Rule 8D not applicable to Assessment years prior to the year in which Rule 8D comes in to force

Dipajyoti Resources Pvt. Ltd. Vs. ITO (ITAT Kolkata)- After hearing the rival submissions and on careful perusal of materials available on record keeping in view of the fact that since the assessment year involved in this appeal is relating to A.Yr. 2004-05 as per the decision of the Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. (supra) relied upon by the ld. Counsel for the assessee, Rule 8D is not applicable in the assessment year under consideration. This Tribunal has been taking a consistent view of sustaining the disallowance u/s 14A at 1% of the dividend income. Accordingly we direct the AO to disallow 1% of the dividend income as expenditure relevant to earning of dividend income. We order accordingly.

INCOME TAX APPELLATE TRIBUNAL,KOLKATA

ITA No. 1561/Kol/2008- Assessment Year: 2004- 05

Dipajyoti Resources Pvt. Ltd., Kolkata

Versus-

I.T.O., Ward-11(4),

Date of Hearing: 14.12.2011.

Date of Pronouncement: 15.12.2011.

ORDER

Per Shri C.D.Rao, AM

The above appeal is filed by assessee against the order dated 13.06.2008 of the ld. CIT(A)-XI, Kolkata pertaining to A.yr.2004-05.

2. Though there are nine grounds raised by assessee there are only two issues involved in this appeal. One issue in ground no.3 is relating to confirmation of dis allowance of Rs. 25,000/- made by AO and further enhancement of dis allowance by Rs. 1,56,609/- u/s 14A of the IT Act. The other issue in ground no.6 raised by assessee is relating to part confirmation of the speculation loss to the tune of Rs. 2,94,945/-.

3. At the time of hearing before us the ld. Counsel appearing on behalf of assessee has not pressed the issue involved in ground no.6. Therefore the same is dismissed as being not pressed.

4. The only issue raised by assessee is relating to dis allowance made u/s 14A of the IT Act.

5. After hearing the rival submissions and on careful perusal of materials available on record keeping in view of the fact that since the assessment year involved in this appeal is relating to A.Yr. 2004-05 as per the decision of the Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. (supra) relied upon by the ld. Counsel for the assessee, Rule 8D is not applicable in the assessment year under consideration. This Tribunal has been taking a consistent view of sustaining the dis allowance u/s 14A at 1% of the dividend income. Accordingly we direct the AO to disallow 1% of the dividend income as expenditure relevant to earning of dividend income. We order accordingly.

6. In the result the appeal of assessee is partly allowed.

Order pronounced in the court on 15.12.2011.