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Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) u/s 14A of I.T. Act read with rule 8D of Income Tax rules for Assessment Year 2006-07.
Summary: The revenue appealed against the order of the Commissioner of Income-tax (Appeals) regarding the addition of Rs. 23,75,000/- u/s 14A of the Income Tax Act read with rule 8D. The Assessing Officer disallowed the sum of Rs. 23,75,007/- as expenses after applying Rule 8D. However, the CIT(A) deleted the disallowance stating that the appellant had sufficient funds for investments and no interest expenses were incurred on the amount in question. The AO's dissatisfaction with the working of disallowance given by the assessee was not demonstrated. The Bombay High Court held that Rule 8D is applicable only from Assessment Year 2008-09, overruling the decision of the Special Bench of ITAT in a previous case. The Tribunal rejected the revenue's ground, stating it had no merit based on the current legal position. In conclusion, the Tribunal dismissed the revenue's appeal, emphasizing the inapplicability of Rule 8D for the relevant assessment year and the lack of demonstrated dissatisfaction by the Assessing Officer with the assessee's working of disallowance u/s 14A.
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