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2020 (12) TMI 123 - AT - Income TaxRectification of mistake u/s 254 - Disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) - whether non-consideration of the Hon ble Supreme Court judgement would constitute a mistake apparent on record within the meaning of Section 254(2) - HELD THAT - Admittedly assessee had infact made reference to the decision of the Hon ble Apex Court in the case of Godrej Boyce Manufacturing Company Limited 2017 (5) TMI 403 - SUPREME COURT and the same had not been considered by this Tribunal while addressing the issue in dispute. Hence, we deem it fit that this is a mistake apparent on record warranting rectification u/s. 254(2) of the Act. Since, we hold that the order deserved to be recalled on the aforesaid ground, the alternative ground raised by the assessee i.e. restricting disallowance of expenses u/s.14A of the Act to ₹ 50,000/- alone, is hereby left open in view of recalling of the order. Accordingly, the order for A.Y.2008-09 passed by this Tribunal is hereby recalled. Miscellaneous Applications preferred by the assessee are allowed.
Issues:
Disallowance made u/s.14A of the Act r.w.r. 8D(2)(iii) of the Rules - Rectification sought by assessee regarding disallowance of expenses for earning exempt income and computation mechanism under Rule 8D(2) - Mistake apparent from record u/s 254(2) of the Act. Analysis: 1. Disallowance u/s.14A of the Act: - The issue revolved around the disallowance made under section 14A of the Act read with Rule 8D(2)(iii) of the Rules. The assessee contended that no expenses were incurred for earning exempt income in the form of dividends, as all expenses were related to professional practice in New Delhi, while the investments generating dividend income were managed in Mumbai without any additional expenses incurred. The Assessing Officer (AO) had earlier made a disallowance under section 14A r.w.r. 8D(2)(iii) of the Rules. The assessee argued that no satisfaction was recorded by the AO regarding the claim of no expenses incurred for earning exempt income, citing the decision of the Supreme Court in a relevant case. 2. Rectification of Order: - The assessee sought rectification under section 254(2) of the Act, contending that the Tribunal erred in not considering the Supreme Court judgment and the earlier decisions in the assessee's own case while deciding on the disallowance of expenses. The Tribunal acknowledged that the Supreme Court decision was not considered and deemed it a mistake apparent on record, warranting rectification. The Tribunal also noted the alternative plea made by the assessee to restrict the disallowance to a specific amount in line with the original disallowance made by the AO in a previous assessment year. 3. Decision and Recall of Orders: - Upon review, the Tribunal found the omission of considering the Supreme Court judgment to be a mistake and recalled the order for the assessment year in question. The Tribunal further extended this decision to subsequent assessment years with similar facts. The Tribunal directed a fresh hearing on the main appeals for the specified dates. Ultimately, the Miscellaneous Applications filed by the assessee were allowed, and the orders for the relevant assessment years were recalled for reconsideration. This detailed analysis of the legal judgment provides a comprehensive overview of the issues involved, the arguments presented by the parties, and the Tribunal's decision regarding the rectification sought by the assessee in relation to the disallowance of expenses under section 14A of the Act.
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