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2012 (10) TMI 130 - AT - Income TaxApplicability of Sub-section(2) to section 14A and Rule 8D - Held that:- Rule 8D cannot be applied keeping in view the decision in the case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) as disallowance u/s 14A r.w.r. 8D are not retrospective. Rule 8D applicable from Assessment Year 2008-09. sub-section (2) of section 14A says that the AO shall determine the amount of expenditure incurred and in relation to such income which does not form part of the total income under this Act. Thus, the onus is on the AO to "determine" the amount of expenditure. The Legislature has used word "shall" before the word "determine", which goes to mean the AO has to take into account all relevant facts and surrounding circumstances to determine expenditure incurred in relation to income not forming part of total income. As in the present case the AO has not made any attempt to "determine" the amount of expenditure incurred in relation to the income not forming part of total income - thus set aside the order of the CIT(A) on the issue of 14A and direct the AO to determine reasonable expenses, attributable to exempt income, taking into account all surrounding circumstances - in favour of assessee for statistical purposes.
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