Dispute over disallowance under Rule 8D(2)(iii) & sec. 14A resolved in favor of assessee

The appeal involved a dispute over the disallowance under Rule 8D(2)(iii) pursuant to sec. 14A. The assessee's claim was rejected by the Assessing Officer due to the non-filing of a revised return, following the precedent set by the Supreme Court. The CIT(A) upheld this decision, dismissing the appeal as no revised return was submitted. Despite the non-appearance of the assessee during the hearing, the Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to compute the disallowance in line with established judicial precedents.

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Issues:
1. Claim for disallowance under Rule 8D(2)(iii) vide sec. 14A
2. Rejection of claim due to non-filing of revised return
3. Dismissal of appeal by CIT(A)
4. Non-appearance of assessee during the hearing
5. Admittance of new claim by the Assessing Officer
6. Consideration of judicial precedents in determining disallowance under Rule 8D(2)(ii) and 8D(2)(iii)

Analysis:
1. The appeal pertains to the claim made by the assessee regarding disallowance under Rule 8D(2)(iii) vide sec. 14A. The assessee contended that only dividend-bearing shares and securities should be considered for the purpose of disallowance. The claim was based on the argument that certain investments did not yield dividend income during the year, and strategic investments in group companies were not made for earning dividend income.

2. The claim made by the assessee was rejected by the Assessing Officer due to the non-filing of a revised return. The rejection was based on the precedent set by the Supreme Court in the case of Goetze (India) Ltd. 284 ITR 323, which emphasized the requirement of filing a revised return to support such claims.

3. The appeal against the Assessing Officer's order was dismissed by the CIT(A) on the grounds that no revised return was filed by the appellant company, thereby upholding the decision of the Assessing Officer. The dismissal was based on the absence of a revised return to substantiate the claim.

4. During the hearing, the assessee did not appear despite multiple notices being issued. Consequently, the appeal was disposed of ex parte, with only the Departmental Representative present on behalf of the Revenue.

5. The Tribunal noted that the assessee had submitted the claim to the Assessing Officer but did not file a revised return. The Tribunal highlighted the possibility for the assessee to raise new grounds during appellate or tribunal proceedings, emphasizing the importance of adhering to the guidelines set by the Supreme Court in Goetze (India) Ltd. 284 ITR 323.

6. In determining the disallowance under Rule 8D(2)(ii) and 8D(2)(iii), the Tribunal considered judicial precedents, including the decision of the Co-ordinate Bench of ITAT Kolkata in REI Agro Ltd. vs. DCIT and the judgment of the Hon’ble Calcutta High Court in GA No. 3581 of 2013. Additionally, the Tribunal referenced the judgment of the Hon’ble Bombay High Court in HDFC Bank Ltd. vs. DCIT to direct the Assessing Officer to compute the disallowance in accordance with the established judicial precedents. Consequently, the appeal of the assessee was treated as allowed for statistical purposes.

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