TMI Blog2011 (6) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... is against the order of CIT(A) - II, Ludhiana dated 24.2.2011 relating to assessment year 2007-08 against the order passed under sect ion 143(3) of the I.T. Act , 1961. 2. The only ground of appeal raised by the assessee is as under; - That the Ld. CIT(A)-II Ludhiana has wrongly confirmed adhoc disallowance of indirect expenses at ₹ 50,000/ - under Rule 8D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of sect ion 14A of the Act , show caused the assessee to point out the expenditure incur red in relation to the earning of exempt income. The explanation of the assessee was that there were no fresh investments in shares during the year and only eight dividend war rants were received during the year under consideration. It was claimed that no expenditure was incur red in relation to the said in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 8-D of the Act. Admittedly, the provisions of Rule 8-D are not applicable to the year under appeal. The constitutional validity of Sect ion 14A(2) (3) of I.T. Act and Rule 8D of the Income Tax Rules was challenged before the Hon'ble Bombay High Court in Godrej Boyce Mfg. Co. Ltd V DCIT Anr, [234 CTR 1(Bom)]. The Court held that the provisions of Rule 8D were not ultra virus the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 50,000/ - being relatable to the earning of exempt income. 8. Following the ratio laid down by the Hon'ble Bombay High Court, we uphold the disallowance of ₹ 50,000/- being expenditure relatable to the earning of the exempt income by invoking the provisions of section 14A of the Act. The ground of appeal raised by the assessee is thus dismissed. 9. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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