Case Law Details
Prakash Securities Private Limited Vs. ACIT (ITAT Mumbai) -Asst. Comm. of Income Tax The dispute is regarding dis allowance of expenses relating to exempt income under section 14A of the IT Act. Under the provisions of Section 14(2) and 14(3), expenses relating to exempt income are required to be computed as per method prescribed by the Government. The Government has since notified the method in the form of Rule 8D w.e.f. 1.4.2008.
The Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. vs. DCIT (328 ITR 81) have held that Rule 8D is applicable only from assessment year 2008-09 and in respect of prior years, dis allowance has to be made on a reasonable basis, of both direct and indirect expenses, after allowing opportunity of hearing to the assessee. Therefore, order of CIT(A) confirming the disallowance following Rule 8D cannot be upheld as assessment year involved is 2007- 08. We, therefore, set aside the order of CIT(A) and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of the decision of Hon’ble Bombay High Court in case of Godrej and Boyce Mfg. Co. vs. DCIT (supra), after allowing opportunity of hearing to the assessee.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA No. : 6334/Mum/2010 Assessment Year : 2007-08
M/s. Prakash Securities Private Limited
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