IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 6706/MUM/2010 (ASSESSMENT YEAR: 2007-08) SHRI GOPAL PUROHIT, C/O. M/S R.K. JHUNJHUNWALA & ASSOCIATES, 151 NARIMAN BHAVAN, NARIMAN POINT, MUMBAI -400 021 PAN: AAGPP 1987 K VS. ASSTT. COMMISSIONER OF INCOME, RANGE- 25(3), PRATYAKASH KAR BHAVAN, C-11, R.NO.308, 3RD FLOOR, BANDRA KURLA COMPLEX, MUMBAI -400 051 (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NATASHA MANGAT RESPONDENT BY : SHRI A.K. NAYAK DATE OF HEARING: 24-09-2012 DATE OF PRONOUNCEMENT: 10-10-2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL ARISES FROM THE ORDER OF CIT(A) 35, MUMBAI, DATED 29.07.2010. 2. THE SOLITARY ISSUE ARISING FROM THE GROUNDS TAKEN ARE THAT THE REVENUE AUTHORITIES ERRED IN APPLYING RULE 8D FOR THE COM PUTATION OF ALLOWABLE EXPENSES AGAINST THE INCOME CLAIMED AS EXEMPT, AS PER SECTION 14A. 3. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THA T THE CASE AND THE ISSUE IMPUGNED IS NOW COVERED BY THE HONBLE BOMBAY HIGH COURT SHRI GOPAL PUROHIT ITA NO. 6706/MUM/2010 2 IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT, RE PORTED IN 328 ITR 81 (BOMBAY), WHEREIN IT HAS BEEN HELD THAT RULE 8D SH ALL BE APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09 AND ONWARD S. SINCE THE CASE OF THE ASSESSEE PERTAINS TO ASSESSMENT YEAR 2007 -08, FORMULA AS PRESCRIBED UNDER RULE 8D CANNOT BE EMPLOYED FOR THE COM PUTATION OF ALLOCABLE EXPENSES AGAINST EXEMPT INCOME. 4. HOWEVER, SOME REASONABLE EXPENSE HAS TO BE ALLOCATED AGAINST THE EXEMPT INCOME OF RS. 28,69,479 AS DIVIDEND AND RS. 83,9 04 AS INTEREST ON PPF, AGGREGATING TO RS. 29,53,383. WE, IN THE INT EREST OF JUSTICE, SUSTAIN THE DISALLOWANCE AT 2% OF AGGREGATE EXEMP T INCOME OF RS. 29,53,383. 5. HAVING HELD SO, WE SET ASIDE THE ORDER OF THE CIT(A) O N THE ISSUE OF SECTION 14A AND APPLICATION OF RULE 8D AND DIRECT THE A O TO COMPUTE THE ALLOCABLE EXPENSE AS PER OUR DIRECTION IN PRECEDING PARA . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 10 TH OCTOBER, 2012. SD/- (P.M. JAGTAP) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 10 TH OCTOBER, 2012 SHRI GOPAL PUROHIT ITA NO. 6706/MUM/2010 3 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-35, MUMBAI. 4) THE CIT -25, MUMBAI, 5) THE D.R. G BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN