TMI Blog2012 (7) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... on of exempt and taxable income earned by way of dividend and interest income, which is reasonable. Since Rule 8D is not applicable for AY under consideration, the disallowance made by the assessee on proportionate basis of exempt income and taxable income in our considered opinion is justified - Decided against Revenue. - I.T.A. No.977/Del/2012 - - - Dated:- 28-6-2012 - SHRI RAJPAL YADAV, AND SHRI K.D. RANJAN, JJ. Appellant by : Shri Satpal Singh, Sr. DR. Respondent by : Shri Anil Jain, CA. O R D E R PER K.D. RANJAN, ACCOUNTAT MEMBER: This appeal by the Revenue for Assessment Year 2007-08 arises out of the order of the Commissioner of Income-tax (Appeals)-VIII, New Delhi. The ground of appeal raised by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act to the extent of Rs.1,73,98,255/- by observing as under:- 4. I have carefully considered the submissions made on behalf of the appellant company and the findings recorded by the Ld. AO. On consideration, I find that what the ld counsel for the appellant has pointed out with regard to the arithmetical errors committed by the AO in working out the value of average investments and average total value of assets is correct. The Ld. AO has committed an error in working out the average value of assets at Rs.52,29,05,941/-. This mistake has been committed by the AO while deducting net current assets of Rs.70400052/- from the investment of Rs.575279938/- as on 31.03.2006 and net current assets of Rs.33647941/- from the value of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by way of dividend and interest income. Therefore, no further disallowance was to be made. He therefore, supported the order of the CIT(A). 5. We have heard both the parties and gone through the material available on record. By Finance Act of 2001, the Parliament enacted section 14A of the Income-tax Act, 1961 with retrospective effect from 1.04.1962. Prior to insertion of sec. 14A, the Revenue had sought to disallow expenditure incurred in relation to exempt income. However, the Hon ble Supreme Court in the case of Rajasthan State Warehousing Corporation vs. CIT, 242 ITR 450, held that where there was one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure incurred in relation to that bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on proportionate basis of exempt income and taxable income in our considered opinion is justified. Hon ble Delhi High Court in the case of Maxopp Investment Ltd. vs. CIT, 203 Taxman 364, has also held that Rule 8D is not retrospective. The AO has to determine amount of such expenditure on the basis of a reasonable and acceptable method of apportionment. Since in the instant case the assessee himself has disallowed Rs.1,73,98,255/- on proportionate basis, in our considered opinion, the learned CIT(A) is justified in upholding the disallowance to the extent of Rs.1,73,98,255/-. Accordingly, we do not find any infirmity in the order of the CIT(A). 6. In the result, the appeal filed by the Revenue is dismissed. 7. This decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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