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TMI Blog2015 (3) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... om Rs. 1,43,06,087/- to Rs. 26.21 lac. The assessee is also aggrieved against the sustenance of addition u/s 14A to the level upheld in the first appeal. 3. Briefly stated, the facts of the case are that this is second round of proceedings. The assessee filed its return declaring total income of Rs. 239.92 crore. The case was processed u/s 143(1). Thereafter, notice u/s 148 was issued on 30.3.2006, pursuant to which assessment was completed u/s 143(3) read with section 147, making addition, inter alia, u/s 14A @ 25% of the exempt income. The assessee challenged the assessment order before the ld. CIT(A), inter alia, against the initiation of reassessment. The ld. CIT(A) vide his order dated 5.2.2008 rejected the assessee's claim of the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of disallowance sustained by the ld. CIT(A) during the first round of proceedings against which only the assessee challenged the disallowance before the Tribunal and the Revenue accepted this disallowance. He further observed that out of total expenses of Rs. 1942.45 crore debited to the Profit & Loss Account, only a sum of Rs. 80.23 crore could be said to have some relation with the exempt income. By apportioning this expenditure of Rs. 80.23 crore in the ratio of Dividend income (Rs. 7.43 crore) to the Total turnover of the assessee company (Rs. 2269 crore), he sustained the disallowance at Rs. 26,21,424/-. Both sides are in appeal against the impugned order to the extent it is prejudicial to their respective interests. 5. We have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce again, after having not pressed the same in the first round before the tribunal. This ground is, therefore, not allowed. 6. Coming to the issue of disallowance u/s 14A on merits, we find that the AO was not correct in applying the provisions of Rule 8D for computing disallowance u/s 14A. Our view is fortified by the judgment of the Hon'ble jurisdictional High Court in the case of Maxopp Investments Ltd. Vs. CIT (2012) 347 ITR 272 (Del) in which it has been held that the provisions of Rule 8D can apply only from the assessment year 2008-09 and in the earlier periods, the disallowance is required to be made on a reasonable and acceptable method of apportionment. 7. It can be seen that the AO has made total disallowance u/s 14A at Rs. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt income, we find that the AO made addition at Rs. 64 lac by applying the mandate of Rule 8D(2) (iii). On the other hand, the ld. CIT(A) bifurcated total expenses into those exclusively relating to the manufacturing activity and those which are common to both manufacturing activity and exempt income. Such amount of common expenses was determined by the ld. CIT(A) at Rs. 80.23 crore. The ld. DR could not point out any deficiency in computing the base amount of expenses at Rs. 80.23 crore. 10. As regards the apportionment of expenses, we are satisfied that the ld. CIT(A) was not justified in allocating Rs. 26.21 lac towards exempt income by apportioning such total expenditure of Rs. 80.23 crore in the ratio of dividend income to the total t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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