2017 (1) TMI 1322

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....claring total income at Rs. 15. 60 crores. The AO completed assessment, u/s. 143(3) of the Act, on 06. 03. 2013 determining its income at Rs. 18. 53 crores. 2. Effective Ground of appeal is about directing the AO to restrict the disallowance u/s. 14A of the Act r. w. r. 8D of the Income tax Rule 1962, (Rules ) to 0. 5% of the average investments. During the assessment proceedings, the AO found that assessee had received dividend of Rs. 72. 25 lakhs which had been claimed as exempt from tax u/s. 10(34) of the Act, that it had disallowed expenditure of Rs. 25. 24 lakhs on its own . The AO , after seeking an explanation in that regard from assessee, made disallowance of Rs. 3. 02 crores u/s. 14A of the Act. 3. During the appellate proceeding....

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..... Co. Ltd. (supra), Rule 8D of Income-tax Rules, 1962 is applicable only from assessment year 2008-09. As further held by the Hon'ble Bombay High Court in the said case, disallowance u/s. 14A is required to be made for the years prior to assessment year 2008-09 by following some reasonable method after taking into consideration the facts and circumstances of the case. In the present case, this issue has already been examined on merit by the learned CIT(Appeals) and on such examination, he has found that the entire investment in shares made by the assessee company out of its own funds and no interest expenditure incurred by it was in relation to the earning of exempt dividend income. The findings recorded by the learned CIT(Appeals) in t....

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....earned CIT(Appeals) deleting the addition of Rs. l, 07, 74, 935/- made by the AO on account of disallowance u/s 14A and upholding the same on this issue, we dismiss the appeal filed by the Revenue. 9. In its cross objection, the assessee has raised the following grounds : "1. The Cross Objector submits that Rule 8D cannot be applied for computing disallowance under section 14A for the Assessment Year 2007-08. 2. Without prejudice, the disallowance under section 14A read with section 8D cannot exceed Rs. 80, 71, 204/- in any view of the matter. 3. The Cross Objector submits that section 14A and Rule 8D cannot be imported into section 115JB for the purpose of arriving at "the amount of expenditure debited to the Profit and Loss Ac....