9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (11) TMI 932 - AT - Income TaxDisallowance u/s 14A of the Act Held that - When Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub section (1) of section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - matter remanded to the file of the Assessing Officer
Issues:
- Disallowance under section 14A of the Income Tax Act for assessment years 2005-06, 2006-07, and 2007-08. - Validity of the order passed by the ld.CIT(A) confirming the disallowance made by the AO. - Applicability of Rule 8D for disallowance. - Interpretation of relevant provisions of section 14A of the Act. - Jurisdictional High Court's judgment in Godrej & Boyce Mfg. Co. Ltd. case. The judgment by the Appellate Tribunal ITAT Mumbai pertained to appeals against a common order for the Assessment Years 2005-06, 2006-07, and 2007-08. The assessee, engaged in trading art, faced disallowance under section 14A of the Income Tax Act due to earning exempt income through borrowed funds. The AO disallowed amounts for each assessment year, which the ld. CIT(A) upheld based on the assessee's own working of disallowance and following a Tribunal's decision. The assessee appealed the order, challenging the disallowance. The common grounds raised by the assessee were disposed of, with one ground not pressed and another set aside for the AO to decide afresh in light of the jurisdictional High Court's judgment in Godrej & Boyce Mfg. Co. Ltd. case. The Tribunal, in line with the High Court's ruling, partly allowed the appeals for statistical purposes, sending the matter back to the AO for reconsideration. The primary issue involved the disallowance under section 14A of the Act for the assessment years in question. The AO disallowed amounts based on the assessee's exempt income and borrowed funds, leading to the dispute. The ld. CIT(A) upheld these disallowances, citing the assessee's own calculations and a Tribunal's decision. The Tribunal, considering the arguments and relevant legal provisions, partly allowed the appeals, setting aside one issue for the AO's reconsideration. Another crucial issue was the applicability of Rule 8D for disallowance. The parties agreed that this issue was covered by the High Court's judgment in Godrej & Boyce Mfg. Co. Ltd. case. The Tribunal concurred, setting aside the matter for the AO to decide afresh in line with the High Court's directions, emphasizing the need for a reasonable basis for determining expenditure related to income not forming part of the total income under the Act. The interpretation of section 14A of the Act was pivotal in resolving the disallowance issue. The Tribunal referred to the High Court's judgment, emphasizing the Assessing Officer's duty to determine relevant expenditure even before Rule 8D's applicability. The Tribunal's decision aligned with the High Court's directive, highlighting the importance of a reasonable basis for determining such expenses. The judgment also addressed the jurisdictional High Court's ruling in the Godrej & Boyce Mfg. Co. Ltd. case. The Tribunal followed the High Court's decision, setting aside one issue for the AO's reconsideration in line with the High Court's directions. This aspect underscored the significance of adhering to the High Court's interpretation of relevant legal provisions in resolving tax disputes effectively.
|
