In a relief to the State Bank of India (SBI), the Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition made on account of deferred payment guarantee commission.
The coram of Judicial Member, Saktijit Dey, and Accountant Member, M.Balaganesh noted that issue of addition made on account of deferred payment guarantee commission is already covered by the order of this Tribunal in assessee’s own case for AY 2001-02 and 2002-03 wherein it was held that Assessing Officer has given effect to the order of the Tribunal and has allowed the deduction for deferred payment guarantee commission for the assessment year 1984-85 to 1989-90 and 1996-97. Consequently, the ground raised by the assessee is decided in favor of the assessee and against the Revenue.
The ITAT while addressing the issue in respect of disallowance of expenses under section 14A of the Act read with rule 8D of the Rules, held, “computation mechanism provided in Rule 8D which was introduced from 24/03/2008 could be made applicable only from A.Y.2008-09 and hence, the same cannot be applied for earlier years prior to A.Y.2008-09. The ld. AR fairly submitted that in order to maintain consistent stand, this Tribunal in earlier years in assessee‟s own case had disallowed 1% of exempt income u/s.14A of the Act as expenses attributable for earning the exempt income. The DR fairly agreed that the said disallowance be made. Accordingly, we direct the AO to disallow only 1% of exempt income u/s.14A of the Act which would be in line with disallowance made in earlier years.”
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