The Pune bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the disallowance made under rule 8D(iii) of the Income Tax Rules, 1962 without giving Weightage to the credit balance of Investments.
Pride Purple Properties, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer because the income included in the hands of the appellant was not the income that does not form part of the total income under the Act as envisaged in section 8D(iii) of the Income Tax Act.
Suhas Bora, the counsel for the assessee contended that while computing said disallowance under rule 8D(iii) of the Income Tax Rules the assessing officer did not give weightage to the credit balance of investments held which resulted in excessive disallowance.
It was also submitted that an addition was made by the assessing officer without considering the facts and opposed the established law.
M. G. Jasnani, the counsel for the department contended that the decisions made by the lower authorities were according to the various decisions. It was also submitted that the disallowance was made under rule 8D(iii) of the Income Tax Rules as per the law.
The bench observed that being the uncontroverted factual position and for the reason the payer of the appellant to remand the matter back for correct computation of disallowance under section 8D(iii) of the Income Tax Rules in all the fairness deserves to be approved.
The two-member bench comprising S. S. Godara(Judicial) and G. D. Padmahshali (Accountant) directed the matter back to the assessing officer for re-adjudication to addition while allowing the appeal filed by the assessee.
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