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TMI Blog2019 (6) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the decision of Hon ble Supreme Court in the case of Anjum M. H. Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] DR did not objected if the matter is restored back to the file of the AO for verification of the contentions of the assessee and for deciding the quantum of interest u/s 234C and 234D in accordance with law. Remanded to AO with direction. - I.T.A. No.1729/Mum/2017 - - - Dated:- 29-3-2019 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri Hari Iyer For the Revenue : Shri. D.G Pansari (DR) ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 1729/Mum/2017, is directed against appellate order dated 07.12.2016 in Appeal No. CIT(A)-3/IT-46/ACIT-2(1)(1)/16-17, passed by learned Commissioner of Income Tax (Appeals)-3, Mumbai (hereinafter called the CIT(A) ), for assessment year(AY) 2006-07, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 31.01.2015 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) read with Section 254 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of one of its group concern wherein disallowance under section 14A of the Act prior to AY 2008-09 is restricted to two per cent of the dividend income. 2. Levy of interest under section 234C of the Act a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the levy of interest under section 234C as mandatory without appreciating the facts of the case. b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have appreciated that there was no shortfall on payment of advance tax due on returned income in any of the instalments for advance tax and hence, interest levied under section 234C of the Act amounting to ₹ 39,48,423/- ought to be deleted. 3. Levy of interest under section 234D of the Act a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the levy of interest under section 234D as mandatory without appreciating the facts of the case and adjudicating the issue on merits. b) On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4D of the 1961 Act is mandatory keeping in view decision of Hon ble Supreme Court in the case of CIT v. Anjum M. H. Ghasswala (2001) 252 ITR 1(SC). 5. Aggrieved by the appellate order dated 07.12.2016 passed by learned CIT(A), the assessee has now filed an appeal before the tribunal . It is submitted by learned counsel for the assessee that the controversy in this appeal is regarding computation of disallowance of expenditure incurred in relation to earning of an exempt income keeping in view provisions of Section 14A of the 1961 Act . At the outset Ld. Counsel for the assessee submitted that Rule 8D of the 1962 Rules is not applicable for the impugned assessment year 2006-07 , which is prior to AY 2008-09 from which assessment year Rule 8D of the 1962 Rules is applicable keeping in view decision of Hon ble Bombay High Court decision in the case of Goderj Boyce Manufacturing Company Ltd. v. DCIT reported in (2010) 328 ITR 81(Bom.) . It is further submitted that tribunal had in assessee own case in ITA no. 1304/Mum/2011 for AY 2007-08 vide orders dated 29.07.2016 held that 2% disallowance of dividend income will be reasonable disallowance of expenses incurred for ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3 We have observed that the impugned assessment year before us is AY 2006-07 and Rule 8D of the 1962 Rules is not applicable for this year keeping in view decision of Hon ble Bombay High Court in the case of Godrej and Boyce Manufacturing Company Limited(supra). The said ratio of law laid down by Hon ble Bombay High Court in the case of Godrej and Boyce Manufacturing Limited(supra) holding that Rule 8D of the 1962 Rules is prospective being applicable from AY 2008-09 onwards is now been confirmed by Hon ble Supreme Court in the case of CIT v. Essar Teleholdings Limited , vide judgment dated 31.01.2018 reported in (2018) 401 ITR 445(SC), wherein Hon ble Supreme Court held as under: 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) and sub-section (3) of Section 14A as well as purpose and intent of Rule 8D coupled with the explanatory notes in the Finance Bill, 2006 and the departmental understanding as reflected by Circular dated 28.12.2006, we are of the considered opinion that Rule 8D was intended to operate prospectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning exempt income. This ground of the assessee is partly allowed. 6.4 The principles of res-judicata are not applicable in the income-tax proceedings but rule of consistency has to be followed as laid down by Hon ble Supreme Court in the case of Radhasoami Satsang v. CIT (1992) 193 ITR 321(SC) , wherein Hon ble Supreme Court held as under: 13. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assess ment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. It is not shown to us by learned DR as to how factual matrix in AY 2006-07 is different from that of AY 2007-08. Both the years are prior to AY 2008-09 from where onwards Rule 8D of the 1962 Rules is held to be applicable. Thus, Respectfully following the aforesaid decision of Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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