2013 (4) TMI 841 - AT - Income Tax

Tribunal rules disallowance under section 14A not added back to book profits.

A.C.I.T., Circle VII, 375, Ludhiana Versus Nahar Capital & Financial Service Ltd.

The Tribunal held that the disallowance under section 14A should not be added back to the book profits under section 115JB of the Income Tax Act. Relying ... - Issues involved: The appeal involves the computation of book profits under section 115JB of the Income Tax Act, 1961, specifically regarding the treatment of disallowance under section 14A in the calculation of book profit for deemed total income u/s 115JB.Comprehensive details of the judgment for each issue involved:1. Computation of Book Profits under Section 115JB:The issue raised in the appeal pertains to the computation of book profits under section 115JB of the Act. The Assessing Officer had added back the disallowance worked out under section 14A to the net profits of the business for tax liability calculation. The CIT (Appeals) allowed the claim of the assessee based on a previous Tribunal decision in the assessee's own case for the assessment year 2008-09. The Tribunal, relying on an earlier decision of the Chandigarh Bench, held that the disallowance under section 14A should not be added back to the book profits under section 115JB. The Tribunal directed the Assessing Officer to adopt the book profits as per the Profit & Loss Account without making an addition for the disallowance under section 14A, as such disallowance is not applicable for determining book profits under section 115JB.2. Judicial Precedents and Application of Decisions:The Revenue contended that the CIT (Appeals) should have followed the decisions of the Mumbai Bench of the Tribunal, but the Tribunal held that the order in the assessee's own case by the Chandigarh Bench should be applied as judicial propriety demands consistency. The Tribunal dismissed the Revenue's plea for referring the issue to a Special Bench, stating that the decision by the Chandigarh Bench in the assessee's case holds binding force, regardless of contrary views by other Tribunals. Thus, the Tribunal upheld the CIT (Appeals) order and dismissed the appeal of the Revenue.3. Final Decision:After considering the rival contentions and perusing the record, the Tribunal upheld the order of the CIT (Appeals) and dismissed the appeal of the Revenue. The Tribunal found no merit in the grounds raised by the Revenue and pronounced the order in open court on April 16, 2012.This summary provides a detailed overview of the judgment, focusing on the computation of book profits under section 115JB and the application of judicial precedents in deciding the appeal.