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TMI Blog2018 (11) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any sound and valid reason, the same need not be gone into as the assessee-company has not challenged the order. Moreover, it would be pertinent to mention here that the AO in the assessment order recorded that there is no prescribed method for working of disallowance and thereafter only relied upon Rule 8D of the Rules. - ITA No.212 of 2017 (O&M) - - - Dated:- 29-10-2018 - MR AJAY KUMAR MITTAL AND MR AVNEESH JHINGAN, JJ. For The Appellant : Mr. Rajesh Sethi, Senior Standing Counsel with Mr. Arun Biriwal, Advocate For The Respondent : Mr. Surjit Bhadu, Advocate ORDER AVNEESH JHINGAN, J. This order shall dispose of two appeals bearing ITA Nos.212 and 205 of 2017. Since the facts and the issues invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a return declaring the income of ₹ 4,88,99,380/-. Subsequently, a return was filed on 06.06.2007 declaring the total income of ₹ 5,05,07,437/-. The case was selected for scrutiny. Notice under Section 143(2) of the Act was issued on 22.09.2007. The assessment under Section 143(3) of the Act was finalised vide order dated 30.12.2008. Apart from other issues, the Assessing Officer noticed that the assessee had invested a sum of ₹ 15,38,82,785/- in share of other companies. The Assessing Officer (AO) invoked the provisions of Section 14A of the Act read with Rule 8D of Income Tax Rules, 1962 (for brevity, 'Rules). The AO by applying Rule 8D of the Rules worked out the disallowance of expenses at ₹ 1,09,32,198/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Bombay High Court has been affirmed and it has been held that Rule 8D of the Rules is prospective in operation. 10. The pin-pointed issue involved in the present appeal is whether for assessment year 2006-07 the assessing Officer could rely upon Rule 8D of the Rules for working out the disallowance of expenses under Section 14A of the Act? 11. The matter is no longer res-integra. The Supreme Court in the case of ESSAR Teleholding Ltd.'s case (supra) held as follows:- 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 subrule (2) has been substituted by a new provision which is to the following effect: ( 2) The expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily, a subordinate legislation should not be construed to be retrospective in operation. The Circular Letter dated 752003 was given a prospective effect. The father of the respondent died on 1952000. There is nothing to show that even Circular dated 982000 had been given retrospective effect. In any view of the matter, as the State of Jharkhand in the Circular Letter dated 75/2003 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. the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity of provisions Revenue had filed appeal, hence the said question was not gone into the aforesaid appeal. In the above case, this Court specifically left the question of retrospectivity to be decided in other appeals filed by the Revenue. We thus have proceeded to decide the question of retrospectivity of Rule 8D in these appeals. 50. In view of our opinion as expressed above, dismissal of the appeal by the Bombay High Court is fully sustainable. As held above, the Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09. 12. The opinion expressed by the Bombay High Court was upheld laying down that Rule 8D of the Rules is prospective in operation and could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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