Rule8d in rules shows with effect from 24/03/2008 sec 14A comes with effect from 1/04/2007 by finance act 2006 can assessing officer apply rule6d for A Y 07-08 ?
if so can he charge penalty u/s 271 (1) (c) since methodology was not available to assessee when he filed return for A Y 07-08 since rule came from 24/03/2008. return is filed in sept07for A Y 07-08
It has been held in the special bench decision of the mumbai tribunal in the case of Daga Capital Management Pvt. Ltd. that rule 8D has retrospective application. However the appeal has been filed and the matter is pending before the high court. But till that time the A. O. will apply the decision and calculate disallowance u/s 14A under rule 8D only.
However penalty should not be levied in view of what you have cited above and it makes sense also. So fight your case in the penalty proceedings if the same are initiated by the A. O.
Also if you think the rule 8D application led to disproportianate disallowance then file an appeal against the order of A. O. with CIT(A).
CAclubindia
