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2016 (7) TMI 1456 - HC - Income TaxDisallowance u/s. 14A - the method adopted by Assessing Officer is not applicable to the year under consideration i.e. Assessment Year 2007-08 - Held that - The impugned order of the Tribunal has restored the issued of disallowance under Section 14A of the Act to the AO to recompute the same on reasonable basis. This was done by following the binding decision of this Court in Godrej & Boyce Manufacturing Co., Ltd., v/s. ACIT 2010 (8) TMI 77 - BOMBAY HIGH COURT wherein it has been held that for the Assessment Year prior to the Assessment Year 200809, the disallowance is to be done on the reasonable basis and not by invoking Rule 8D of the Income Tax Rules 1961. No substantial question of law arises
Issues:
Challenge under Section 260A of the Income Tax Act, 1961 regarding the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2007-08. Analysis: The High Court of Bombay heard an appeal challenging the order of the Income Tax Appellate Tribunal related to the Assessment Year 2007-08. The main issue raised by the Revenue was whether the Tribunal was justified in directing the Assessing Officer to recompute the disallowance under Section 14A of the Income Tax Act on a reasonable basis, as opposed to the method initially adopted. The Tribunal had referred to a previous decision of the Court in Godrej & Boyce Manufacturing Co., Ltd., v/s. ACIT 328 ITR 81, which held that for Assessment Years prior to 2008-09, disallowance should be based on a reasonable basis rather than Rule 8D of the Income Tax Rules 1961. The High Court noted that the impugned order by the Tribunal followed the binding decision of the Court in the Godrej case. As a result, the Court found that no substantial question of law arose for their consideration. Consequently, the Court dismissed the appeal, and no costs were awarded in the matter. In conclusion, the High Court upheld the Tribunal's decision to direct the Assessing Officer to recompute the disallowance under Section 14A on a reasonable basis, in line with the Court's previous ruling. The judgment emphasized the importance of adhering to established legal precedents in tax matters, leading to the dismissal of the appeal.
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