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TMI Blog2012 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... that amount of such expenditure as claimed by assessee is not correct, he required to determine amount of such expenditure on basis of a reasonable and acceptable method of apportionment rule 8D, which is prospective in operation and cannot be regarded as being retrospective - the issue is remitted to the file of the Assessing Officer to consider the issue afresh in light of the decision - partly in favour of revenue. - ITA No.5641/Del./2011 - - - Dated:- 15-6-2012 - U.B.S. BEDI, AND SHRI A.N. PAHUJA, JJ. Assessee by : Shri M.P. Rastogi, Adv. With Sh. P.M. Shastri, CA Revenue by : Shri Sanjay Pandey, Sr. DR ORDER PER U.B.S. BEDI, J.M. This appeal of the Revenue is directed against the order passed by the CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing of malt and malt extract and the products are used as industrial raw materials for manufacturing of health foods and alcoholic beverages. During the year the company recorded a turnover of Rs.202.60 crores with a returned income of Rs.53.10 crores. The company has also made investments of its surplus funds from time to time over the years in shares, securities and mutual funds from which it earned dividend of Rs.1,48,16,667/-. The assessee company vide its letter dated 22.02.2010 submitted before the Assessing Officer that the dividend has been earned from investment of surplus funds and no expenditure as such has been incurred to earn the income exempt from tax, however, a disallowance of Rs.1,00,000 has been made in the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income and disallow the said part of expenditure u/s 14A of the Act. Further, reliance was placed on the decisions of Punjab Haryana High Court in the case of CIT vs. Hero Cycle Ltd. (2010) 323 I.T.R. 518 and another decision in the case of CIT vs. Metalman Auto P. Ltd. (2011) 336 I.T.R. 434 to support the plea that law requires a finding of incurrence of expenditure for earning the exempt income. 6. CIT(A) while considering and accepting the plea of the assessee has concluded to restrict the addition at Rs.1,00,000/- (which was offered by the assessee itself in the return) while referring case of Godrej Boyace Mfg. Co. Ltd. vs. DCIT, 328 I.T.R. 81 and ITAT, Delhi D Bench decision in the case of DCIT vs. Jindal Photo Ltd. as per p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecedent for Assessing Officer to determine amount of expenditure incurred in relation to exempt income is that he must record his dissatisfaction with correctness of claim of expenditure made by assessee or with correctness of claim made by assessee no expenditure has been incurred. Held, yes Whether therefore, determination of amount of expenditure in relation to exempt income under rule 8D would only come into play when Assessing Officer rejects claim of assessee in this regard Held, yes Whether rule 8D, which was introduced by virtue of Notification No. 45/2008, dated 24.3.2008, is prospective in operation and cannot be regarded as being retrospective Held, yes Whether though sub-sections(2) and (3) of section 14A were introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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