2015 (12) TMI 25 - AT - Income Tax

Disallowance u/s 14A r.w.r 8D - Held that - In view of the decision from Hon ble jurisdictional High Court in Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT) we restor the matter back to the file of the Assessing Officer to consider the calculation of the assessee for disallowable expenditure in accordance with law by analyzing/verifying investments vis- -vis borrowed funds after providing reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purpose

Summary

Issues:
1. Disallowance of share issue expenses.
2. Rejection of claim under section 14A(2) read with Rule 8D of the Income Tax Rules.

Analysis:
1. Disallowed Share Issue Expenses:
The appellant did not press ground no.2 regarding the disallowance of Rs. 2,03,162 under share issue expenses. As the appellant's counsel did not press this ground and the Revenue had no objection, the ground was dismissed as not pressed.

2. Rejection of Claim under Section 14A(2) read with Rule 8D:
The appellant contended that the issue of disallowance under section 14A(2) for the assessment year 2008-09 was similar and was remanded back to the Assessing Officer due to the absence of borrowed funds used by the assessee. The Tribunal's order dated 23/11/2012 for A.Y. 2008-09 was referred to, where the matter was restored back to the AO for reevaluation. The Tribunal found the facts identical and remanded both appeals to the AO to examine the claim of the assessee afresh in light of the decision in Godrej & Boyce case. The AO was directed to verify investments vis-a-vis borrowed funds and consider the calculation of disallowable expenditure in accordance with law, providing a reasonable opportunity for the assessee to be heard. The appeals were disposed of accordingly, with one being allowed and the other being partly allowed for statistical purposes.

In conclusion, the Tribunal's judgment addressed the issues of disallowed share issue expenses and the rejection of the claim under section 14A(2) read with Rule 8D. The Tribunal remanded both appeals to the Assessing Officer for reevaluation based on the decision in a previous case, emphasizing the need for a thorough examination of the disallowable expenditure and providing the assessee with a fair opportunity to present their case.