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TMI Blog2012 (10) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2007-2008. 2. The appeal / Cross Objection wise grounds read as under: "In ITA No.6392/M/2011, assessee has raised only the following grounds: 1) a) The CIT (A) - 16 erred in directing the AO to work out direct expenses attributable to earning dividend income of ₹ 10,331,706/- per section 14A of the Act. b) The CIT (A) ought to have held that there was no expenditure incurred in earning the exempt income." In ITA No.6112/M/2011, Revenue has raised the following grounds: 1) "On the facts and in the circumstances of the case and in law, the Ld CIT (A) failed to interpret the provisions of Section 14A of the IT Act, 1961 and Rule 8D in its right perspective and true meaning. 2) On the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent the higher authorities reverse the observation of the CIT (A) that Rule 8D cannot be applied retrospectively; by holding Rule 8D as reasonable in nature for determining the expenditure attributable to earning exempt income in the year under appeal, the AO be directed to consider the book value of the investments in calculating the average value of the investments for computing the disallowance under Rule 8D(2) as against the market value of investments considered by the AO." 3. Briefly stated the relevant facts of the case are that the assessee is a company engaged in the business of investing in joint ventures and also carrying on research activities. Ld Counsel for the assessee mentioned that the solitary issue which is a bone of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Mfg. Co. Ltd. vs. DCIT as well as the ITAT decision in the case of M/s. Daga Capital Management Pvt. Ltd. reported in 117 ITD 169 and held that the Rule 8D has no application to the assessment year 2007-2008 i.e. the AY under consideration. However, the CIT (A) set aside the issue to the files of AO by stating as under: "However, I find that since the appellant did not make any apportionment on its own of the direct expenses which according to me he should have done as it cannot be said that no expenditure was incurred for the purposes of earning of the dividend. The AO has to apply the apportionment of the expenditure after complying with the legal requirement of section 14A of the Act. Accordingly, AO is directed to work out the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not demonstrated in full that the expenditure incurred by the assessee does not contain direct expenditure related to the dividend. In response to the query from the Bench on the veracity of the directions by the CIT (A), Ld Counsel stated that whole of issue may be adjudicated de-novo also considering the binding judgment of jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd. (supra). Ld Counsel mentioned that he has no objection if directions are given by the Tribunal to AO to adjudicate the whole issue de-novo by passing a speaking order attending to the arguments raised by him. 8. We have considered the above arguments of both the parties and perused the papers filed before us. It is an undisputed fact that the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and Leasing Co. Private Limited (ITA No.433/M/2010) are different on facts. It is the grievance of the assessee that the provisions of section 14A as they stand at the relevant point of time as applicable to AY 07-08 are not properly appreciated by the Revenue. It is the prayer of the parties that all the grounds raised by them may be set aside to the files of the AO for de novo assessment on this issue. We find merit in the arguments of the parties and order accordingly. In the set aside proceedings, AO shall consider all the objections raised by the Ld Counsel before us and meet out the objections by passing a speaking order. Accordingly, all the three appeals/CO are allowed for statistical purposes. 9. In the result, all the three a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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