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TMI Blog2015 (9) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... as not incurred any direct or indirect expenditure in earning its dividend income which is exempt under section 10(34) of the Act. We are therefore of the view that it would be in the interest of equity and justice if the assessee makes its claim in this regard before the Assessing Officer. The Assessing Officer will examine the claim of the assessee and thereafter decide the issue in accordance with law and as explained in the judicial decisions referred to (supra). Thus remit the issue regarding disallowance u/s.14A of the Act, back to the file of the AO - Decided in favour of assessee for statistical purposes. - ITA No. 623/Bang/2014 - - - Dated:- 30-6-2015 - Abraham P. George, AM And Vijaypal Rao, JM, JJ. For the Appellant : Smt Sheetal Borkar, Adv For the Respondent : Dr P K Srihari, Addl. JCIT ORDER Per Abraham P. George, Accountant Member In this appeal filed by the assessee it is aggrieved on a disallowance made by the AO u/s.14A of the Income-tax Act, 1961 ('the Act'in short) read with Rule 8D of the Income-tax Rules, 1962 ('the Rules' in short), which was confirmed by the CIT (A). 02. Facts apropos are that assessee, a printe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 2,78,495/- under Rule 8D(2)(iii) for expenditure incurred. Total disallowance came to ₹ 23,91,210/-. 04. Aggrieved assessee moved in appeal before the CIT (A). Same contentions which were taken before the AO were reiterated. CIT (A) relying on his own order in assessee's own case for A. Ys. 2009-10 and 2010-11 dismissed the grounds raised by the assessee and confirmed the addition made by the AO. 05. Now before us, Ld. AR submitted that CIT (A) had followed his own decision for A. Y. 2009-10 in confirming the disallowance made by the AO u/s.14A of the Act. However according to her, the said decision of the CIT (A) was carried in appeal by the assessee before this Tribunal in ITA.1266/Bang/2012, dt.25.10.2013. Ld. AR submitted that the issue was remitted back to the AO by this Tribunal for reconsideration. Ld. AR submitted that similar directions could be issued for the impugned assessment year also. 06. Per contra, Ld. DR supported the orders of the lower authorities. 07. We have perused the orders and heard the rival contentions. It is true that CIT (A) had followed his own order for A. Ys. 2009-10 and 2010-11 for confirming the disallowance made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons even to see from the angle of applicability of the case laws cited by the appellant. Further, I have gone through the case laws cited by the appellant. They are all for the Assessment Year's prior to the amendment to Rule 8D inserted w.e.f. 24.3.2008 applicable from A.Y. 2008-09 onwards. 8. The citation CIT Vs. Hero Cycles Ltd (2010) 323 ITR 518 (P H) is for the A.Y. 2004-05. The second citation Maxopp Investments Ltd Vs. CIT (2011) (ITA 687/2009) Delhi High Court is for the A.Y. 2002-03. Similarly the third citation DCIT Vs. Maharashtra Seamless Ltd (2011) 52 DTR 5 (Del) (Trib) is for the A.Y. 2003-04. 9. In view of the amended provisions these case laws cited are no more applicable. Even in appeal stage the DCIT Vs. Maharashtra Seamless Ltd. (2011) 52 DTR 5 (Del) (Trib), when asked to establish, that what is invested is invested from own funds, the appellant expressed inability since the funds are all merged. Hence, I find the observation of the Assessing Officer that it is a composite business is correct. The Assessing Officer has also established that it is not just own fund but other funds as well which has a cost that has gone into the investments. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with such method as may be prescribed. The method, having regard to the meaning of the expression 'prescribed' in Section 2(33), must be prescribed by rules made under the Act. What merits emphasis is that the jurisdiction of the Assessing Officer to determine the expenditure incurred in relation to such income which does not form part of the total income, in accordance with the prescribed method, arises if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not part of the total income. Moreover, the satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Hence, Sub section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect of the expenditure incurred in relation to income which does not form part of the total income is correct. The Assessing Officer must, in the first instance, determine whether the claim of the assessee in that regard is correct an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the claim of the assessee having regard to the accounts of the assessee. (underlining by us for emphasis) 5.3.4 Rule 8D was inserted by the Income-tax Act (Fifth Amendment) Rules, 2008, which were published in the Gazette on March 24, 2008. The rules specifically provide that they shall come into force from the date of their publication in the Official Gazette. 8D. (1) Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfied with (a) the correctness of the claim of expenditure made by the assessee ; or (b) the claim made by the assessee that no expenditure has been incurred, in relation to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). (2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely: (i) the amount of expenditure directly relating to income which does not form part of total income ; (ii) in a case where the assessee has incurred expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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