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TMI Blog2010 (10) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... t income. Neither the Assessing Officer nor the Ld. Commissioner of Income Tax (Appeals) has rebutted these submission. Assessing Officer has gone into to make the adhoc estimate which is not sustainable in the light of [C.I.T. vs. Hero Cycles Ltd. (2009 -TMI - 35238 - PUNJAB AND HARYANA HIGH COURT)] decision - Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Impulse (India) Pvt. Ltd.. He observed that the argument that no procedure as is given under Rule 8D is available for A.Y. 2006-07 and so no expenses u/s 14A can be disallowed is preposterous. He held that the legal position as is laid out by section 14A is applicable since 2001. Only the procedure or method of computation has been prescribed from A.Y. 2007-08. The spirit of section 14A of the IT Act has been extant since1st April, 2001. He further observed that one of the most of the reason is to adopt the procedure as laid down in Rule 8D for A.Y. 2006-07 since the spirit is the same. He further found alternatively that expenses can be disallowed on an estimate basis (10% or so) or on a pro-rata basis both of which are wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It earned dividend income, which was exempted under section 10(34) and (35) of the Income Tax Act, 1961. The Assessing Officer made an inquiry whether any expenditure was incurred for earning this income and as a result of the inquiry made addition by way of disallowance under section 14A(3), which was partly upheld by the Commissioner (Appeals). The tribunal held that there was no nexus between the expenditure incurred and the income generated. Therefore, it held that merely because the assessee had incurred interest expenditure on funds borrowed in the main unit it would not ipso facto invite the disallowance under section 14A, unless there was evidence to show that such interest bearing funds had been invested in the investments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from assessment year 2007-08. In this regard he referred to ITAT, Delhi Bench decision in the case of Impulse (India) Pvt. Ltd. vs. ACIT 22 SOT 368 wherein it was held that the provisions of sub-section (2) and (3) of Section 14A could not applied preceding the assessment year 2007-08. 6.2 Ld. Departmental Representative on the other hand supported the orders of the Ld. Commissioner of Income Tax (Appeals) and referred the decision of the Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. vs. DCIT. In the said case it was held that even when prior to A.Y. 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub-section (1) of Section 14A. For that purpose, the Assessing Officer is duty b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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