TMI Blog2012 (11) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... 8E. - the order passed by Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count. Other issue on which the CIT invoked the provisions of section 263 is not disallowing u/s 14A read with Rule 8D. The assessee himself has disallowed expenses of Rs.3,000/- of peons, conveyance, postage, etc. The Assessing Officer accepted the quantum of disallowance. CIT takes a view that the disallowances should be as per Rule 8D. Various Courts had held that the provisions of Rule 8D cannot be invoked retrospectively. These provisions are applicable prospectively only and w.e.f. assessment year 2008- 09 onwards. In the assessee’s case, the year involved is assessment year 2006-07. Thus, the view taken by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is erroneous and prejudicial to the interest of revenue on the issue of allowability of rebate u/s 88E, tax payable u/s 115JB and disallowance u/s 14A of the Income-tax Act, 1961. 3. The appellant craves leave to add, to alter, or amend any grounds of the appeal raised above at the time of hearing. 2. In this appeal, the issue involved is against the order of CIT under section 263 of the Income-tax Act in which the order of Assessing Officer passed u/s 143(3) dated 29.12.2008 has been set aside for making assessment afresh. Assessee is doing business of broking in shares and securities. It trades in shares, futures and options. 3. The learned AR submitted that the CIT has set aside the order of the Assessing Officer even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the rebate u/s 88E of the Income-tax Act. Therefore, the order of Assessing Officer was neither erroneous nor prejudicial to the interest of revenue on this count. Various Benches of ITAT had accepted this in its decisions. The other issue on which the CIT invoked the provisions of section 263 of Income-tax Act was for disallowance u/s 14A read with Rule 8D. The learned AR submitted that various courts had already decided and held that provisions of Rule 8D are not retrospective. These are applicable only from the assessment year 2008- 09 onwards. The year under consideration is assessment year 2006-07 where Rule 8D is not applicable. Assessee itself disallowed reasonable amount pertaining towards exempted income which has been accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue. The CIT initiated the proceedings u/s 263 on three counts (i) relief to the rebate u/s 88E which was claimed and allowed; (ii) tax payable u/s 115JB not charged separately without giving rebate under section 88E; and (iii) not making disallowance as per the provisions Rule 8D of the IT Rules r.w.s. 14A of the Income-tax Act. A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on total income a Tax at normal rates 2a 0 b Tax at special rates (11 of Schedule SI) 2b 0 c Tax payable on Total Income (2a + 2b) 2c 0 3 Gross tax payable (higher of 2c and 1) 3 0 4 Credit under section 115JAA of tax paid in earlier years (if 2c is more than 1) (7 of Schedule MATC) 4 0 5 Tax payable after credit under section 115JAA (3 4) 5 0 6 Rebate under section 88E(4 of Schedule STTC) 6 0 7 Balance Tax payable (5 6) 7 0 8 Surcharge on 7 8 0 9 Education Cess including secondary and higher education cess on (7 + 8) 9 0 10 Gross ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the CIT invoked the provisions of section 263 is not disallowing u/s 14A read with Rule 8D. The assessee himself has disallowed expenses of Rs.3,000/- of peons, conveyance, postage, etc. The Assessing Officer accepted the quantum of disallowance. CIT takes a view that the disallowances should be as per Rule 8D. Various Courts had held that the provisions of Rule 8D cannot be invoked retrospectively. These provisions are applicable prospectively only and w.e.f. assessment year 2008- 09 onwards. In the assessee s case, the year involved is assessment year 2006-07. Thus, the view taken by the Assessing Officer by accepting the reasonable disallowance by not invoking the applicability of Rule 8D is a sustainable view in law. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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