Even if Rule 8D not applicable, indirect expenses which may be attributable on a reasonably proper basis can be disallowed

Kama Holding Ltd. Vs. ACIT (ITAT Delhi)- Rule 8D has been held to be retrospective in nature and the dis allowance has been worked out by applying Rule 8D. Hon’ble Bombay High Court in subsequent judgment in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT & Another (2010) 234 CTR (Bom) 1 has held Rule 8D to be prospective in nature. Thus, Rule 8D would not be applicable to the assessment year in question i.e. 2007-08. The Hon’ble High Court, however, has directed that indirect expenses which may be attributable on a reasonably proper basis can only be disallowed.

INCOME TAX APPELLATE TRIBUNAL, DELHI

Kama Holding Ltd.  Vs. ACIT, Cir. 9(1)

ITA No. 4456/Del/2010 -Asst. Yr: 2007- 08

ACIT, Cir. 9(1) Vs.    SRF Polymers Ltd.

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