2014 (1) TMI 801

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.... Assessment Years 2000-01 and 2001-02 vide his sparate orders both dated 08.04.2009. 2. The first common issue in these appeals of assessee is against the order of CIT(A) confirming the disallowance of expenses qua exempted income by invoking the provisions of section 14A of the Act r.w.r 8D of Income-tax Rules, 1962. For this, assessee has raised following common ground nos. 1, 2 for both the Assessment Years and ground no. 4 for AY 2000-01 and for the sake of convenience, we reproduce the said grounds from ITA No.930/K/2010: "1. That the CIT(A) was wrong in confirming the action of the Assessing Officer in applying Rule 8D and consequently in disallowing Rs.4,53,25,000/- under section 14A. 2. That without prejudice to the content....

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....come by laying down the principle as under: "(v) The provisions of rule 8D of the Income-tax Rules which have been notified with effect from March 24, 2008, shall apply with effect from the assessment year 2008-09; (vi) Even prior to the assessment year 2008-09, when rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub-section (1) of Section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the asse....

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....er is accordingly directed to do so and work out the quantum of disallowance. This ground of appeal of the assessee is allowed as directed above." In view of the above, we restrict the disallowance u/s. 14A of the Act to 1% of total exempt income and direct the Assessing Officer to work out the quantum of disallowance accordingly. This ground of appeal of revenue is partly allowed." Further, as the issue is covered, we direct the AO to restrict the disallowance at 1% of the total exempt income and work out the quantum of disallowance accordingly. These grounds of appeal of assessee is partly allowed. 4. The second issue in ITA No. 930/K/2010 for AY 2000-01 is as regards to computation of book profit u/s. 115JB of the Act thereby ma....

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....rvations held by the assessee company with General Insurance Corporation of India and other subsidiaries in respect of unidentified Motor Third party claim which were placed at pages 31 to 34 of the paper book that assessee's liability towards unidentified motor Third party claim cannot be stated as unascertained liability. In our considered opinion the liability on account of unidentified Motor Third Party claim is certain. However the quantification is not certain. However, as regarding quantification also all the subsidiary companies of the General Insurance Corporation of India along with the assešsee company has adopted the same method decided by the holding company i.e. General Insurance Corporation of India. 13.1. Keeping i....