Rule 8D r.w. section 14A can not be applied for years prior to A.Y. 2008-09 so invoking of provision of section 263 of the IT Act not justified

Since the assessment year involved in this appeal is 2005-06 Rule 8D of the IT Rules is not applicable in the present case keeping in view of the decision of the  Honourable Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. In this case the ld. CIT-Admn has issued jurisdiction u/s 263 of the IT Act based on the order of the ITAT, Special Bench, which has been subsequently over ruled by Hon’ble Bombay High Court (supra). Therefore we are of the view that invoking of provision of section 263 of the IT Act is not justifiable in the facts and circumstances of the case. Hence we squash the order of ld. CIT-Admn and allow the appeal of assessee.

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH “B”, KOLKATA

ITA No. 1061/Kol/2009

Assessment Year : 2005-06

Sri Kedar Nath Agarwal, Kolkata

Versus

D.C.I.T., Circle-35

Date of Pronouncement : 15.12.2011.

ORDER

Per Shri C.D.Rao, AM

The above appeal is filed by assessee against the order dated 01.06.2009 of the ld. CIT-XII (Admn.), Kolkata pertaining to A.yr. 2005-06.

2. This appeal is against order u/s 263 of the IT Act wherein the ld. CIT(Admn) has directed the AO to make dis allowance u/s 14 A of the IT Act by invoking Rule 8 D of the IT Rules.

3. After hearing the rival submissions and on careful perusal of material available on record since the assessment year involved in this appeal is 2005-06 Rule 8 D of the IT Rules is not applicable in the present case keeping in view of the decision of the  Honourable Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. In this case the ld. CIT-Admn has issued jurisdiction u/s 263 of the IT Act based on the order of the ITAT, Special Bench, which has been subsequently over ruled by Honourable Bombay High Court (supra). Therefore we are of the view that invoking of provision of section 263 of the IT Act is not justifiable in the facts and circumstances of the case. Hence we squash the order of ld. CIT-Admn and allow the appeal of assessee.

4. In the result the appeal of assessee is allowed.

Order pronounced in the court on 15.12.2011.