9911796707
TMI Blog2012 (7) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... he income that does not form part of total income has been challenged. 2. Facts indicate that the assessee is engaged in the business of activities of salespurchase in shares and securities during the year under consideration and deriving income under the head 'business income' and 'capital gain'. In addition, the assessee also earned dividend from these shares and securities. For the assessment year 2008-09, the assessee has filed the I.T. Return on 27.09.2009 showing a total income of Rs..1,93,55,860/- but the Assessing Officer has completed its assessment u/s 143(3) on 29.01.2010 on total income of Rs.2,07,69,000/- after making an addition of Rs.14,13,064/- u/s 14A of the Act read with Rule 8D of Income Tax Rules, treating the above as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Maharashtra Seamless Ltd. (Del.), CIT vs. Hero Cycles Ltd. (P&H), DCIT vs. Jindal Photo Ltd. (ITAT, Delhi). Since for disallowance u/s 14A or even under Rule 8D, onus is on Assessing Officer to show nexus between expenditure and tax free income before making any disallowance under relevant section and in assessment year 2007-08, the assessee earned dividend income of Rs.1797010/- in respect of mutual fund investments and made a suo moto disallowance of Rs.173038/- u/s 14A of the Act. The Assessing Officer applied Rule 8D and computed the disallowance at Rs.32,18,475/- which came to be deleted by CIT(A) in appeal and departmental appeal in this regard was dismissed. 4. CIT(A) while considering and accepting the plea of the assessee has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee regarding expenses incurred in relation to the income which does not form part On the other hand, Ld.AR for the assessee strongly supported the order under appeal the total income under the Act, is not correct, has to be arrived at by the Assessing Officer, on an objective basis. In the present case, we find that the Assessing Officer has proceeded to apply Rule 8D without giving any finding with regard to the correctness of the claim made by the assessee regarding the disallowance to be made u/s 14A of the Act. The CIT(A) has also proceeded on the same basis. We are, therefore, of the view that the orders of the CIT(A) has to be set aside and the issue should be remanded to the Assessing Officer for fresh consideration. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er latest decision of Delhi High Court, the applicability of Rule 8D as laid down by the Bombay High Court in the case of Godrej & Boyace Mfg. Co. Ltd. has been confirmed in Maxopp Investment Ltd. vs. CIT (203 Taxman 364), however the matter has been restored back by Delhi High Court to re-decide the disallowance in view of direction issued therein. Therefore, it was pleaded for setting aside the order of CIT(A) and restoring that of the Assessing Officer. 5.1 In response to notice of hearing, assessee did not appear but sent one application for adjournment though his counsel who was also not present but the plea raised therein is not found to be adequate and was rejected, so we proceeded to decide the appeal on the basis of material on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in section 14A(2) - Held, yes - Whether, however, fact that sub-sections (2) and (3) of section 14A and rule 8D would operate prospectively (and, not retrospectively) does not mean that prior to that period Assessing Officer is not to satisfy himself with correctness of claim of assessee with regard to such expenditure - Held, yes - Whether even for per-rule 8D period, whenever issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain correctness of claim of assessee in respect of expenditure incurred in relation to income which does not form part of total income under Act and if he is satisfied on an objective analysis and for cogent reason that amount of such expenditure as claimed by assessee is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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