Appeal allowed for re-computation under Rule 8D with Section 14A following High Court's decision

The appeal was allowed for statistical purposes, with the Tribunal directing the Assessing Officer to re-compute the disallowance under Rule 8D read with Section 14A. The Tribunal followed the jurisdictional High Court's decision, rejecting the assessee's reliance on the Delhi High Court's decision in a similar case, as the Supreme Court's dismissal did not result in the merger of the orders.

---

---

Issues Involved:
1. Legality and justice of the Assessing Officer's order as upheld by the Commissioner of Income Tax (Appeals) (CIT(A)).
2. Applicability of Section 14A to income entitled to deduction under Section 80P(2)(d) for a cooperative society.
3. Attribution of Rs. 60,58,021/- as expenses to income entitled to deduction under Section 80P(2)(d).
4. Attribution of total expenses of the head office to the earning of interest income.
5. Attribution of expenses to the earning of interest income as per the provisions of Section 57(iii).

Issue-wise Detailed Analysis:

1. Legality and Justice of the Assessing Officer's Order:
The assessee contested that the order of the Assessing Officer, upheld by the CIT(A), was "bad in law and beyond all the cannons of law and justice." However, this was a general ground without specific arguments presented during the hearing.

2. Applicability of Section 14A to Income Entitled to Deduction under Section 80P(2)(d):
The assessee argued that the provisions of Section 14A should not apply to income entitled to deduction under Section 80P(2)(d). The Assessing Officer and CIT(A) held the contrary view, relying on earlier Tribunal decisions against the assessee for previous assessment years, confirmed by the Hon'ble Punjab & Haryana High Court. The assessee cited the decision of the Hon'ble Delhi High Court in CIT Vs. Kribhco, which was in favor of the assessee and upheld by the Hon'ble Supreme Court by dismissal of the SLP. The Tribunal, however, noted that the dismissal of the SLP by the Supreme Court does not result in the merger of the High Court's order with that of the Supreme Court, thus the earlier decision of the jurisdictional High Court had to be followed.

3. Attribution of Rs. 60,58,021/- as Expenses to Income Entitled to Deduction under Section 80P(2)(d):
The assessee challenged the attribution of Rs. 60,58,021/- as expenses to the income entitled to deduction under Section 80P(2)(d). The Assessing Officer had recomputed these expenses based on earlier years' decisions, which were upheld by the Tribunal and the Hon'ble High Court. The Tribunal reaffirmed the attribution, following the jurisdictional High Court's decision.

4. Attribution of Total Expenses of the Head Office to the Earning of Interest Income:
The assessee contended that attributing total head office expenses to the earning of interest income was incorrect. The Tribunal upheld the attribution, relying on the earlier decisions that were confirmed by the Hon'ble Punjab & Haryana High Court.

5. Attribution of Expenses to the Earning of Interest Income as per Section 57(iii):
The assessee argued that the attribution of expenses to the earning of interest income under Section 57(iii) was against judicial decisions. The Tribunal, however, upheld the attribution, following the jurisdictional High Court's decision.

Additional Consideration:
The Tribunal addressed the applicability of Rule 8D for computing disallowance under Section 14A, stating that Rule 8D became applicable from the assessment year 2008-09. Thus, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for re-computing the disallowance under Rule 8D read with Section 14A.

Conclusion:
The appeal was allowed for statistical purposes, with the Tribunal directing the Assessing Officer to re-compute the disallowance under Rule 8D read with Section 14A. The Tribunal followed the jurisdictional High Court's decision, rejecting the assessee's reliance on the Delhi High Court's decision in CIT Vs. Kribhco, as the SLP dismissal did not result in the merger of the orders.

Order Pronounced:
The order was pronounced in the Open Court on 12/01/2015.

---