The Commissioner Of Income Tax-10 v. M/S. Godrej Agrovet Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 934 OF 2011 The Commissioner of Income Tax-10..Appellantversus M/s. Godrej Agrovet Ltd. ..Respondent -------- Mr. Suresh Kumar for the Appellant. Mr. P.J.Pardiwala, Sr. Advocate with Mr. Atul K. Jasani for the Respondent. ............. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE P.C.: 1This appeal under Section 260A of the Income Tax Act, 1961 (the Act) by the revenue seeks to challenge the order dated 17.09.2010 of Income Tax Appellate Tribunal (the Tribunal) relating to Assessment Year 2005-06. 2Being aggrieved by the order dated 17.09.2010 of the Tribunal the following questions court. a)Whether on the facts and in the circumstances of the case and in law, the ITAT was correct in holding that the CIT(A) was not justified in applying the said Rule 8D to quantity the disallowance u/s. 14A? b)Whether on the facts and in the circumstances of the case and in law, the ITAT was correct in restricting the disallowances to the extent of 2% of the income on the basis that in the earlier year CIT(A) restricted the expenses to 2% of total exempt income, overlooking that the CIT(A) while calculating the expenses in the relevant Assessment Year has taken into account the provisions of Section 14A of the I.T.Act while making the disallowance on proportionate basis? 3So far as question (a) is concerned, the Tribunal in its order dated 17.09.2010 has followed the decision of this court in the matter of Godrej & Boyce Mfg. Co. Ltd. reported in 328 ITR page 0081. In the above case, this court has held that Rule 8D of the Income Tax Rules, 1962 is applicable prospectively w.e.f. Assessment Year 2008-09, this appeal relates to Assessment Year 2005-06. Consequently, the Tribunal correctly held that Rule 8D of the Income Tax Rules, 1962 is inapplicable for the Assessment year under consideration. In view of the above,we see no reason to entertain question (a) as formulated by the revenue. 4So far as question (b) is concerned, the Tribunal in its impugned order dated 17.09.2010 while applying the decision of this court in the matter of Godrej (Supra) has disallowed the expenditure only to the extent of 2% of the total exempt income earned by the respondent-assessee on the basis its order dated 27.02.2009 for the Assessment Year 2002-2003 and order dated 10.09.2009 for the Assessment years 2003-2004 and 2004-05 wherein disallowance was restricted to 2% of the exempt income. Further, the Tribunal has remanded the matter to the Assessing Officer to verify the disallowance claimed and restrict the disallowance only to the extent to 2% of the total exempt income. We find no fault with the order of the Tribunal. In the circumstances, we see no reason to entertain question (b) also. Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)