2012 (9) TMI 1084 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case are the disallowance u/s 14A and the addition made on account of commission paid to the director.

Disallowance u/s 14A:
The Revenue appealed against the order of the CIT(A) regarding the disallowance u/s 14A. The Assessing Officer had disallowed &8377; 32,69,000 u/s 14A, but the CIT(A) upheld the disallowance only to the extent of &8377; 5,50,000. The matter was brought to the attention of the Tribunal citing the decision of the Delhi High Court in the case of Maxopp Investment Limited Vs. CIT, which held that Rule 8D has no retrospective effect. The Tribunal referred to the guidelines provided by the High Court on how to determine the disallowance under Section 14A for the period prior to the introduction of Rule 8D. Consequently, the Tribunal set aside the orders of the authorities below and directed the Assessing Officer to re-determine the disallowance as per the guidelines of the High Court, ensuring the assessee is given a fair opportunity to be heard.

Commission paid to Director:
The Revenue challenged the deletion of the addition of &8377; 43,00,000 made by the Assessing Officer on account of commission paid to the director. The Tribunal noted that a previous order by the ITAT in the assessee's own case had ruled in favor of the assessee regarding the payment of commission to the director. Following the decision of the ITAT, the Tribunal upheld the order of the CIT(A) and dismissed the Revenue's appeal on this issue.

Cross-objection:
The assessee had filed a cross-objection challenging the disallowance sustained by the CIT(A) under Section 14A. However, since the Tribunal had already restored the issue to the Assessing Officer while addressing the Revenue's appeal, the cross-objection of the assessee was considered to be only academic in nature and was treated as allowed for statistical purposes.

In conclusion, the appeal of the Revenue was partly allowed for statistical purposes, and the cross-objection of the assessee was treated as allowed for statistical purposes. The decision was pronounced in open court on 7th September 2012.