TMI Blog2012 (10) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... ai dated 9.6.2011 for the assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espective of the fact whether any income is earned by the assessee or not. In CO No.142/M/2012 the assessee raised the only effective ground reads as under: In the event 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical of the applicability of Rule 8D as per discussion in para 2.2.2 of the impugned order. On considering the submissions of the assessee, CIT (A) relied on the binding jurisdictional High Court judgment in the case of Godrej and Boyce 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) are proper and relied on the argumentative grounds. Further, he mentioned that neither the CIT (A) nor the Assessing Officer has examined the issues relating to the disallowability of expenditure, when the dividend is earned without incurring any expenditure. The assessee has 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 directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment specifies that the AO is under obligation first to dissatisfy himself about the claims of the assessee on the topic before any reasonable method for any determination of disallowable sum is determined. We have also find that the decisions of Cheminvest India Ltd (supra) Shree Shyamkamal Finance 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 par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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