Case Law Details
Brief: Bombay High Court rules on prospective operation of Rule 8D and upholds the constitutional validity of sub-sections (2) and (3) of section 14A and Rule 8D.
Citation: Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT (Bombay High Court), ITA No. 626/2010 and W.P. 758/2010 dated 12 August 2010
Facts: – The assessee filed its return of income for the Assessment Year (AY) 2002- 03 claiming exemption under section 10(33) (See Note-1 below) of the Income tax Act, 1961 (ITA) in respect of gross dividend earned on shares and units.
In the scrutiny proceedings, the assessee contended that it had not incurred any expenditure for earning the dividend income. The Assessing Officer (AO) rejected the claim of the assessee and disallowed certain expenses as being attributable towards earning dividend income. The Commissioner of Income-tax (Appeals) deleted the dis allowance.
The Tribunal following its judgment in the case of Daga Capital Management Private Limited (See Note-2 below) , held that the provisions of sub-sections (2) and (3) of section 14A (See Note-3below) of the ITA are procedural in nature and have retrospective effect. The Tribunal directed the AO to examine the issue afresh in the light of the specific provisions contained under sub-section (2) of section 14A and Rule 8D of the Income-tax Rules, 1962 (Rules).
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