IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 4526/DEL/2011 ASSESSMENT YEAR: 2008-09 SAHARA INDIA MASS COMMUNICATION LTD. (NOW KNOWN AS SAHARA ONE MEDIA & ENTERTAINMENT LTD.), CTS 40-44, SAHARA INDIA POINT, S.V. ROAD, GURGAON. AAACP 3047R VS DCIT, CENTRAL CIRCLE-6, NEW DELHI APPELLANT RESPONDENT ASSESSEE BY SH. GAURAV JAIN, ADVOCATE SH. DIVYAM MITTAL, CA REVENUE BY SH. SANJOGKAPOOR, SR. DR ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 10/08/2011 IN APPEAL NO. 173/10-11 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-1, NEW DELHI (LD. CIT(A)) FOR ASSESSMENT YEAR 2008-09, M /S SAHARA ONEMEDIA &ENTERTAINMENT LTD (FORMERLY KNOWN AS SAHARA INDIA MASS COMMUNICATION LTD), WHO IS THE ASSESSEE, FILED THIS APPEAL CHALLENGING THE COMPUTATION OF DISALLOWANCE UNDER SECTION 14A OF TH E INCOME TAX ACT, DATE OF HEARING 11.12.2019 DATE OF PRONOUNCEMENT 18 .12.2019 2 1961 (FOR SHORT THE ACT) READ WITH RULE 8D OF THE INCOME TAX RULES1962 (THE RULES). 2. FACTS ON THIS ASPECT ARE THAT IN THE RETURN OF I NCOME THE ASSESSEE DECLARED A SUM OF RS. 12,29,522/-AS A DIVIDEND INCO ME FROM INVESTMENT MADE IN COMPANIES AND SIMULTANEOUSLY CLAIMED THE SA ME AS EXEMPTION UNDER SECTION 10 (34) OF THE ACT. LEARNED ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT SUCH AN IN COME WAS EARNED FROM THE OLD INVESTMENTS FOR WHICH NO EXPENSES WAS INCURRED AND PROCEEDED TO APPLY THE FORMULA UNDER RULE THE OF TH E RULES. LEARNED ASSESSING OFFICER MADE AN ADDITION OF RS. 5,08,827/ -ON THIS SCORE. 3. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT THERE WAS NO JUSTIFICATION FOR DISALLOWING A S UM OF RS. 5,08,827/-ON ACCOUNT OF EXPENSES UNDER SECTION 14A OF THE ACT AN D RULE 8D OF THE RULES. LD. CIT(A) HELD THAT IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTUR ING COMPANY LIMITED 328 ITR 81 RULE 8D OF THE RULES IS APPLICAB LE FROM ASSESSMENT YEAR 2008-09. 4. WHILE CHALLENGING THE IMPUGNED ORDER ONLY ARGUME NT ADVANCED BEFORE US IS THAT IN VIEW OF THE DECISION OF THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. CARAFBUILDERS &CONSTR UCTIONS (P) LTD (2019) 414 ITR 122 (DELHI), THE LEARNED ASSESSING OFFICER COMMITTED AN ERROR IN TAKING THE TOTAL VALUE OF INVESTMENT AND NOT THE IN VESTMENT THAT HAD YIELDED EXEMPT INCOME FOR COMPUTING THE DISALLOWANC E UNDER SECTION RULE 8D (2) (II) OF THE RULES. 5. LD. DR PLACED RELIANCE ON THE ORDERS OF THE AUTH ORITIES BELOW. 3 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE LEARNED ASSESSING OFFICER TOOK INTO CONSIDERATION THE VALUE OF THE ENTIRE INVESTMENT WH ILE COMPUTING THE DISALLOWANCE UNDER RULE RULE 8D(2)(II) OF THE RULES INSTEAD OF THE INVESTMENT THAT HAD A YIELDED THE EXEMPT INCOME. BY NOW IT IS A FAIRLY SETTLED BY THE DECISIONS OF THE HONBLE JURISDICTIO NAL HIGH COURT IN CASES INCLUDING ACB INDIA LTD (2015) TAXMANN.COM 71 ETC W HICH WERE NOTICED IN THE DECISION REPORTED IN CARAF BUILDERS (SUPRA), TH AT NUMERICAL B IN CLAUSE (II) OF RULE 8D (2) OF THE RULES REFERS TO AVERAGE VALUE OF THE INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OR SHALL NOT F ORM PART OF THE TOTAL INCOME. 7. THE SLP FILED AGAINST DECISION IN THE CASE OF CA RAF BUILDERS (SUPRA) IS DISMISSED BY THE HONBLE APEX COURT IN SPECIAL L EAVE PETITION (CIVIL) DIARY NO. 25130/2019 BY ORDER DATED 30/08/2019. THE PRINCIPLE LAID CITED AS ON THE DATE DOES NOT ADMIT OF ANY DOUBT THAT THE NUMERICAL B IN CLAUSE (II) OF RULE 8D (2) OF THE RULES REFERS TO AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT FORM PART OR SHALL NOT F ORM PART OF THE TOTAL INCOME AND IT WOULD BE AN ERROR TO TAKE THE VALUE O F TOTAL INVESTMENT IN SUCH PLACE. 8. IN VIEW OF THIS SETTLED POSITION OF LAW, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED ASSESSING OFFICER COMMITTE D AN ERROR IN COMPUTING THE DISALLOWANCE UNDER RULE 8D(2)(II) OF THE RULES. WE ACCORDINGLY, WHILE ALLOWING THE CONTENTION OF THE A SSESSEE, DIRECT THE ASSESSING OFFICER TO TAKE THE VALUE OF THE INVESTME NT THAT HAD YIELDED EXEMPT INCOME IN THE NUMERICAL B IN CLAUSE (II) OF RULE 8D (2) OF THE 4 RULES, AND COMPUTE THE DISALLOWANCE UNDER SECTION 1 4 A AND RULE 8D OF THE RULES. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ACCORDI NGLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2019. SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18/12/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI