2011 (12) TMI 662 - AT - Income Tax

Summary

Issues involved: Disallowance u/s. 14A of the Act.

Summary:
The Appellate Tribunal ITAT Mumbai heard an appeal for assessment year 2007-08 against the order of Ld. CIT(A) regarding the disallowance of &8377; 81,03,631 u/s. 14A of the Act. The AO had made the disallowance following a decision of the Special Bench in the case of Daga Capital Management Pvt. Ltd. The Ld. CIT(A) confirmed the AO's action in the first appeal.

However, the decision of the Special Bench was reversed by the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT, holding that Rule 8D of I.T. Rule is prospective and applicable from assessment year 2008-09. Consequently, the Tribunal set aside the orders of the authorities below and directed the AO to re-decide the disallowance, if any, in respect of exempted income after giving the assessee a hearing and considering the evidence. The appeal by the assessee was allowed for statistical purposes.

The order was pronounced on the 2nd day of December 2011.