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2015 (3) TMI 651 - HC - Income TaxComputation of disallowance of interest - Tribunal rejected the computation made by the AO as per Rule 8D - Grievance of the revenue is that in terms of decision of Godrej Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) reasonable disallowance of expenditure in relation to exempt income has to be made even in respect of Assessment Year prior to Assessment Year 2008-09 when Rule 8D of the Income Tax Rules, 1962 is applicable - Held that - So far as the issue of disallowance of reasonable expenditure to earn exempt income is concerned, we find that the impugned order has followed its decision in case of the respondent-assessee for the Assessment Year 2005-06 2014 (8) TMI 457 - BOMBAY HIGH COURT where disallowance was limited to 2% of the exempt income and the same was held to be fair and reasonable. The revenue being aggrieved by the order of the Tribunal in case of respondent-assessee for the Assessment Year 2005-06 has preferred an appeal to this Court. However the above appeal of the revenue was dismissed. - Decided against revenue.
Issues Involved:
Challenge to order of Income Tax Appellate Tribunal on disallowance of interest computation as per Rule 8D for Assessment Year 2007-08. Analysis: The High Court heard an appeal by the revenue challenging the Income Tax Appellate Tribunal's order regarding the Assessment Year 2007-08. The revenue proposed a question of law related to the computation of disallowance of interest under Rule 8D. The Court expressed initial confusion regarding the proposed question but clarified that the revenue did not contest the applicability of a previous decision. The revenue's grievance was that reasonable disallowance of expenditure in relation to exempt income should be made even for years before Rule 8D was applicable. The Court noted that for the Assessment Year 2005-06, the Tribunal had limited the disallowance to 2% of the exempt income, which was deemed fair and reasonable. An appeal by the revenue for the Assessment Year 2005-06 had previously been dismissed by the Court. The Court found that the issue raised in the proposed question had already been decided against the revenue in a previous case involving the same respondent-assessee. Consequently, the Court held that no substantial question of law arose for consideration and dismissed the appeal without any costs.
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