Rule 8D is prospective and effective only from the assesseement year 2008-09

Last updated: 07 May 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The only ground of appeal shows the grievance of the appellant against the order of the Ld. CIT(A)-39, Mumbai. who held that the interest to the tune of Rs..41,05,081/- should be considered for working out the disallowance u/s.14A of the Act. Briefly stated the facts of the case are that the appellant company engaged in the business of general sales agents for International airlines and full fledged money changers. For the year under consideration, the return of income declaring the total income of Rs..5,94,41,960/- was filed on 16.11.2007. This return was selected for scrutiny assessment and accordingly notices u/s.143(2) and 142(1) of the Act were issued and served upon the assessee. During the course of the assessment proceedings, the A.O. found that the assessee has declared dividend of Rs..4,00,039/- and has claimed the same as exemption u/s.10(34) of the Act. The A.O. asked the assessee as to why the proportionate expenses attributable to the dividend income should not be disallowed u/s.14A read with Rule 8D. In reply to this, the assessee vide letter dated 10.11.2009 worked out the disallowance at Rs..6,99,840/-. The A.O. was not satisfied with the working of the assessee and went on to work out the disallowance u/s.14A read with Rule 8D. Thus the aggregate disallowance worked out to Rs..14,14,985/- and accordingly, the A.O. added back this amount to the return income of the assessee.

Citation :
M/s. Global Aviation Services P.Ltd.NKM International House,B.M. Chinoy Marg,Backbay Reclamation,Mumbai-400 020 PAN NO: AAACG 4127F (Appellant) Vs.The Asstt. Commissioner of Income-Tax Central Circle 22 & 30 Mumbai (Respondent)