IN THE INCOME TAX APPELLATE TRIBUNAL
                     DELHI BENCH: `A' NEW DELHI

            BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
                                &
               SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER

                          ITA No. 4526/Del/2011
                         Assessment Year: 2008-09

Sahara India Mass Communication       Vs       DCIT, Central Circle-6,
Ltd. (Now known as Sahara One                  New Delhi
Media & Entertainment Ltd.), CTS
40-44, Sahara India Point, S.V. Road,
Gurgaon.
AAACP 3047R
    Appellant                                  Respondent


                                  Assessee by Sh. Gaurav Jain, Advocate
                                              Sh. Divyam Mittal, CA
                                  Revenue by Sh. SanjogKapoor, Sr. DR

                                          Date of Hearing   11.12.2019
                                      Date of Pronouncement 18.12.2019

                                  ORDER

PER K. NARASIMHA CHARY, JM

      Aggrieved by the order dated 10/08/2011 in appeal No. 173/10-11
passed by the learned Commissioner of Income Tax (Appeals)-1, New
Delhi ("Ld. CIT(A)") for assessment year 2008-09, M/s Sahara OneMedia
&Entertainment     Ltd    (formerly    known     as   Sahara    India    Mass
communication Ltd), who is the assessee, filed this appeal challenging the
computation of disallowance under section 14A of the Income Tax Act,
                                     2


1961 (for short "the Act") read with Rule 8D of the Income Tax Rules1962
("the Rules").






2.     Facts on this aspect are that in the return of income the assessee
declared a sum of Rs. 12,29,522/-as a dividend income from investment
made in companies and simultaneously claimed the same as exemption
under section 10 (34) of the Act. Learned Assessing Officer did not agree
with the contention of the assessee that such an income was earned
from the old investments for which no expenses was incurred and
proceeded to apply the formula under rule the of the Rules. Learned
Assessing Officer made an addition of Rs. 5,08,827/-on this score.

3.     Assessee preferred appeal before the Ld. CIT(A) and contended
that there was no justification for disallowing a sum of Rs. 5,08,827/-on
account of expenses under section 14A of the Act and rule 8D of the
Rules. Ld. CIT(A) held that in view of the decision of the Hon'ble Bombay
High Court in the case of Godrej & Boyce Manufacturing Company
Limited 328 ITR 81 Rule 8D of the Rules is applicable from assessment
year 2008-09.

4.     While challenging the impugned order only argument advanced
before us is that in view of the decision of the Hon'ble jurisdictional High
Court in the case of PCIT vs. CarafBuilders &Constructions (P) Ltd (2019)
414 ITR 122 (Delhi), the learned Assessing Officer committed an error in
taking the total value of investment and not the investment that had
yielded exempt income for computing the disallowance under section
rule 8D (2) (ii) of the Rules.

5.     Ld. DR placed reliance on the orders of the authorities below.
                                    3


6.    We have gone through the orders of the authorities below in the
light of the submissions made on either side. It is evident from the
assessment order that the learned Assessing Officer took into
consideration the value of the entire investment while computing the
disallowance under rule Rule 8D(2)(ii) of the Rules instead of the
investment that had a yielded the exempt income. By now it is a fairly
settled by the decisions of the Hon'ble jurisdictional High Court in cases
including ACB India Ltd (2015) taxmann.com 71 etc which were noticed in
the decision reported in Caraf Builders (supra), that numerical B in clause
(ii) of Rule 8D (2) of the Rules refers to average value of the investment,
income from which does not form part or shall not form part of the total
income.

7.    The SLP filed against decision in the case of Caraf Builders (supra)
is dismissed by the Hon'ble Apex Court in Special Leave Petition (civil)
diary No. 25130/2019 by order dated 30/08/2019. The principle laid cited
as on the date does not admit of any doubt that the numerical B in clause
(ii) of rule 8D (2) of the Rules refers to average value of investment,
income from which does not form part or shall not form part of the total
income and it would be an error to take the value of total investment in
such place.






8.    In view of this settled position of law, we are of the considered
opinion that the learned Assessing Officer committed an error in
computing the disallowance under Rule 8D(2)(ii) of the Rules. We
accordingly, while allowing the contention of the assessee, direct the
Assessing Officer to take the value of the investment that had yielded
exempt income in the numerical B in clause (ii) of Rule 8D (2) of the
                                      4


Rules, and compute the disallowance under Section 14 A and Rule 8D of
the Rules.

9.      In the result, appeal of the assessee is accordingly allowed.

        Order pronounced in the Open Court on 18th December, 2019.

               Sd/-                                     Sd/-
         (R.K. PANDA)                        (K. NARASIMHA CHARY)
     ACCOUNTANT MEMBER                            JUDICIAL MEMBER

Dated: 18/12/2019
Copy forwarded to:

1.      Appellant
2.      Respondent
3.      CIT
4.      CIT(Appeals)
5.      DR: ITAT
                                                      ASSISTANT REGISTRAR
                                                            ITAT NEW DELHI