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TMI Blog2020 (5) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be independent of rule 8D. AO has noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee. On the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same. Pronouncement of orders within 90 days - Covid-19 epidemic - Worldwide lockdown - HELD THAT:- We are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance made of ₹ 2,86,45,152/- being the expenditure incurred by Project and Investment Department under Rule 8D(2)(i) of the Rules, no further disallowance can be made under Rule 8D(2)(iii) of the Rules. (c) The aggregate amount of disallowance made of expenditure U/s. 14A of the Act read with Rule 8D cannot exceed the expenditure incurred by the Project and Investment Department of ₹ 2,86,45,152/-. 1.2 The expenditure incurred by the Project and Investment Department of ₹ 2,86,45,152/- cannot be considered in computing Book Profit u/s. 115JB of the Act, as the AO has not established that such expenditure represents direct expendit Assessing Officer s grievances: 1. On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O to exclude strategic investments from the total investment for computing disallowance u/s. 14A r.w.r 8D(2)(iii), without appreciating the fact that the assessee has earned exempt dividend income by incurring establishment and administrative expenditure on strategic investment. 2. On the facts and the circumstances of the case and in law, the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses incurred to earn the dividend income [under rule 8D(2)(i)]. Out of the total amount of ₹ 13,93,13,152, the Assessing Officer reduced the suo motu disallowance offered of ₹ 6,18,69,000, and added, inter alia, the remaining ₹ 7,74,44,152 to the income returned by the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) upheld, in principle, the rejection of suo motu disallowance offered by the assessee but gave some partial relief on the computation part, but, for the reasons we will set out in a short while, it is not really necessary to deal with justification for the partial relief granted by the CIT(A). Suffice to note that the learned CIT(A) upheld, in principle, the rejection of suo motu disallowance offered by the assessee. The assessee is aggrieved of the action of the CIT(A) being upheld in principle while the Assessing Officer is aggrieved of the relief granted by the CIT(A). Both the parties are in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered the facts of the case in the light of the applicable legal position. 7. We find that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee. As a matter of fact, on the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance of ₹ 6,18,69,000 offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same. 8. In the result, the appeal of the assessee for the assessment year 2013-14 is allowed in the terms indicated above, and the appeal of the Assessing Officer for the assessment year 2013-14 is dismissed as infructous. 9. Coming to the cross appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for MAT computation. 10. Learned representatives fairly agree that whatever we decide for the assessment year 2013-14 will also apply mutatis mutandis to this assessment year as well, as all the material facts, including the reasons of resorting to disallowance under rule 8D(2) are the same as in the assessment year. The rejection of suo motu disallowance offered by the assessee, for this year also, was based on section 14A read with rule 8D, rather than with the facts of this case or on analysis of the disallowance offered by the assessee. In view of this position, and for the detailed reasons set out earlier in this order which are equally applicable here, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance of ₹ 5,61,47,265 offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on the same. 11. However, before we part with the matter, we must deal with o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 13. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary step ..... X X X X Extracts X X X X X X X X Extracts X X X X
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