Continental Carriers Pvt. Ltd vs. ACIT (ITAT Delhi)

DATE: (Date of pronouncement)
DATE: January 8, 2011 (Date of publication)

Click here to download the judgement (Continental_Carriers_14A.pdf)

S. 14A law laid down in Minda Investments cannot be followed as later decisions have remanded matter to AO

In respect of AY 2005-06 the AO computed s. 14A disallowance under Rule 8D following ITO vs. Daga Capital Management 26 SOT 603 (Mum) (SB). In appeal before the Tribunal, the assessee argued, relying on Hero Cycles 323 ITR 518 (P&H) and Minda Investments, that as the AO had not rebutted the claim of the assessee that no expenditure had been identified to earn the tax-free income, no disallowance u/s 14A could be made. It was also pointed out that no expenditure had been identified to be incurred for earning the exempt dividend and that the assessee had surplus funds from where the investment was made. Held, remanding the matter to the AO in the light of Godrej & Boyce 234 CTR 1 (SC):

The plea of the assessee based on Minda Investments Ltd that the disallowance should be deleted cannot be accepted as in the later decisions similar matters have been restored to the file of the AO and according to rule of precedence, later decision passed by similar strength of the Bench has to be followed in preference to the earlier decision.

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