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TMI Blog2016 (10) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules and the same is thus, deleted. - Decided in favor of assessee. - ITA No.984/PN/2016 - - - Dated:- 14-10-2016 - MS. SUSHMA CHOWLA, JM For the Appellant : Shri Nikhil Pathak For the Respondent : Smt. Sumitra Banerji ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT(A)-1, Pune, dated 01.02.2016 relating to assessment year 2008-09 against order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- 1. The learned CIT(A) erred in confirming the disallowance of ₹ 5,12,750/- u/s 14A r.w.r 8D when the assessee had not earned any exempt income during the year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, there was no question of any expenditure being relatable to the said exempt income. The Assessing Officer observed that where the assessee was not maintaining separate details for exempt income and taxable income, it could not be accepted that the assessee had not incurred any expenditure related to exempt income. He was of the view that the provisions of section 14A of the Act were attracted and hence, disallowance was calculated as per Rule 8D of the Rules @ 0.5% of the average investments at ₹ 5,12,750/-. 5. The CIT(A) upheld the order of Assessing Officer. He also noted that in assessment year 2012-13 on similar facts, the assessee had not challenged invoking of provisions of section 14A of the Act read with Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court in Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT (2010) 328 ITR 81 (Bom) had held that the machinery provisions of Rule 8D of the Rules are to be applied prospectively from assessment year 2008-09. The year under appeal before the Tribunal is assessment year 2008-09, hence the issue has to be decided by keeping the provisions of both section 14A of the Act and Rule 8 D of the Rules in mind. The claim of assessee before the authorities below was that the investment was made out of its own sources and for the year under consideration, the assessee had not earned any exempt income, so there is no question of disallowance of any expenditure attributable to such exempt income. The Assessing Officer on the other hand, considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 31.03.2008 on account of shares of companies is brought forward from the earlier years and no fresh investment has been made during the year as evident from Schedule E to the Balance Sheet, placed at page 18 of the Paper Book. In the totality of the above said facts and circumstances of the case, where no fresh investment has been made and no dividend has been earned by the assessee during the year under consideration, the question which arises is whether any disallowance could be made on account of expenses attributable to earning of exempt income. First of all, the Assessing Officer though makes reference to the debiting of interest expenditure but in final analysis, disallowance made was on account of Rule 8D(iii) of the Rules i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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