TMI Blog2017 (11) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Limited vs. Deputy Commissioner of Income Tax [2017 (5) TMI 403 - SUPREME COURT OF INDIA] as held we do not find any mention of the reasons which had prevailed upon the Assessing Officer, while dealing with the Assessment Year 2002-2003, to hold that the claims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the Assessing Officer, particularly, in the absence of any new fact or change of circumstances. Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the Assessee had been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer on delayed payment of employees contribution of ESI and PF. iii) Whether on the facts and in the circumstances of the case and in law and learned CIT(A) has erred in deleting the disallowance of ₹ 2,53,22,418/- made by the Assessing Officer under the provisions of Section 14A read with rule 8D of the Income Tax Rules. In DBITA No. 204/2017 i) Whether the Tribunal has erred in deleting the disallowance of expenditure of ₹ 39,80,602/- which was made by the Assessing Officer by applying the provisions of Section 14A r/w Rule 8D, ignoring that the said expenditure was incurred for earning the exempted dividend income? ii) Whether the Tribunal was justified in arriving at the finding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 394 ITR 449 wherein it has been held as under:- 36. Section 14A as originally enacted by the Finance Act of 2001 with effect from 1.4.1962 is in the same form and language as currently appearing in Sub-section (1) of Section 14A of the Act. Sections 14A (2) and (3) of the Act were introduced by the Finance Act of 2006 with effect from 1.4.2007. The finding of the Bombay High Court in the impugned order that Subsections (2) and (3) of Section 14A is retrospective has been challenged by the Revenue in another appeal which is presently pending before this Court. The said question, therefore, need not and cannot be gone into. Nevertheless, irrespective of the aforesaid question, what cannot be denied is that the requirement for att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the Assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the Assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the Assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 4.4. In that view of the matter, the issue is required to be answered in favour of the assessee and against the department. In DBITA No. 204/2017 5. Therefore, the issue No. 1 2 will be governed by the reasoning of question no. 3 of Appeal No. 202/2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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