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TMI Blog2010 (10) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. It may be pointed out the A.O. has applied the provisions of Rule 8D of the Income-tax Rules, 1962 for working out the disallowance u/s 14A. 3. The findings of the CIT (Appeals) are as under: 2.4 I have carefully considered submissions made on behalf of appellant. So far as the appellant contention about application of section 14A(2) (3) read with rule 8D is concerned, it may be mentioned that Special Bench, ITAT, Mumbai in its decision in the case of Daga Capital Management has held that these provisions were of procedural nature. Hence they were applicable to all pending proceedings. In effect they are to be retrospectively applied. Therefore, this contention is not accepted and it is also that disallowance of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso common to various activities. In fact the appellant has specifically borrowed some funds in its Treasury division where the investment activity is carried on. Therefore, appellant s claim that the expenses relatable to exempt income disallowed by it on estimated/proportionate basis be accepted I not correct. The disallowance has to be worked out as per procedure prescribed in Rule 8D. 2.5 As regards actual computation of disallowance under Rule 8D, I agree with the contention of the AR that Rule 8D should be applied only to the treasury division of the company where the investment activity is carried on. The interest debited to the hotel division of Manesar and Goa was specifically to the loans taken for hotel business and not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Rule 8D of the I.T.Rules, 1962. 5. The assessee has filed the cross objection and his grounds are to the following effect: 1. That the CIT(A) erred on facts and in law in not holding that disallowance under section 14A of the Income-tax Act, 1961 ( the Act ) could not have been worked out as per the method provided in Rule 8D of the Income-tax Rules, 1962 ( the Rules ) since the same was prospective in operation and were not applicable to the year under consideration. 2. Without prejudice, that the CIT (Appeals) erred on facts and in law in adopting average value of total assets of treasury division only as opposed to average value of total assets of the company as a whole, while computing disallowance under section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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