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2018 (5) TMI 794 - AT - Income TaxRevision u/s 263 - disallowance u/ 14A - apportionment of expenditure in relation to the income not forming part of the total income - Held that:- It was immaterial if dividend income was actually earned or not, which, rather, may be a consideration where the shares, as in the present case, are held to retain control over the investee company, i.e., for strategic reasons, as was the case with regard to the investment by Maxopp Investment Ltd. – one of the assessees in that case. [2018 (3) TMI 805 - SUPREME COURT OF INDIA] The related expenditure has to be reckoned on an expansive basis, i.e., as attributable thereto. The constitutionality of r.8D, providing for rules of apportionment of both direct and indirect expenditure, stands already upheld by the Hon’ble High Court in Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Earlier, in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (2017 (5) TMI 403 - SUPREME COURT OF INDIA), with reference to the language of section 14A, the title of which is itself clarificatory, the Apex Court clarified that income must not be includible in the total income, so that once this condition is satisfied, the expenditure incurred in earning the same cannot be allowed to be deducted. The AO in the present case has clearly failed to apply the law in the matter, which gets reiterated time and again by the Hon'ble Apex Court. We find no merit in the assessee’s case. We, accordingly, uphold the impugned order, both on the aspect of lack of inquiry by the assessing authority, as well as his non-observance of the Board Circular 5/2014, which we have found to be in consonance with the law as explained by the Apex Court. The impugned order being after the date of amendment (by way of Explanation 2) to section 263, i.e., 01.06.2015, the same is an equally valid ground for the exercise of revisionary power u/s. 263. It is this power, i.e., to deem an order as erroneous in-so-for as it is prejudicial to the interests of the Revenue, that stands conferred w.e.f. 01.06.2015. That is, the law, w.e.f. 01.06.2015, deems an order as so, where any of the circumstances specified is, in the opinion of the competent authority, satisfied. It has nothing to do with the date of the passing of the order deemed erroneous, or the year to which it pertains. Being a part of the procedural law, the provision shall have effect from 01/06/2015 (also refer CWT v. Sharvan Kumar Swarup & Sons [1994] 1994 (9) TMI 2 - SUPREME Court). - Decided against assessee.
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