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TMI Blog2019 (1) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... : 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 involved in both the appeals are identical, hence, these are being disposed of by a common order. 2. For sake of convenience, the facts are being extracted from ITA No. 212 of 2017. 3. The revenue has filed the present appeal under Section 260A of Income Tax Act, 1961 (for brevity, 'the Act') against the order of Income Tax Appellate Tribunal, Chandigarh (hereinafter referred to as 'Tribunal') passed in ITA No.511/Chd/2011 dated 28.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/-. 6. Against the said order, the assessee-company filed an appeal before the Commissioner of Income Tax (Appeals), Chandigarh (for brevity, '(CIT(A)'). The First Appellate Authority vide order dated 30.04.2009 sustained the additions made by disallowing expenses under Section 14A of the Act. The assessee preferred a further appeal before the Tribunal. The appeal of the assessee was partly allowed vide order dated 28.08.2014. The Tribunal followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td.'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 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) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect 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 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 subsection (2) and sub section (3) of Section 14A as well as purpose and intent of Rule 8D coupled with the explanatory notes in the Finance Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not have been applied to any assessment prior to assessment year 2008-09. Hence, the issue is decided against the revenue. 13. As per question No.1 claimed by the appellant whether the Tribunal was justified in restricting the disallowance made under Section 14A of the Act to ₹ 5 lakhs without 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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