2018 (12) TMI 60

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....ts u/s 28(iv) of the Act? ii. Whether on the facts and circumstance of the case and in law, the Hon'ble ITAT is justified in directing the Assessing Officer to recompute the average investments relying upon CIT(A)'s order for A.Yrs.2005-2006 and 2006-2007?" 3. During the course of arguments of the learned counsel for the Revenue we found that in the impugned judgment in the context of the first question, the Tribunal had referred to and relied upon its decision in case of Gracious Hospatility Limited. Learned counsel for the Revenue fairly brought to our notice the fact that such decision of the Tribunal was challenged by the Revenue before the High Court in Income Tax Appeal No.431 of 2016 and such appeal was dismissed by an ....

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....he disallowance under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1961. The facts on record would suggest that the assessee had made investments which yielded tax free dividend. In the opinion of the Assessing Officer, the expenditure in relation to investment which yielded such tax free income was required to be disallowed in terms of Section 14A r/w Section 8D of the Rules. The issue eventually reached the Tribunal. The Tribunal noted that in the earlier years the Commissioner (Appeals) and the Tribunal had come to the conclusion that no interest bearing funds were utilized for making investments in the shares which resulted into tax free income. The Tribunal, therefore, directed the Assessing Officer to restrict the....

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....ual position, as per the judgment of this court in the case of Reliance Utilities and Power Ltd. (supra), it would have to be presumed that the investment made by assessee would be out of the interest-free funds available with the assessee. We, therefore, are unable to agree with the submission of Mr. Suresh Kumar that the Tribunal had erred in dismissing the appeal of the Revenue on this ground. We do not find that question (A) gives rise to any substantial question of law and is therefore rejected." 8. In view of such facts even the question No.2 is not required to be entertained. Learned counsel for the Revenue may be correct in pointing out that in the context of present case which concerns the assessment year 2009-10, Rule 8D was al....