TMI Blog2017 (3) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 26,83,073 (Rs.2,38,07,025 ₹ 2,11,23,952) as on 31-03-2008. The AO disallowed the sum of ₹ 26,83,073/-u/s 43B of the Act in view of an SLP moved by the department before the Hon ble Supreme Court. 4. The CIT-A directed the AO to pass an appropriate order in the light of the decision of the Hon ble Apex Court in the case of Exide Industries Ltd. Relevant findings of the CIT-A in this regard is reproduced herein below:- 4.2 I have carefully considered the submissions of the A.R and noted the A.O s finding in the impugned order. It is indeed correct that the Calcutta High Court in the case of Exide Industries Ltd (supra) had held that Clause (f) of Sec. 43B was inconsistent with the object with which the Sec. 43B was enacted and therefore the same was struck down as ultra virus. Decision of the jurisdictional Calcutta High Court has since been followed with approval by the Kerala High Court in the case of CIT Vs. Hindusthan Latex Ltd. Following the judgments of the Calcutta Kerala High Courts the ITAT Benches at Bangalore Jodhpur have also allowed relief to the appellant by deleting the disallowances made in respect of provision for leave encashment. I, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43B of the Act on account of leave encashment amounting to ₹ 26,83,073/- in the assessment proceedings. 6. On the other hand, the ld.AR of the assessee submits before us that the issue in hand may be restored to the file of the AO in view of SLP pending before the Hon ble Calcutta High Court. 7. Heard rival submissions and perused the material on record. We find that this Tribunal decided the issue therein is being similar to the issue on hand covering the grounds as raised in no-1 and the relevant portion of which is reproduced herein below: 25. The issue raised in Ground No. 8 relates to the disallowance of 1.51 crores made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of provision made by the assessee for leave encashment. 26. The assessee-Company during the year under consideration had made a provision of ₹ 1.51 crores for leave encashment on the basis of an acturial valuation and the same was claimed as deduction by relying on the decision of the Hon ble Calcutta High Court in assesese s own case reported in 292 ITR 470 and the decision of the Hon ble Supreme Court in the case of Bharat Earth Movers reported in 245 ITR 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be entitled to make a claim in its returns . 28. We have carefully perused the Interim Order dated 8t h May, 2009 passed by the Hon ble Supreme Court in the matter. It is observed that the Hon ble Apex Court in the said order has made it clear that the assessee, during the pendency of the Civil Appeal, would pay tax as if Section 43B(f) is on the Statute Book, but at the same time, it would be entitled to make claim in its return. Keeping in view all these developments, the Coordinate Bench of this Tribunal in the case of Dy. CIT vs.- BLA Industries Pvt. Ltd. (ITA No. 1434/KOL/2012 dated 16.01.2015) has restored the similar issue to the file of the Assessing Officer with a direction to await till the final decision of the Hon ble Supreme Court on the issue and then to decide the issue accordingly. Following the said decision of the Coordinate Bench, we restore this issue to the file of the Assessing Officer with the similar direction. Ground No. 8 is accordingly treated as allowed for statistical purposes. 8. Taking into consideration the order supra , we remand the issue to the file of AO to decide the same in accordance with the Judgment of the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or realizing the dividend. Save and except 2 occasions on which dividend was received the appellant did not earn tax-free income on any other occasion during the entire F.Y. 2007-08. In the circumstances all that the appellant was expected to incur expenditure on, related to accounting of dividend received on 2 occasions. The appellant fairly estimated such expenditure at ₹ 6,000/-. The appellant's estimate of the amount disallowable u/s 14A appeared to be fair and reasonable having regard to the totality of the facts and circumstances of the case. It has been held by judicial authorities that expenditure which can be disallowed u/s 14A must have some real, rational and proximate nexus with earning of tax-free income. Rule 8D is a rule of evidence which prescribes a mathematical formula for making disallowance. The presumptive rule of evidence contained in Rule 8D is however rebuttable in nature the assessee can rebut the presumption by bringing on record relevant facts to establish that expenditure was in fact not incurred to the extent envisage by Rule 8D. Before Rule 8D(2) is invoked in it is necessary for the A.O to first come to a rational conclusion that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/-. The ITAT Kolkata Bench in the case of Hindusthan Paper Corporation Ltd Vs DCIT in I.T.A. No. 47/Kol/2012 for the Asst Year 2008-09 had considered a similar issue. The appeal decided by the Tribunal also related to A.Y. 2008-09 being the year in which Rule 8D came in force. In that case the appellant, a Government Undertaking, had received dividend only on one occasion from its subsidiary through ECS mode. By invoking provisions of Rule 8D(2)(iii) the A.O. disallowed ₹ 1,02,59,650/-. Taking into consideration the explanations put forward by the assessee and having regard to the fact that the dividend was received from the subsidiary only on one occasion through ECS the ITAT did not find any merit in the disallowance made by the A.O. by mechanical application of Rule 8D(2)(iii). The Tribunal accepted the submissions of the assessee that even after introduction of Rule 8D, it was necessary for the A.O. to establish some real and proximate nexus between incurring of expenses and earning of dividend and in absence of such nexus; disallowance only based on arithmetical formula; incorporated in Rule 8D(2)(iii) was held to be unsustainable. The facts of the case decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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