CIT vs Jaico Financial Services (P) Ltd.

Sanjiv Khanna, J.

Notice.

Mr. Rajesh Dureja, Adv. accepts notice.

This appeal filed by the Revenue u/s 260A of the Income Tax Act, 1961 (Act, for short) impugns order dated 30.3.2011 passed by the

Tribunal giving the following directions :

We have considered the submissions of Ld. D.R. for the Revenue and have gone through the orders of authorities below. We find that the

Assessing Officer has made disallowance of Rs. 667.51 lacs on the basis of Rule 8D but as per the judgment of Hon''ble High Court of Bombay

rendered in the case of Godrej & Boyce Manufacturing Pvt. Ltd., rule 8D is perspective (sic) and hence will apply w.e.f. Assessment Year 2008-

09 and hence the said rule is not applicable in the present year being Assessment Year 2006-07. This aspect has been noted by the CIT(A) and

thereafter, he has worked out disallowance at Rs. 62,67,575/- on the basis of proportion of dividend income and total profit from sale purchase of

shares and F&O segment which has been taken by him at a figure of Rs. 1243.88 lacs as against dividend income of Rs. 91.69 lacs. There is no

basis indicated by him for taking this figure on Rs. 1243.88 as total profit from sale purchase of shares & F&O segment. When the income

declared by the assessee in its return of income is only Rs. 410.77 lacs, then how there can be profit from sale purchase of shares and F & O

segment of Rs. 1243.88 lacs. The assessee has not appeared before us to explain this fact and hence, we deem it fit and proper to restore the

matter back to the file of the Assessing Officer for a fresh decision in the light of this judgment of Hon''ble High Court of Bombay rendered in the

case of Godrej & Boyce Manufacturing Pvt. Ltd. (supra). The Assessing Officer should pass necessary order as per law as per above discussion

after providing adequate opportunity of being heard to the assessee.

The appeal pertains to assessment year 2006-07. We may notice that Delhi High Court in ITA No. 687/2009 titled Maxopp Investment Ltd. vs.

CIT on 18th November, 2011 decided a similar issue and has interpreted Section 14A of the Act. Directions and method of computation of

deductions u/s 14A have been explained in the said decision. It has been held that Rule 8D of the Income Tax Rules, 1962 is applicable from the

assessment year 2008-09.

In all cases where the Tribunal has remanded this aspect/question to the Assessing Officer either before or after the decision in Maxopp

Investment Ltd. (supra) for a fresh consideration, the Assessing Officer is bound to comply with the direction and ratio expounded in Maxopp

Investment Ltd. (supra). Decision of the jurisdictional High court is binding on the Assessing Officer and the assessee. Even when the matter is

remanded referring to the decision of the Bombay High Court in Godrej and Boyce Mfg. Co. Ltd. Vs. Dy. Commissioner of Income Tax, Range

10(2) and Others, , the Assessing Officer should take into consideration and apply the ratio of the decision in Maxopp Investment Ltd. (Supra).

There is no repugnancy or incongruity between the two decisions. The appeal is accordingly disposed of.