9911796707
TMI Blog2016 (2) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 14A from Rs. 21,74,522/- to Rs. 6,93,201/- by applying the provision of Rule 8D r.w. section 14A. Cognizance of this return was not taken by the AO on the ground that it was not filed within the time available under section 139(5) of the Income Tax Act. The ld.AO has observed that the assessee-company made investment of Rs. 8.9 crores in tax free investment. He confirmed the disallowance made by the assessee for the purpose of section 14A in the original. The assessee has made disallowance of Rs. 21,74,522/-. According to the AO this disallowance has been worked out on the basis of Rule 8D r.w.s. 14A of the Act. Since the amount considered by the assessee was reasonable one, the ld.AO did not make any interference with the disallowance. 4. Appeal to the CIT(A) did not bring any relief. 5. Before us, the ld. Counsel for the assessee contended that the Hon'ble Bombay High Court it he case of Godrej Boyce Manufacturing Co. Ltd. DCIT, 328 ITR 81 has held that the Rule 8D cannot be applied retrospectively. It is applicable from the assessment year 2008-09. Thus, it is not applicable in the assessment year 2007-08. In the computation made by the assessee on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns (2) and (3) of Section 14A 29. Sub-section (2) of Section 14 A of the said Act provides the manner in which the Assessing Officer is to determine the amount of expenditure incurred in relation to income which does not form part of the total income. However, if we examine the provision carefully, we would find that the Assessing Officer is required to determine the amount of such expenditure only if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under the said Act. In other words, the requirement of the Assessing Officer embarking upon a determination of the amount of expenditure incurred in relation to exempt income would be triggered only if the Assessing Officer returns a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. Therefore, the condition precedent for the Assessing Officer entering upon a determination of the amount of the expenditure incurred in relation to exempt income is that the Assessing Officer must record that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in relation to income which does not form part of the total income under the said Act for such previous year, the Assessing Officer shall determine the amount of the expenditure in relation to such income in accordance with the provisions of sub-rule (2) of Rule 8D. We may observe that Rule 8D(1) places the provisions of Section 14A(2) and (3) in the correct perspective. As we have already seen, while discussing the provisions of Sub-sections (2) and (3) of Section 14A, the condition precedent for the Assessing Officer to himself determine the amount of expenditure is that he must record his dissatisfaction with the correctness of the claim of expenditure made by the assessee or with the correctness of the claim made by the assessee that no expenditure has been incurred. It is only when this condition precedent is satisfied that the Assessing Officer is required to determine the amount of expenditure in relation to income not includable in total income in the manner indicated in sub-rule (2) of Rule 8D of the said Rules. 31. It is, therefore, clear that determination of the amount of expenditure in relation to exempt income under Rule 8D would only come into play when the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that nothing in Section 14A empowered the Assessing Officer to either re-assess under Section 147 or pass an order enhancing the assessment or reducing the refund already made or otherwise increasing the liability of the assessee under Section 154, for any assessment year beginning on or before the first day of April, 2001. Thus, in respect of all the assessment years prior to the assessment year beginning on or before the 1st day of April, 2001, concluded assessments could not be disturbed despite the fact that Section 14A had been expressly made retrospective with effect from 01.04.1962. The provisions of Section 14A, which were retrospective with effect from 01.04.1962 are now encapsulated in sub-section (1) of Section 14A. It is also clear that sub-sections (2) and (3) of Section 14A were introduced subsequently by virtue of the Finance Act, 2006 and were introduced with effect from 01.04.2007. However, although sub-sections (2) and (3) had been introduced with effect from 01.04.2007, they remained empty shells inasmuch as the expression "such method as may be prescribed" got meaning only by the introduction of Rule 8D by virtue of the Income-tax (Fifth Amendment) Rules, 2008 w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
