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TMI Blog2011 (2) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Management Pvt. Ltd. holding that Rule 8D is retrospective in nature, has been over-ruled by the Hon ble Bombay High Court in the case of GODREJ AND BOYCE MFG. CO. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] , where it has been held that Rule 8D would be applicable only on and from assessment year 2008-09 onwards and not prior to assessment year 2008-09 - the AO shall be at liberty to identify actual expenditure which had been incurred for the purpose of making and earning dividend income from the investment in shares and mutual funds as so observed by the Hon ble High Court in the case of Godrej Boyce vs. DCIT. Matter restored back to the file of the Assessing Officer for his fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able him to decide the issue in its right and correct perspective and as per the provisions of law. The appeal filed by the assessee is partly allowed. - I.T. A. No.4931/Del/2010 - - - Dated:- 18-2-2011 - SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L.SETHI, JUDICIAL MEMBER. Appellant by: Smt. Alka Arren, CA. Respondent by: Shri H.K. Lal, Sr.DR. ORDER PER C.L. SETHI, JUDICIAL MEMBER: The present appeal has been filed by the assessee, against the order dated 30.08.2010 passed by the Commissioner of Income-tax (Appeals), in the matter of an assessment made under sec. 143(3) of the Income-tax Act, 1961 (the Act), pertaining to the assessment year 2007-08. 2. Ground Nos.1(a) to 1(c) are directed ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The AO therefore, applied the provisions of Rule 8D and worked out the total amount of expenses disallowable u/s 14A of the Act. 4. Being aggrieved, the assessee preferred an appeal before the learned CIT(A). 5. After considering the AO s order, assessee s submissions and the facts of the case, the CIT(A) decided the issue against the assessee by observing and holding as under:- 7. I have carefully considered the fact of the case and the submissions made by the Ld. AR. It is noted that the appellant company was incorporated on 01.07.2005 and it started its operation during the A.Y. 2006-07. This is the second year of business. The appellant has showed long term investment of ₹ 10,00,50,439/- in shares and mutual fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of Section 14A(2) are applicable in the instant case because Rule 8D has been brought to statute to avoid the guess work in estimation. The working of disallowance under Rule 8D is very specific, which does not leave any scope for subjectivity. Accordingly, the contention of the appellant can not be accepted. In view of the decision of Special Bench Mumbai ITAT (supra) on this issue, categorically holding that Rule 8D is procedural in nature, I hold that disallowance made by the AO under Rule 8D is correct under the normal provisions of the Act or while computing book profits under MAT and thus, no interference is called for in this regard. Accordingly, these grounds of appeal are rejected. 6. Hence, the assessee is in fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ej Boyce vs. DCIT (supra). We therefore, restore the matter back to the file of the Assessing Officer for his fresh adjudication in the light of our observations as made above. The assessee shall be at liberty to put forward all such legal contentions and submissions as he may be advised in connection with the quantification of expenses, if any, incurred for the purpose of making and earning dividend income from investment in shares and mutual funds. The AO shall decide the issue in the light of the proposition laid down by the Hon ble Bombay High Court in the case of Godrej Boyce (supra) and after providing reasonable opportunity of being heard to the assessee. 9. Ground No.2 is directed against the CIT(A) s order in confirming the AO s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported into clause (f) of the Explanation to sec. 115JA of the Act. In this view of the matter, we therefore, delete the disallowance of expenses confirmed by the CIT(A) while computing book profit under sec. 115JB of the Act. In other words, no addition to the book profit shall be made on account of alleged expenditure incurred to earn exempt income while computing income u/s 115JB of the Act. Thus, this ground No.2 is decided in favour of the assessee. 12. Ground No.3 is as under:- 3.0 That on the facts and in the circumstances of the case, the CIT (Appeals) was not justified and grossly erred in confirming non-quantification of unabsorbed depreciation to be carried forward to subsequent years. 13. We have heard both the part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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