TaxTMI 
TaxTMI 
2015 (9) TMI 1343
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....essing Officer dated 24/12/2009 under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 ( in short 'the Act'). 2. In all the appeals, Revenue has raised a common issue which relates to the disallowance made by the Assessing Officer by invoking the provisions of section 14A of the Act. The solitary Ground raised by the Revenue is commonly worded in all the three appeals, which reads as under:- "On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in directing the AO to disallow the expenses as per the direction of the Honourable Bombay high court in the case of M/s Godrej & Boyce m Mfg. co . Ltd Vs. DCIT which is not accepted by the department." 3. The brief background of the dispute is that the responde....
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....ction 139(1) of the Act where a disallowance of Rs. 3800/- was already made, the balance of Rs. 14,54,429/- ( Rs. 14,58,229 minus Rs. 3,800/-) was added to the returned income. 5. Before CIT(A), assessee did not dispute the amount of interest expenditure of Rs. 2.07,809/- disallowed by the Assessing Officer out of the total disallowance of Rs. 14,54,429/-. For the balance of the disallowance, the assessee company contended that the Assessing Officer erred in computing the disallowance based on Rule-8D of the Rules, because the said Rule has been held to be applicable with effect from A.Y 2008-09 and is not applicable for the year under consideration, following the judgment of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. C....
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....fore us, Ld. CIT-DR, appearing for the Revenue has primarily reiterated the stand of the Assessing Officer which is based on application of Rule 8D of the Rules in order to quantify the amount disallowable under section 14A of the Act. 8. On the other hand, Ld. Representative for the assessee has justified the order of CIT(A) by placing reliance thereon. 9. Having heard the rival submissions, we find no justifiable reason to interfere with the conclusion drawn by the CIT(A). Notably, the disallowance computed by the Assessing Officer based on Rule 8D of the Rules is not tenable in as much as Rule 8D is applicable only w.e.f. assessment year 2008-09 as laid down by the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Compan....
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....e Act. The Assessing Officer applied the provisions of Rule 8D of the Rules and computed a disallowance of Rs. 46,04,325/- under section 14A of the Act, being expenditure related to the earning of such exempt income. The disallowance computed by the Assessing Officer was on account of interest expenditure as well as out of administrative expenditure, which according to him was relatable to the earning of exempt income. 13. In appeal before CIT(A), the assessee contended that the investments made in mutual funds, etc., which yielded the exempt income were made out of interest free funds, and that the interestbearing borrowed funds were not at all used for making such investments. The CIT(A), in para 5.2 of his order has tabulated the mutu....
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....concerned, the CIT(A) set aside the action of the Assessing Officer in computing such disallowance by application of clause (ii) of Rule 8D of the Rules and instead directed the Assessing Officer to determine disallowance on a reasonable basis as per the directions of the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd. vs. DCIT(supra). Against such decision of the CIT(A), Revenue is in appeal before us. 14. In the above background, we have heard the rival Counsels and find that there is no justification for interfering with the order of CIT(A) on the aspect of the disallowance under section 14A of the Act. 14.1 In so far as, the issue relating to the disallowance of interest expenditure is concerned, the CIT(....