Calcutta High Court
Pan Emami Cosmed Ltd vs Commissioner Of Income Tax on 21 June, 2018
Author: Sanjib Banerjee
Bench: Sanjib Banerjee, Abhijit Gangopadhyay
O-119
ITAT No.151 of 2015
GA No. 3573 of 2015
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
PAN EMAMI COSMED LTD.
Versus
COMMISSIONER OF INCOME TAX, CENTRAL-II
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
And The Hon'ble JUSTICE ABHIJIT GANGOPADHYAY Date : June 21, 2018.
Appearance Mr. J.P. Khaitan, Sr. Adv.
Ms. Swapna Das, Adv.
Mr. Akhilesh Gupta, Adv.
Mr. Siddharth Das, Adv.
Mr. Debasish Chowdhury, Adv.
The Court : The substantial questions of law raised by the appellant- assessee are as follows:
"1. Whether interest can be disallowed under Section 14A of the Income Tax Act, 1961 for the assessment year 2007-08 by invoking and applying Rule 8D of the Income Tax Rules, 1962?
2. Whether interest can be disallowed under Section 14A of the Income Tax Act, 1961 in respect of advances paid for purchase of shares?
3. Whether interest can be disallowed under Section 14A of the Income Tax Act, 1961 in respect of shares on which short term capital gains was earned or which were held as stock-in-trade and if so, to what extent?"2
However, the assessee says that the principal question is the first and such aspect of the matter is now covered by a judgment reported at 401 ITR 445 where the Supreme Court has held that the operation of Rule 8D of the Income Tax Rules, 1962 is prospective. There was, apparently, a divergence of views prior to that.
It is not in dispute that the assessment in question is for the assessment year 2007-08 in which, following the dictum of the Supreme Court, Rule 8D of the said Rules will have no manner of operation. The Appellate Tribunal erred in giving Rule 8D of the said Rules retrospective operation and approving the formula thereunder applied by the Assessing Officer. To such extent, the order impugned cannot be sustained.
It is fairly submitted on behalf of the appellant that notwithstanding such position, a fresh exercise has to be conducted as to whether there would be any tax liability notwithstanding Rule 8D of the said Rules not being applicable in the relevant assessment year.
Accordingly, ITAT No. 151 of 2015 and GA No. 3573 of 2015 are disposed of by setting aside such part of the judgment and order impugned dated June 8, 2015 passed by the Appellate Tribunal in ITA No. 989/Kol/2011 and C.O. 48/Kol/2011 that approved the application of Rule 8D of the said Rules in the matter of disallowance of interest in assessment year 2007-08. For the purpose of assessing the tax, if at all, on such aspect, the Assessing Officer will conduct a fresh exercise in accordance with law and will pass a reasoned order within two 3 months of the receipt of a copy of this order upon affording the assessee a reasonable opportunity of being heard.
There will be no order as to costs.
(SANJIB BANERJEE, J.) (ABHIJIT GANGOPADHYAY, J.) sg.