TMI Blog2013 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... herein relying on the decision Navnitlal Zaveri vs. K.K. Sen (1964 (10) TMI 16 - SUPREME COURT) stated that it is incumbent on ITOs to follow the circular No.14 (XL-35) of 1955 and draw the attention of the assessee concerned to all the reliefs and refunds to which the assessee seems to be entitled on the facts of the case even though the assessee might have omitted to claim refund or relief. In the present case, though the assessee has considered the dividend income as taxable and offered it to tax though the same is exempt u/s.10(38), relying on the aforesaid decision assessee should be granted the benefit of exemption. Accordingly direct the A.O. to treat the dividend as exempt u/s. 10(38). So far as taxing of dividend is concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. CIT (A) vide his order dated 10-7-2012, partly allowed the appeal of the assessee. Aggrieved by the order of CIT (A), the assessee is now in appeal before us. 5. Before us the effective grounds taken by the assessee read as under:- "1. The Ld. CIT (A) has grievously erred in law as well as on facts in confirming the addition of Rs.83,549/- made by the A.O. while applying the provisions of Sec. 14A of the I.T. Act,1961 read with rule 8D of the I.T.Rules,1962 on the ground that the decisions relied upon by the appellant are old and prior to amendment. In view of facts and elaborate submissions filed coupled with settled legal position laid down by various courts of law after the amendment of Sec.14A(2) w.e.f. 1-4-2007, the impugned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. During the course of assessment proceedings the A.O. noticed that assessee has shown investment in shares and securities of Rs.19,49,122/- as at the end of the year. He also observed that assessee has claimed financial charges of Rs.78,13,332/-.A.O.was of the view that the assessee has made investments for earning income in the form of dividend and long term capital gain which are totally exempt in the hands of the assessee. Before the A.O. the assessee submitted that out of the total interest expenditure of Rs.78,13,332/-, interest on rolling mill was Rs.44,87,889/- and the same cannot be considered for working out the disallowance. Based on the working submitted by the assessee, the A.O. disallowed Rs. 83,549/- u/s. 14A read with ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvesting in shares/units. In such a case, the A.O. is supposed to make necessary disallowance as per the provisions of Sec. 14A (2) r.w.r. 8D of the I.T. Rules, 1962. The A.O. has followed the same procedure and accordingly application of Rule 8D is upheld. During the appellate proceedings, the appellant has not challenged computation of disallowance. I have also gone through the computation made by the A.O. and the same is as per the provisions Rule 8D of I.T. Rules, 1962. The appellant had placed reliance on various case laws. The ratio of these case laws will not help the appellant as the Hon'ble Courts had considered the provisions of Sec. 14A as it was existing before 1-4-2007. The working of Section 14A has changed substantially after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally excluded for the purpose of taxation; the same cannot be considered while computing the tax. Our view also is supported by the decision of Hon'ble Gujarat High Court in the case of Chokshi Metal Refinery vs. CIT (1977) 107 ITR 63 (Guj.) wherein the Hon'ble High Court relying on the decision of Hon'ble Apex Court in the case of Navnitlal Zaveri vs. K.K. Sen, AAC (1965) 56 ITR 198 (SC) has held as under:- "Head Note - CBDT Circulars - Binding nature - Implications of Circular No.14 (XL-35) of 1955 - It is incumbent on ITOs to follow the abovesaid circular and draw the attention of the assessee concerned to all the reliefs and refunds to which the assessee seems to be entitled on the facts of the case even though the assessee might hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the total income as contemplated under sec. 14A. The Assessing Officer can adopt a reasonable basis for effecting the apportionment. While making that determination, the Assessing Officer should provide a reasonable opportunity to the assessee of producing its accounts and relevant or germane material having a bearing on the facts and circumstances of the case." 13. We are of the view that so far as taxing of dividend is concerned, since the assessee is eligible to claim the dividend as exempt u/s.10(38) and for which we have directed the A.O. hereinabove to grant the exemption to assessee but so as far as the matter of disallowance u/s. 14A is concerned, we remit back the issue to the file of A.O. so that he can consider the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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