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TMI Blog2018 (4) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the Hon'ble ITAT Amritsar was right in not following the Circular No. 5/2014 of CBDT, New Delhi dated 11.02.2014 wherein the intention of the legislature was clarified. (ii) Whether on the facts and circumstances of the case the Hon'ble ITAT Amritsar was right in law in discounting the applicability of decision of Special Bench of the Hon'ble ITAT, Mumbai in the case of ITO Vs. Daga Capital Management (P) Krsd, (2009) 312 ITR (AT) (Mumbai) (SB) to the present case which held that retrospective effect can be given to Rule 8D of the Income Tax Rules. 2. The same questions of law apply to all the three cases. The assessment years in relation to these appeals are as follows:- 1. ITA No. 14/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of 1,14,44,26,620 + 58,18,27,020 = 27,74,25,117 1,72,62,53, 640 12,84,42,42,158 + 1/2 % of (86,31,26,820) =3,72,85,665+43,15,634 =4,16,01,299 Thus disallowance u/s 14A was required to be made at ₹ 4, 16, 01, 299/- which had not been made at the time of framing of the assessment. Accordingly, I have reason to believe that income of ₹ 4,16,01,299/- has escaped assessment. 4. The Assessing Officer (AO) after getting an explanation from the Assessee proceeded to hold that the disallowance is to be worked out in terms of Section 14A read with Rule 8D of the Income Tax Rules, 1962 with the consequential proceeding of penalty etc. 5. Aggrieved by that, against all the three orders of assessment, the appeals were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 8D of the Income Tax Rules with the further plea that Rule 8D operates retrospectively. The Tribunal taking note of the factual findings of the CIT appeals rejected the department appeal in paragraph Nos. 11 12 as follows:- 11. In this regard, there is no denial to the decision of the Special Bench of the Tribunal (Supra). However, the applicability thereof has not been established by the department, since there is no effective rebuttal to the finding of the ld. CIT(A) that the provisions of section 14A of the Act do not come into play, since the assessee has specifically stated of not having earned any dividend income in any of the three years under consideration and this contention remains undisputed. Now, whereas the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Apex Court in Paragraph 45 to 51 of the Judgment passed by the Hon'ble Supreme Court in the case of Commissioner of Income Tax 5 Mumbai (Supra). 45. As noted above, that Rule 8D has again been amended by Income Tax (Fourteenth Amendment) Rules, 2016 w.e.f. 02.06.2016, by which Rule 8D sub- rule (2) has been substituted by a new provision which is to the following effect: [(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; and (ii) The annual average of the monthly averages of the opening and closing balances of the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-2003 adopted the earlier circular letters issued by the State of Bihar only in respect of cases where death had occurred after 15-10- 2000 i.e. date from which the State of Jharkhand came into being, the High Court, in our opinion, committed a serious error in giving retrospective effect thereto indirectly which it could not do directly. Reasons assigned by the High Court, for the reasons aforementioned, are unacceptable. There is no indication in Rule 8D to the effect that Rule 8D intended to apply retrospectively. 48. Applying the principles of statutory interpretation for interpreting retrospectivity of a fiscal statute and looking into the nature and purpose of sub-section 2 Sub-section (3) of Section 14A as well as pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n State of Jharkhand Ors. Vs. Shiv Karampal Sahu, (2009) 11 SCC 453. In para 17 following has been stated: Godrej and Boyce Manufacturing Company Limited versus Deputy Commissioner of Income Tax, Mumbai and Another, (2017) 7 SCC 421, where the Division Bench of the Bombay High Court after elaborately considering the principles to determine the prospectivity or retrospectivity of the amendment has concluded that Rule 8D is prospective in nature. Against the aforesaid judgment of the Bombay High Court dated 12.08.2010 an appeal was filed in this court which has been decided by vide its judgment reported in Godrej and Boyce Manufacturing Company Limited versus Deputy Commissioner of Income Tax, Mumbai and Another, (2017) 7 SCC 421. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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