2016 (7) TMI 1527

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....diwalla Revenue by: Shri Ranadher Gupta ORDER C.N. Prasad, These three appeals are filed by the assessee and the Revenue against the order of the Ld. CIT(A)-4, Mumbai pertaining to assessment years 2007-08 & 2008-09. ITA No. 1304/M/2011 - A.Y. 2007-08 2. The first issue in the appeal of the assessee is that the Ld. CIT(A) erred in confirming the disallowance u/s. 14A r.w.r. 8D of....

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....tion to exempt income, no disallowance is warranted under Sec. 14A r.w. Rule 8D. The Ld. Counsel for the assessee submits that the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd Vs DCIT., held that Rule 8D is not retrospective. Therefore he submits that the lower authorities are not justified in applying Rule 8D for the Assessment Year 200708. The Ld. Counsel for the assessee....

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....s held that Rule 8D applies only prospectively. Therefore, we hold that provisions of Rule 8D have no application for Assessment Year 2007-08. However, reasonable disallowance should be made and we direct the Assessing Officer to restrict the disallowance under section 14A at 2% of the dividend income as reasonable expenses for earning exempt income. This ground of the assessee is partly allowed. ....