2021 (2) TMI 776

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....at while adjudicating the ground no. 5 of the appeal preferred by the assessee which was in respect of computing disallowance by applying Section 14A of the Income Tax Act, 1961 (in short the "Act") read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 (hereinafter referred to as the "Rules"). According to ld. AR, even though the Ld. CIT(A) while passing the first appellate order followed the decision of this Tribunal in the case of REI Agro Ltd. Vs. DCIT, 144 ITR 141 wherein it has been held that the average value of investment used in Rule 8 comprised of only those investments which actually yielded exempt income during the year and, therefore, the disallowance under Rule 8D(2)(iii) should be restricted to the average of the opening and....

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....el Late Sri Dilip S. Damle, FCA had specifically pointed out about ground no. 5 and objected to the abovementioned erroneous direction issued by the ld. CIT(A) in relation to certain specific investments which was not in line with the computation as set out in Rule 8D. According to him, the Ld. AR had in fact brought to the notice of this Tribunal that the computation of 'average value of investments' as defined in clause (b) of Rule 8D(2) was 'the average of value of investment of income from which does not or shall not form part of the total income as appearing in the Balance Sheet of the assessee, on the first day and the last day of the previous year'. The Ld. AR submitted that nowhere did the instant Rule provide for computing the mont....

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....lent with regard to the assessee's claim that the "average of the opening and closing value as appearing on the first day and the last day of the previous year of such dividend bearing investments and not the monthly average of dividend bearing investments" ought to have been considered for the purpose of Rule 8D(2)(iii); which according to ld. A.R also should have been allowed considering the specific language used in Clause (b) of Rule 8D(2) as also the decision rendered by the Tribunal in petitioner's own case for earlier AYs 2009-10 and 2010-11. 4. The Ld. DR vehemently opposed the submission of the Ld. AR and submitted that there is no error apparent on the face of the record, therefore, should not admit the Misc Application and sho....