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2017 (7) TMI 863 - AT - Income TaxAddition u/s 14A read with Rule 8D(iii) - Held that:- In the present case, it is an admitted fact that the AO while making the disallowance u/s 14A of the Act invoked the provisions contained in Rule 8D of the Income Tax Rules, 1962, which is not applicable for the assessment year under consideration as the same is applicable for the assessment year 2008-09 onward. In this regard, it is relevant to point out that the Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. Vs DCIT reported in (2010 (8) TMI 77 - BOMBAY HIGH COURT) held that Rules 8D of the Income Tax Rules, 1962 inserted on 24.03.2008 is applicable from the assessment year 2008-09 prospectively which cannot be applied retrospectively. It is also noticed that the AO while making the disallowance out of the expenses has not given any basis for making the disallowance @ 20%. Therefore, considering the ratio laid down in the aforesaid referred to decision deem it appropriate to set aside the impugned order and remand the case back to the file of the AO to be adjudicated afresh de novo in accordance with law after providing due and reasonable opportunity of being heard to the assessee. The AO should also decide the another issues which have been agitated by the assessee in its appeal alongwith the main issues relating to the disallowances of interest u/s 14A of the Act and the expenses while framing the de novo assessment. Appeal of the assessee is allowed for statistical purposes.
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