- (1.) The appeal was admitted on 27th Nov., 2009 and the following questions of law were formulated; (i) Whether the Tribunal was justified in law in holding that the provisions of sub-ss. (2) and (3) inserted in s. 14A of the IT Act, 1961 w.e.f. 1st April, 2007 and r. 8D inserted in the IT Rules, 1962 on 24th March, 2008 were procedural and retrospective and were applicable for the asst. yrs. 2001-02, 2004-05 and 2005-06? (ii) Whether and in any event the Tribunal was justified in law in holding that it had no jurisdiction to adjudicate upon the legality and/or validity of r. 8D of the IT Rules, 1962? (iii) Whether the Tribunal was justified in law in not following its order for the asst. yr. 2002-03 and in upholding the disallowance under s. 14A made in the assessments for the asst. yrs. 2001-02 and 2005-06 and that made by the CIT(A) for the assessment year. 2004-05? As far as the asst. yrs. 2003-04 and 2005-06 we find the following substantial question of law was formulated for decision of this Court: (1) Whether the learned Tribunal was justified in remanding for rendering fresh decision after having decided the matter by the Tribunal previously with regard to the claim of the assessee relating to proportionate deduction of compensation paid in connection with the mining activity for obtaining raw material limestone to the AO?
(2.) At the very outset, Mr. Bajoria, learned senior advocate appearing for the appellant, submitted that he has instruction not to press the sole question relating to the asst. yrs. 2003-04 and 2005-06. Therefore, that question goes out of the arena of consideration and the learned Tribunal's order in respect thereof is confirmed.
(3.) With regard to the asst. yrs. 2001-02, 2004-05 and 2005-06, the aforesaid three questions were pressed. Briefly stated the facts and circumstances of the case are that the AO under s. 14A of the IT Act disallowed expenditure to the extent of a sum of Rs. 5,22,768. Aggrieved by this order, the assessee preferred an appeal. The CIT(A) reduced the aforesaid sum to Rs. 50,000. Aggrieved by the order of the CIT(A), the Revenue preferred an appeal before the learned Tribunal. The assessee preferred a cross-appeal. The learned Tribunal held that a Special Bench of the Tribunal, in the case of ITO vs. Daga Capital Management (P) Ltd,2008 119 TTJ 289 : held that r. 8D was procedural in nature and therefore, was retrospective in effect. The learned Tribunal on that basis concluded that since they were bound by the views expressed by the Special Bench and considering that the learned Tribunal was not in a position in law to enhance the amount of expenditure disallowed, they chose to reverse the order passed by the CIT(A). The facts and circumstances with respect to the asst. yrs. 2004-05 and 2005-06 were also identical. In that view of the matter, in all the aforesaid assessment years the orders passed by the CIT(A) were reversed by the learned Tribunal. In this backdrop, the aforesaid appeal was preferred by the assessee and the aforesaid three questions were formulated.;