1 itxa4139-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.4139 OF 2009 The Commissioner of Income Tax-6 ..Appellant. V/s. M/s. Dipareena Investment Pvt. Ltd. ..Respondent. Mr. Suresh Kumar for appellant. Mr.P.J. Pardiwala, senior Advocate with Ms.Vasanti Patel for respondent. CORAM : J.P. DEVADHAR AND R.M. SAVANT, JJ. DATED : 30TH NOVEMBER, 2010 P.C. :- 1. Three questions of law are raised by the revenue in this appeal, which read as under:- (a) Whether on the facts and in the circumstances of the case and in law, the ITAT erred in deleting the disallowance u/s.14A holding that there is no scope for making any estimated disallowance of expenditure u/s.14A without appreciating the fact that Rule 8D has been inserted in the I.T. Rules by Board's Notification No.45/2008 dated 24-03-2008 prescribing method for determining amount of expenditure to be disallowed u/s.14A of the I.T. Act and hence the ITAT should have directed the A.O. to work out disallowance in 2 itxa4139-09 accordance with the said rule ? (b) Whether on the facts and in the circumstances of the case, the ITAT was justified in law in holding that the surplus realized from sale of units is assessable under the head 'capital gains' as against the head 'business income' without appreciating that one of the main business activities of the assessee company was dealing in units of mutual funds and it was engaged in this activity on regular basis from year to year ? (c) Whether on the facts and in the circumstances of the case, the ITAT was justified in law in holding that the provisions of section 234D had no retrospective effect and that when refund was granted prior to 01-06-2003, interest could not be charged u/s. 234D without appreciating the fact that the provisions of section 234D are procedural in nature and shall be operative in respect of any regular assessment made on or after 01-06-2003 and the regular assessment u/s.143(3) in the assessee's case having been made on 22-09-2003 ? 2. As regards the first question is concerned, counsel on both sides agree that in view of the judgment of this Court in the case of Godrej and Boyce Mfg. Co. Ltd. V/s. Deputy Commissioner of Income Tax & Anr. reported in (2010) 328 ITR 81 (Bom), the decision of the Tribunal be set aside and the matter be remanded to the Tribunal for de novo consideration. Accordingly, the decision of the Tribunal in relation to question No.1 is quashed and set aside and the matter is restored to the file of the Tribunal for de novo consideration in the light of the above 3 itxa4139-09 judgment. 3. As regards question (b) is concerned, the Tribunal in para 8 of the judgment has held that acquisition of units by the assessee was only as an investment for availing exemption u/s.54EA of the Act and not as a part of assessee's business, therefore, the gains arising from the sale of units are liable to be assessed under the head 'capital gains'. Counsel for the revenue fairly states that no fault can be could with the order of the Tribunal. Accordingly, the second question cannot be said to be a question of law arising out of the order of the Tribunal. 4. As regards question (c) is concerned, counsel for the revenue states that the said issued is covered against the revenue by a Division Bench judgment of this Court in the case of CIT V/s. M/s. Bajaj Hindustan Ltd. [Income Tax Appeal No.198 of 2009] decided on 15/04/2009. Accordingly, the third question cannot be said to be a question of law arising from the order of the Tribunal. The appeal is accordingly disposed of with no order as to costs. (R.M. SAVANT, J.) (J.P. DEVADHAR, J.)