TMI Blog2012 (3) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and carried forward liability payable by the appellant company to Elephanta Oil Vanaspati Industries Ltd. and shown by it, as such in its regularly maintained audited books of account. For that, being unwarranted, the addition so confirmed, it is prayed, may kindly be deleted. 2. For that the Ld. Commissioner of Income Tax (Appeals) erred in confirming disallowance of ₹ 43,422/- under rule 8D(iii) of the IT Rules, 1962. For that being unwarranted the disallowance so confirmed, it is prayed may kindly be deleted. 3. For that the appellant company craves leave to take additional ground or grounds of appeal at or before the time of hearing. 3. Assessing Officer during the course of assessment noted that the sundry creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 840.78. It was further submitted that amount shown as payable to Elephanta represented bank guarantees given in 1984-85 by Elephanta on behalf of the assessee to custom authorities through Punjab Sindh Bank. It was further submitted in respect of Elephanta on the recommendation of the BIFR, the Hon ble High Court had admitted the relevant company petition for liquidation of the said Elephanta and had also appointed provisional liquidator who shall taken into his possession and control of the assets of Elephanta including its books of account and statutory records. The said liquidation proceedings remain pending even as on date and the amount payable to and receivable from Elephanta by the assessee company continue to remain at the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of ₹ 1,53,48,850/- standing against the name of M/s Elephanta Oil Vanaspathi Industries Ltd.. Hence, the addition of ₹ 1,53,48,850/- is confirmed. 5. Against the above order the assessee is in appeal before us. 6. Ld. counsel of the assessee submitted that whereas a sum of ₹ 1,53,48,849.75 was payable by the assessee company to Elephanta a sum of ₹ 1,57,10,690.53 was also receivable from it. So in the net effect, Elephanta owed to the assessee company a sum of ₹ 3,61,840.78. He pleaded that assessee company was in liquidation. Hence, he claimed that there was no basis of making the addition in this regard by the lower authorities. Ld. counsel further submitted that the said liability of ₹ 1,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 8. Apropos issue of disallowance of ₹ 43,422/- On this issue Assessing Officer noted that perusal of Schedule-4 of the balance sheet it is seen that there were long term investments to the tune of ₹ 86,84,401/- made by the assessee in quoted and unquoted shares of different companies. Assessee was asked to furnish working of disallowance u/s. 14A read with rule 8D of the IT Rules. No compliance in this regard was made by the assessee. Assessing Officer noted that it was held by the Hon ble Special Bench of the ITAT, Delhi in the case of M/s. Cheminvest Ltd. vs. ITO in ITA No. 87/Del/2008 that disallowance u/s. 14A is to be made even if no income has resulted or earned by the assessee in the year under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome had been earned or received by the assessee; c) the allowance of expenditure in relation to dividend income would not be admissible in computing the income of an assessee under the Act in both the situations, whether the shares are held as investment or held on trading account as stock-in-trade; and d) the provisions of Rule 8D of the Income Tax Rules which have been notified with effect from 24 March, 2008 shall apply with effect from assessment year 2008-09. As held by the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. (Supra) Rule 8D of the Income Tax Rules, 1962 is applicable only prospectively i.e. from A.Y. 2008-09. Since the assessment year involved in the present case is 2008-09, respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether in terms of section 14A(2) condition precedent for Assessing Officer to determine amount of expenditure incurred in relation to exempt income is that he must record his dissatisfaction with correctness of claim of expenditure made by assessee or with correctness of claim made by assessee no expenditure has been incurred. Held, yes Whether therefore, determination of amount of expenditure in relation to exempt income under rule 8D would only come into play when Assessing Officer rejects claim of assessee in this regard Held, yes Whether rule 8D, which was introduced by virtue of Notification No. 45/2008, dated 24.3.2008, is prospective in operation and cannot be regarded as being retrospective Held, yes Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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