2016 (2) TMI 1085 - AT - Income Tax

Tribunal: Disallowance under sec 14A not added to book profit under sec 115JB

The Tribunal ruled that the disallowance made under section 14A r.w.r. 8D cannot be added when computing book profit under section 115JB. Such ... Disallowance u/s.14A r.w.r.8D while computing book profit u/s.115JB - MAT computation - Held that:- Invoking provisions of the section 14A r.w.r.8D of the Rules was already adjudicated by us in assessee’s appeal [2015 (8) TMI 1037 - ITAT CHENNAI] and disallowed made u/s.14A r.w.r.8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing the taxable income in the normal course. There is no provision in the Act to add this kind of disallowances while computing the book profit u/s.115JB of the Act and it cannot change the book profit on this count. Therefore, even if there is an addition in view of provision u/s.14A r.w.r.8D, that cannot be added back to compute the book profit u/s.115JB of the Act. Accordingly, this ground of the assessee to be considered as allowed. Issues Involved:- Whether the disallowed amount under section 14A r.w.r. 8D can be added while computing book profit under section 115JB of the Act.Analysis:Issue 1: Disallowance under section 14A r.w.r. 8D for computing book profit under section 115JBThe Tribunal acknowledged that the assessee raised ground No.5 in ITA No.2277/Mds./2014, questioning the addition of Rs. 37,28,239 disallowed under section 14A r.w.r. 8D while computing book profit under section 115JB of the Act. The Tribunal failed to adjudicate on this specific issue initially. However, upon review, it was noted that the provisions of section 14A r.w.r. 8D had already been addressed in a previous order dated 19.06.2015. It was clarified that the disallowance made under section 14A r.w.r. 8D cannot be added when computing book profit under section 115JB. The Tribunal emphasized that such disallowances are for the purpose of computing taxable income and do not impact the book profit calculation under section 115JB. Therefore, any addition resulting from section 14A r.w.r. 8D should not be included in the computation of book profit under section 115JB. Consequently, the ground raised by the assessee was considered allowed, leading to no change in the final result of the appeal in ITA No.2277/Mds./2014 dated 26.06.2015.Final Decision:The Miscellaneous Application filed by the assessee was allowed, and the ground raised regarding the disallowance under section 14A r.w.r. 8D for computing book profit under section 115JB was considered allowed. The order was pronounced on Friday, the 19th of February, 2016, at Chennai.