance u/s.14A as per rule 8D, leading to the current appeal.

The Tribunal noted that the issue of disallowance u/s 14A is settled in light of the judgment of the Hon'ble Bombay High Court in Godrej & Boyce Limited Vs. ACIT dated 12.08.2010. The High Court held that the provisions of section 14A apply to present circumstances, and the disallowance should be determined by the AO on a 'reasonable basis,' not rule 8D. Consequently, the Tribunal set aside the previous order and remanded the matter to the AO for deciding the disallowance amount in accordance with the mentioned judgment, providing the assessee with a fair opportunity to present their case.

The Tribunal allowed the appeal for statistical purposes, pronouncing the order on December 20, 2010.