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TMI Blog2020 (6) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as 'the Act') r.w.r. 8D; (ii) Disallowance of Client referral fees Rs. 27,93,401/-. 3. Shri V.G.Ginde, appearing on behalf of the assessee submitted that the assessee is a share broker. The assessee filed its return of income for the impugned assessment year on 30/09/2012 declaring total income of Rs. 9,59,865/-. During the relevant period the assessee received dividend income of Rs. 1,21,155/-. The assessee made suo-motu disallowance of Rs. 10,000/- for earning exempt income. The Assessing Officer made further disallowance of Rs. 9,57,180/- as direct expenditure under Rule 8D(2)(i) of the Income Tax Rules, 1962.( in short 'the Rules'). The Assessing Officer has erred in holding that the Demat charges paid by the assessee are in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilised for making investment. The ld. Authorized Representative of the assessee further submitted that as regards disallowance under Rule 8D(2)(iii) is concerned, the assessee has made suo-motu disallowance of Rs. 10,000/-. The CIT (A) has enhanced disallowance to dividend income earned. The ld. Authorized Representative of the assessee prayed that the disallowance under rule 8D(2)(iii) may be restricted to suomotu disallowance made by the assessee. 3.1 In respect of ground No.2, the ld.Authorized Representative of the assessee submitted that the assessee has paid Client Referral Fees of Rs. 45,52,399/- as against total turnover of Rs. 3,28,17,19/- during the period relevant to the assessment year under appeal. The Client referral Fees p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be made in the current assessment year. 4. On the other hand, Ms. R. Kavitha, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. 5. We have heard the submissions made by rival sides and have perused the orders of authorities below. The first ground of appeal is qua disallowance made under section 14A r.w.r. 8D. The assessee has earned dividend income of Rs. 1,21,155/-. The assessee made suo-motu disallowance of Rs. 10,000/- under section 14A of the Act. The Assessing Officer made further disallowance of Rs. 9,92,123/-. In first appellate proceedings, the CIT (A) restricted the disallowance under section 14A of the Act to the total exempt income earned. After analy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the immediately preceding assessment year has restricted the payment of Client referral Fee to 5.36% in the current assessment year. The CIT (A) has upheld the same. The assessee has filed a comparative chart of the brokerage income earned and the Client referral Fees paid during the immediate three preceding assessment years. The same is reproduced herein below: Particulars AY 2009-10 AY 2010-11 AY 2011-12 AY 2012-13 Rs. Rs. Rs. Rs. Brokerage income as per P&L A/c. 3,21,35,055 4,98,14,411 5,00,61,333 2,74,97,389 Client referral Fees 94,02,213 78,96,349 33,10,533 45,52,399 Per cent (B) to (A) 29.26% 15.85% 6.61% 16.56% Average for last 3 years : &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stimating by applying percentage of the earlier assessment year. In the facts of the case, we deem it appropriate to restore this issue back to the file of Assessing Officer to verify genuineness of the payments made to the parties concerned. The Assessing Officer while verifying genuineness of the payments, shall grant reasonable opportunity of hearing to the assesse, in accordance with law. The ground No.2 of the appeal is allowed for statistical purposes in the terms aforesaid. 7. In the result, appeal of the assessee is partly allowed for statistical purpose. 8. This appeal was heard on 20/02/2020. As per Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963, (ITAT Rules, 1963), the order was required to be "ordinarily" pronou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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