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TMI Blog2019 (1) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue under Section 260A of the Income-tax Act 1961 (for short 'Act') in the case of Vedanta Ltd (Formerly known as Madras Aluminium Co. Ltd.) relates to the assessment year 2010-2011 and arises from the order dated 10th April, 2018 passed by the Income-Tax Appellate Tribunal ('Tribunal', for short). 2. The issue raised by the Revenue relates to the disallowance under Section 14A of the Act. It is an accepted and admitted position that the respondent assessee had earned dividend income of Rs. 8.97 crores which was exempted under Section 10(34) of the Act. The said dividend was paid by group companies. The assessee had made self disallowance of Rs. 9,07,453/-. 3. The assessing officer, without examining and referring to the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 8D with regard to the expenditure in relation to dividend income on which exemption u/s 10(34) has been claimed. Therefore, the total income as per regular computation has been assessed as follows:- Expenditure Incurred In Relation To Income Not Includible In Total Income Under Section 14A Read With Rule 8D:- (i) Direct Expenditure Rs. 9,07,453/- (ii) Interest Expenditure to the extent not directly attributable to any particular Income(A) Rs.12,26,00,000 Average Value of Investment (B) Average value of investment in exempted income as Per the balance sheet as on 01.04.2009 and 31.03.2010 Investment in exempted income as on 01.04.2009 Rs.72,91.40.000/- Investment in exempted income as on 31.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for invoking the said rule. The Rule 8D can be applied only if the assessing officer is not satisfied with the correctness of the claim made by the assessee in respect of the expenditure which the assessee claims to have been incurred in relation to income which does not form part of his total income. 5. The second reason given by the Commissioner of Income-Tax (Appeals) was facts specific. He had recorded the following findings:- "Further I found disallowance has been worked out mechanically without considering the submissions or referring to the accounts of the assessee. I have examined the annual report of the appellant and it is seen that * As on 31st March, 2010 the appellant had the total investment in assets giving rise to tax fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment that had yielded tax free income. He referred to decisions of different High Courts. Reference was also made to clause (iii) to Rule 8D(2) to observe that the assessing officer had not examined the question whether the disallowance of Rs. 9,07,453/- was sufficient and in accordance with law. The final finding recorded by the Commissioner of the Income-Tax (Appeals) was: "Thus respectfully relying of the above referred decision of Hon'ble ITAT, it is held that the rejection of appellant's claim by A.O. u/s 14A is not as per law as no satisfaction is recorded for invoking Rule 8D and the rejection of appellant's claim is not supported by material evidence that expenses debited to the accounts of the appellant have proximate connectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. 9. Legal principle and ratio is no longer res integra and is settled by the judgment of the Supreme Court in Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income-Tax and another [2017] 394 ITR 449 (SC) in which it has been held as under:- "37. We do not see how in the aforesaid fact situation a different view could have been taken for Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14-A of the Act read with Rule 8-D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the assessing officer is not satisfied with the claim of the assessee. Whether such determination is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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