Oriental Bank of Commerce, Gurgaon V. DCIT, New Delhi

ITA 5968/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3926 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 05-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5968/DEL/2014 ASSESSMENT YEAR : 2006-07 ORIENTAL BANK OF COMMERCE, CENTRAL ACCOUNTS OFFICE, PLOT NO.5, SECTOR-32, INSTITUTIONAL AREA, GURGAON. PAN: AAACO0191M VS. DCIT, CIRCLE-13(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KVSR KRISHNA, CA DEPARTMENT BY : MS SHEFALI SWAROOP, CIT DR DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 24.10.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE LD. CIT(A) ON 29.08.2014 IN RELATION TO THE ASS ESSMENT YEAR 2006-07. ITA NO.5968/DEL/2014 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE CONFIRMATION OF DISALLOWANCE U/S 14A AMOUNTING TO RS.2,53,07,008/-. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSING OFFICER, IN THE ORIGINAL ASSESSMENT, COMPUTED DISALLOWANCE T O THE TUNE OF RS.4,81,18,439/- U/S 14A IN RESPECT OF EXEMPT DIVID END INCOME. THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE ASSESSIN G OFFICER FOR RE- COMPUTATION OF DISALLOWANCE. IN SUCH FRESH PROCEED INGS, THE ASSESSING OFFICER ALLOWED SOME RELIEF BY GIVING EFFECT TO THE ORDER PASSED BY THE CIT(A). NO RELIEF BEYOND THAT WAS ALLOWED. THE LD . CIT(A) SUSTAINED THE DISALLOWANCE AT 5% OF TAX FREE INCOME BY THE IM PUGNED ORDER. THE ASSESSEE IS AGGRIEVED AGAINST THE SUSTENANCE OF DIS ALLOWANCE TO THIS EXTENT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSMENT YEAR UNDER CONS IDERATION IS 2006-07. IT HAS BEEN HELD IN SEVERAL JUDGMENTS THAT THE PROV ISIONS OF RULE 8D HAVE BEEN INSERTED FROM A.Y. 2008-09 AND HENCE CANN OT APPLY RETROSPECTIVELY. THUS RULE 8D CANNOT BE INVOKED FO R MAKING ITA NO.5968/DEL/2014 3 DISALLOWANCE. HOWEVER, THE FACT REMAINS THAT IF SOM E EXEMPT INCOME HAS BEEN EARNED AND SOME EXPENDITURE HAS BEEN INCURRED FOR EARNING SUCH EXEMPT INCOME, THEN DISALLOWANCE U/S 14A IS CALLED FOR DE HORS RULE 8D. THE LD. AR HAS PLACED ON RECORD A COPY OF THE JUDGM ENT OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM) IN WHICH THE HON'BLE HIGH COURT APPROVED THE VIEW TAKEN BY THE TRIBUNAL IN RESTRICTING THE DISALLOWANCE TO 1% OF T HE GROSS EXEMPT INCOME. NO CONTRARY VIEW IN THE PRE-RULE 8D PERIOD HAS BEEN BROUGHT ON RECORD BY THE LD. DR. RESPECTFULLY FOLLOWING TH E PRECEDENT, WE DIRECT THAT THE DISALLOWANCE U/S 14A BE RESTRICTED TO 1% O F THE GROSS EXEMPT INCOME. 5. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 24.10.201 7. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 24 TH OCTOBER, 2017. DK ITA NO.5968/DEL/2014 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.