AI Drafter 
TaxTMI 
TaxTMI 
2020 (5) TMI 627
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....o have held that: 1.1 (a) no disallowance can be made under Rule 8D(2)(i), as the Ld. AO has not establishment that Rs. 2,86,45,152/- incurred by Project and Investment Department represents direct expenditure. Without prejudice to the above and in the alternate (b) In view of the disallowance made of Rs. 2,86,45,152/- being the expenditure incurred by Project and Investment Department under Rule 8D(2)(i) of the Rules, no further disallowance can be made under Rule 8D(2)(iii) of the Rules. (c) The aggregate amount of disallowance made of expenditure U/s. 14A of the Act read with Rule 8D cannot exceed the expenditure incurred by the Project and Investment Department of Rs. 2,86,45,152/-. 1.2 The expenditure incurred by the Project and Investment Department of Rs. 2,86,45,152/- cannot be considered in computing Book Profit u/s. 115JB of the Act, as the AO has not established that such expenditure represents direct expendit Assessing Officer's grievances: 1. " On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the A.O to exclude strategic investments from the total investment f....
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.... under rule 8D(2)(iii)" He then proceeded to compute the disallowance under section 14A read with rule 8D, which was 0.5% of the average investments held by the assessee [i.e. under rule 8D(2)(iii)] amounting to Rs. 11,06,68,000 plus Rs. 2,86,45,152 being on account of direct expenses incurred to earn the dividend income [under rule 8D(2)(i)]. Out of the total amount of Rs. 13,93,13,152, the Assessing Officer reduced the suo motu disallowance offered of Rs. 6,18,69,000, and added, inter alia, the remaining Rs. 7,74,44,152 to the income returned by the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) upheld, in principle, the rejection of suo motu disallowance offered by the assessee but gave some partial relief on the computation part, but, for the reasons we will set out in a short while, it is not really necessary to deal with justification for the partial relief granted by the CIT(A). Suffice to note that the learned CIT(A) upheld, in principle, the rejection of suo motu disallowance offered by the assessee. The assessee is aggrieved of the action of the CIT(A) being upheld in principle while the Assessing Officer is aggrieved of the r....
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.... not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2)". That exercise is clearly not carried out. The Assessing Officer has noted the explanation of the assessee and proceeded to disregarded the same on the basis of working of rule 8D(2)(i) and 8D(2)(iii). There is no other, and in fact no, reason for rejection of the computation of disallowance by the assessee. As a matter of fact, on the fact of this case, there is not even a whisper of the reason, barring reference to rule 8D(2)(i), for rejecting the suo motu disallowance offered by the assessee. On these facts, and for the detailed reasons set out above, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance of Rs. 6,18,69,000 offered by the assessee. Once we hold so, all other issues raised in these appeals become wholly academic and infructuous, and there is no need to adjudicate on th....
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....ion (2), as increased by the amount or amounts of expenditure relatable to any income to which (section 10 (other than the provisions contained in clause (38) thereof ) or section 11 or section 12 apply and all the relevant expenditure has to be added back to income for MAT computation. 10. Learned representatives fairly agree that whatever we decide for the assessment year 2013-14 will also apply mutatis mutandis to this assessment year as well, as all the material facts, including the reasons of resorting to disallowance under rule 8D(2) are the same as in the assessment year. The rejection of suo motu disallowance offered by the assessee, for this year also, was based on section 14A read with rule 8D, rather than with the facts of this case or on analysis of the disallowance offered by the assessee. In view of this position, and for the detailed reasons set out earlier in this order which are equally applicable here, the Assessing Officer was in error in invoking rule 8D(2). We, therefore, deem it fit and proper to direct the Assessing Officer to delete the impugned additional disallowance under section 14A read with rule 8D, and to thereby accept the suo motu disallowance of....
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....sident of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment". In the ruled so framed, as a result of these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 13. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on accoun....
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....re of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 1....