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TMI Blog2015 (6) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... made by AO - Decided against revenue. Disallowance being 0.5% of average investment as per Rule 8D of IT Rules - CIT(A) deleted addition - Held that:- The present year is A.Yr.07-08 on which rule 8D is not applicable. Therefore in view of the decision of Kolkata Bench of ITAT in the case of DCIT vs M/s.Varanasi Commercial Ltd., [2012 (3) TMI 401 - ITAT KOLKATA] for A.yr.2007-08 where the disallowance has been restricted to 1% of the exempted income. Following the same we find no infirmity in the order of ld. CIT(A) who has rightly restricted the disallowance to 1% of the exempted income - Decided against revenue. - ITA Nos. 377 & 378/Kol/2012, CO Nos. 37 & 38/Kol/2012 - - - Dated:- 29-4-2015 - Mahavir Singh, JM And B. P. Jain, AM,JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee allowed the claim of the assessee and directed the AO to delete the disallowance. 4. The ld. DR relied upon the order of AO where as the ld. Counsel for assessee relied upon the submissions made before ld. CIT(A) and the order of ld. CIT(A). 5. We have heard the rival contentions and perused the facts of the case. For the sake of convenience we reproduce the order of the ld. CIT(A) for A.Yr.2006-07 as under :- I have carefully considered the submission of the appellant along with the case laws relied upon, perused the impugned assessment order and the materials available on records and the facts of the case. It is seen that the disallowance has been made u/s 40(a)(ia) on the ground that no TDS on the said amount has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case. The relevant portion of the decision of the Hon'ble Calcutta High Court in the case CIT vs Virgin Creations (supra) is reproduced herein below :- The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e. well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed. Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. and also in the case of Alom Extrusions Ltd., has already decided that the aforesaid provision has retrospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am in agreement with the contention of the AR of the appellant that provision of Rule-8D is not applicable prior to the assessment year 2008-09. However, the contention of the appellant that no expenditure has been incurred for earning the exempt dividend income is not acceptable. In response to this query as to why the recent decision of the Hon'ble High Court, Kolkata in the case of M/s.ISG Traders Ltd vs CIT (supra) should not be applicable in the appellant's case and proportionate interest paid on borrowed fund be disallowed being expenditure relatable to earning of exempt dividend income, the AR of the appellant submitted that the interest charged in the P L Accounts for the relevant year under appeal pertains to those loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore we find no infirmity in the order of ld. CIT(A) in sustaining the disallowance @1% of the exempt dividend income. Our view find support from the decision of Kolkata Tribunal in the case of DCIT vs M/s.Varanasi Commercial Ltd., vide ITA No.1539/Kol/2011 order dated 07.03.2012 for A.yr.2007-08. 3. After hearing the rival submissions and on careful perusal of materials available on record keeping in view of the fact that since the assessment year involved in this appeal is relating to A.Yr. 2007-08 as per the decision of the Hon'ble Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. (supra) relied upon by the ld. Counsel for the assessee, Rule 8D is not applicable in the assessment year under consideration. This Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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