TMI Blog2011 (12) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... to make necessary disallowance under sec. 14A read with Rules 8D of the Income-tax Rules, 1962. 2. The brief facts of the case are that the assessee has filed its return of income on 22.11.2006 declaring a loss of ₹ 8,08,100. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Act was issued on 10.10.2007 which was duly served upon the assessee. Learned Assessing Officer has passed a very brief order on 17.12.2008 whereby he observed that after considering the details filed by the assessee and discussing the issue with Shri RL Garg, CA, the return filed by the assessee is accepted. 3. Learned Commissioner on perusal of the record found that assessee has shown dividend income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court s decision, Rule 8D cannot be applied in the case of the assessee for assessment year 2006-07. Learned Commissioner did not accept the contentions of the assessee and set aside the assessment order. The observations made by the Learned Commissioner read as under: The contention of the assessee is considered and has not been accepted on the facts and circumstances of the case and in view of the CBDT letter in F.No.173/172/2008-ITA-I dated 04.02.2009 which states that the requisite disallowance u/s.14A read with Rules 8D in case assessee has earned exempt income i.e. dividend income and in the light of the following court pronouncements: 1. Hon ble ITAT Mumbai in the case of Daga Capital Management (P) Ltd. 26 SOT 603 (MUM)(S.B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt in this year. In such situation, learned Assessing Officer has rightly accepted the case of the assessee and his order cannot be termed as erroneous as well as prejudicial to the interest of the revenue. He further pointed out that in the case of CIT vs. Honda Siel Power Product reported in 333 ITR 547, Hon'ble Delhi High Court has observed that once a regular assessment is made under sec. 143(3) then a presumption can be raised that order has been passed upon application of mind, though this presumption is reputable but there must be some material to indicate that Assessing Officer had not applied his mind. If he has taken one of the plausible views then Learned Commissioner cannot substitute his view by exercising the powers unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the A.O has adopted one of the courses permissible under law or where two views are possible and the A.O has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the A.O is unsustainable under law. (vi) If while making the assessment, the A.O examines the accounts, makes enquiries, applies his mind to the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al instead of the decision of Hon'ble Bombay High Court in the case of Godrej Boyce (supra) which was brought to his notice at the time of hearing and which has duly been noticed by the Learned Commissioner in the written submissions of the assessee extracted in the impugned order. It would only indicate that Learned Commissioner failed to appreciate the facts in right perspective. He insisted that disallowance under sec.14A has to be made as per Rule 8D. We further find that in the absence of Rule 8D, the disallowance ought to be made on a reasonable basis. Assessee has pointed out that it has disallowed a sum of ₹ 31,93,178 at its own and the net effect of the disallowance is that no dividend income was claimed exempt. Since ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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