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TMI Blog2016 (3) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... rameters for making disallowance can be arrived at, that resort to Rule 8D(2) can be had by the AO. Rule 8D(2) will thus be a last resort when it becomes impossible to arrive at a just conclusion on the amount of expenses that has to be disallowed as attributable or incurred in earning exempt income. It cannot therefore be said that once the AO rejects the mode of computation of disallowance u/s.14A of the Act as made by the Assessee, he has no other option but to resort to Rule 8D of the Rules. Besides the above, we are also of the view that the AO has adopted one of the possible course open to him in law. The CIT cannot invoke jurisdiction u/s.263 of the Act just because he does not agree with the view of the AO. As u/s.263 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imate percentage of time devoted Estimated cost that can be apportioned Officer Salary 4,82,278 100% thereof ₹ 492,778 492,778 Telephone 6,000 Medical 4,500 Premium Manager Salary 789,443 50% thereof ₹ 443,472 443,472 Travelling 75,000 Telephone 18,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. According to him once the basis of estimation of disallowance as done by the Assessee is not accepted by the AO, than the AO has no other option but to resort to make disallowance in accordance with Rule 8D of the Income Tax Rules, 1962 (Rules) and he could not substitute the estimation of the Assessee by his own estimation. 4.1. To the show cause notice issued by the CIT u/s.263 of the Act, the Assessee gave reply pointing out that the view taken by the AO was a possible view and the same was not erroneous or prejudicial to the interest of the revenue. The Assessee placed reliance on the decision of the Hon ble Supreme Court in the case of Malabar Industrial Co. Vs. CIT 243 ITR 83(SC). The Assessee also submitted that even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s subject-matter of several decisions rendered by various Benches of the ITAT as well as the Hon ble High Courts. The Hon ble Delhi High Court in the case of Maxopp Investments Ltd. v. CIT (2011)203 Taxman 364(Del) and the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. 328 ITR 81(Bom.) have taken a view that Rule 8D of the I.T. Rules will apply only for A.Ys. 2008-09 and subsequent assessment years. It has also been laid down that the assessee has to make a claim (including a claim that no expenditure was incurred) with regard to expenditure incurred for earning income which is not chargeable to tax. Such a claim has to be examined by the AO and only if on an objective satisfaction arrived at by the AO that the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rning exempt income. It cannot therefore be said that once the AO rejects the mode of computation of disallowance u/s.14A of the Act as made by the Assessee, he has no other option but to resort to Rule 8D of the Rules. 8. Besides the above, we are also of the view that the AO has adopted one of the possible course open to him in law. The CIT cannot invoke jurisdiction u/s.263 of the Act just because he does not agree with the view of the AO. In other words u/s.263 of the Act, the CIT cannot substitute his view with that of the AO. The decision relied upon by the learned counsel for the Assessee clearly supports the stand taken by the Assessee in this regard. 9. We therefore hold that the order of the AO was neither erroneous nor prej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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