ITAT rules for assessee, condones appeal delay, sets aside Rule 8D(2)(iii) addition.

The ITAT ruled in favor of the assessee, condoning the delay in filing the appeal against the order under section 154 due to a satisfactory explanation provided by the assessee. Additionally, the ITAT set aside the addition made under Rule 8D(2)(iii) as Rule 8D was deemed not applicable for the relevant assessment year, based on the decision in the Godrej & Boyce case. The ITAT clarified that this decision did not impact the pending appeal against the original assessment order's disallowance under section 14A.

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Issues:
1. Delay in filing appeal against order under section 154
2. Validity of notice issued under section 154 and addition made under Rule 8D(2)(iii)

Analysis:

Issue 1: Delay in filing appeal against order under section 154
The appeal was against the order dated 25.4.2013 arising from the order passed under section 154 for A.Y. 2006-07. The Assessing Officer proposed an additional disallowance under section 14A r.w.r 8D, which the assessee contested. The assessee challenged the action before CIT(A), but there was a delay of 2 and half months in filing the appeal. The assessee explained that the delay was due to confusion regarding filing a separate appeal against the order passed under section 154 when the issue was already raised in the original assessment appeal. The CIT(A) rejected the condonation petition, but the ITAT found the explanation satisfactory. Referring to the Collector Land Acquisition case, the ITAT held that the delay was not deliberate or negligent, and the assessee had a sufficient cause. Thus, the delay of 2 and half months was condoned.

Issue 2: Validity of notice issued under section 154 and addition made under Rule 8D(2)(iii)
The Assessing Officer proposed an additional disallowance under Rule 8D(2)(iii) in the order passed under section 154. The assessee contended that Rule 8D was not applicable for A.Y. 2008-09, citing the decision of the Bombay High Court in the Godrej & Boyce case. The ITAT agreed that Rule 8D was not applicable for the relevant assessment year, thus rendering the addition made by the Assessing Officer unsustainable. The ITAT set aside the order passed under section 154, clarifying that their decision had no impact on the pending appeal against the original assessment order's disallowance under section 14A. Consequently, the ITAT allowed the appeal filed by the assessee.

In conclusion, the ITAT ruled in favor of the assessee, condoning the delay in filing the appeal and setting aside the addition made under Rule 8D(2)(iii) as it was not applicable for the assessment year in question.

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