2018 (4) TMI 1003 - HC - Income Tax

Disallowance u/s. 14A restricted to the extent of 10% of dividend - Held that - The issue of applicability of Rule 8D of the Income Tax Rules 1962 (Rules) as sought by the Revenue for the Assessment Year 2007-08 would have no application. This is so, as this Court in Godrej & Boyce Manufacturing Co. Ltd., v/s. DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT has held that Rule 8D of the Rules would be applicable only from the AY 2008-09 onwards. Prior thereto, the disallowance, if any, would have to be on the reasonable basis. In the present facts, the CIT(A) and the Tribunal have restricted the disallowance to the extent of 10% of the dividend on a reasonable basis i.e. for Assessment Year 2007-08.

Issues:
1. Amendment of title and appeal number in the Appeal Memo
2. Challenge to the order of the Income Tax Appellate Tribunal for Assessment Years 2005-06 and 2007-07
3. Question of law regarding disallowance under section 14A of the Income Tax Act for Assessment Year 2007-08
4. Applicability of Rule 8D of the Income Tax Rules 1962
5. Dismissal of the Appeal and Chamber Summons

Amendment of Title and Appeal Number in the Appeal Memo:
The Applicant sought to amend the title of the Appeal Memo due to a change in the name of the Respondents following an amalgamation. The new name of the amalgamated company was to be substituted in place of the original name. Additionally, the Applicant requested to substitute the Appeal Number before the Tribunal. The Respondents did not object to the proposed amendments, and the Court allowed the Applicant to carry out the amendments without re-verification.

Challenge to the Order of the Income Tax Appellate Tribunal:
The Appeal challenged the order dated 24th February, 2015 passed by the Income Tax Appellate Tribunal for Assessment Years 2005-06 and 2007-07. Specifically, the Appeal related to Assessment Year 2007-08. The Revenue raised a question of law questioning the Tribunal's decision to uphold the order of the CIT(A) regarding the disallowance under section 14A of the Income Tax Act to the extent of 10% of the dividend.

Question of Law Regarding Disallowance under Section 14A:
The Revenue conceded that Rule 8D of the Income Tax Rules 1962, which they sought to apply for Assessment Year 2007-08, was not applicable based on a previous court decision. The Court had ruled that Rule 8D would be applicable only from Assessment Years 2008-09 onwards. Therefore, the disallowance had to be made on a reasonable basis. Both the CIT(A) and the Tribunal had limited the disallowance to 10% of the dividend for Assessment Year 2007-08. As a result, the proposed question did not raise any substantial question of law and was not entertained.

Dismissal of the Appeal and Chamber Summons:
The Court dismissed the Appeal, stating that no substantial question of law arose. Consequently, no costs were awarded. With the dismissal of the Appeal, the Chamber Summons became infructuous and was disposed of accordingly.

← Previous Next →