2015 (8) TMI 1558 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - CIT-A considering the fact that after insertion of rule 8D w.e.f. A.Y. 2008-09 there is no notional disallowance - HELD THAT - On consideration of the above facts and submissions of the parties we find that issue raised in the departmental appeal is covered in favour of the assessee by order of the Tribunal in the case of the same assessee for assessment year 2010-11 2014 (5) TMI 1082 - ITAT CHANDIGARH in which on identical grounds the Tribunal dismissed the departmental appeal following the order of the Tribunal in earlier years. Departmental appeal is dismissed.

Summary

Issues: Departmental appeal against CIT(A) order for assessment year 2011-12 regarding disallowance under section 14A read with Rule 8D for computing income under normal provisions and book profit under section 115JB.

Analysis:
1. Ground 1 - Application of Pre-Rule 8D Decision: The departmental appeal questioned the CIT(A)'s reliance on an ITAT decision predating the insertion of Rule 8D for disallowance under section 14A. The department argued that the CIT(A) erred in following this precedent. However, the assessee contended that the issue was already decided in their favor by the Tribunal for the assessment year 2010-11. The Tribunal upheld the assessee's position, citing a previous order on identical grounds. Consequently, the Tribunal dismissed the departmental appeal, affirming the favorable decision for the assessee based on previous rulings.

2. Ground 2 - Notional Disallowance Post Rule 8D Insertion: The department raised concerns about the CIT(A) not considering the impact of Rule 8D's insertion from A.Y. 2008-09, emphasizing the absence of notional disallowance post this amendment. The department highlighted a previous case involving notional disallowance. However, the CIT(A) aligned with the assessee's position, which was supported by the Tribunal's consistent decisions in the assessee's favor for prior years. The Tribunal, after reviewing the facts and submissions, reiterated that the issue was settled in favor of the assessee by previous Tribunal orders, thereby dismissing the departmental appeal.

3. Ground 3 - Consistency with High Court Decision: The department questioned the CIT(A)'s decision's alignment with a specific High Court ruling. However, the Tribunal's analysis primarily focused on the precedents set by its own decisions in the assessee's previous cases. By emphasizing the Tribunal's consistent rulings in favor of the assessee based on earlier orders, the Tribunal dismissed the departmental appeal, reinforcing the favorable outcome for the assessee.

Overall, the Tribunal's judgment in the departmental appeal for the assessment year 2011-12 upheld the decisions made in favor of the assessee, citing previous Tribunal orders that established a precedent supporting the assessee's position on the disallowance under section 14A read with Rule 8D for computing income under normal provisions and book profit under section 115JB. The Tribunal's reliance on past rulings and consistency in decision-making underscored the dismissal of the departmental appeal and the withdrawal of the assessee's Cross Objection.