2025 (12) TMI 425

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....006-07. According to Revenue, the impugned order of ITAT gives rise to the following two questions of law : A. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in directing the AO to evaluate the plea of assessee afresh and, in any case, the disallowance, if any, retained by him shall not exceed 5% of the exempt income without appreciating that CBDT Circular No.5/2024 has clarified that the section as well as Rule 8D do not make any exemption in this regard? B. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in directing the AO to evaluate the plea of assessee afresh and, in any case, the disallowance, if any, retained by....

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....fficer applied Rule 8D of the Income Tax Rules, 1962 and accordingly computed the disallowance of Rs. 5,64,66,105/- which comprised of disallowance of interest expenditure of Rs. 4,69,58,242/- in terms of Rule 8D(2)(ii) and Rs. 95,07,863/- representing overheads expenses in terms of Rule 8D(2)(iii). 3. Being aggrieved by the order of the Assessing Officer, the Assessee carried the matter in Appeal before the CIT (Appeals). The CIT (Appeals), noted that the suo-moto disallowance made by the Assessee was of Rs. 16,56,73,690/-, and therefore the CIT (Appeals) held that there is no justification for the Assessing Officer to compute a further disallowance of Rs. 5,64,66,105/-. 4. Being dissatisfied with the decision of the CIT (Appeals), t....

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....pt income as was the position in Assessment Year 2004-05. 6. After perusing the findings rendered by the ITAT, we are clearly of the view that no substantial question of law arises for consideration of this Court. We say this because admittedly Rule 8D was brought into effect from the Assessment Year 2008-09. Though initially it was the contention of the Revenue that Rule 8D would apply retrospectively, the said issue has thereafter been decided by the Hon'ble Supreme Court in the case of Commissioner of Income Tax 5, Mumbai Vs. Essar Telepholdings Ltd., [(2018) 90 taxmann.com 2 (SC)]. The Hon'ble Supreme Court has held that Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Yea....