Appellate Tribunal directs AO to delete disallowed amount under section 14A & remand computation under section 115JB

The Appellate Tribunal ruled in favor of the appellant, directing the Assessing Officer to delete the disallowed amount under section 14A and remand the computation under section 115JB for fresh adjudication in accordance with the law.

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Issues involved:
1. Disallowance under section 14A r.w.r 8D(2)(iii) of the Income Tax Act.
2. Addition to book profit under section 115JB of the Income Tax Act.

Detailed Analysis:
1. Disallowance under section 14A r.w.r 8D(2)(iii) of the Income Tax Act:
The appellant contested the disallowance of Rs.19,23,063 under section 14A r.w.r 8D(2)(iii) by the Assessing Officer, as the actual expenses claimed were Rs.51,669 only. The Assessing Officer invoked Rule 8D and disallowed various expenses. The appellant argued that expenses under Rule 8D(2)(iii) cannot exceed the actual expenses claimed. However, the CIT(A) upheld the disallowance, considering additional interest-bearing unsecured loans and investments. The Appellate Tribunal held that the disallowance exceeded actual expenses without referencing the appellant's books, concluding that the disallowance was made without complying with the law. The Tribunal directed the Assessing Officer to delete the disallowed amount, allowing the appeal on this issue.

2. Addition to book profit under section 115JB of the Income Tax Act:
The Assessing Officer disallowed Rs.19,52,849 under section 14A r.w.r 8D in the normal income computation and also while computing income under section 115JB. The appellant argued that disallowances under normal computation should not apply to section 115JB or should not exceed actual expenses claimed. The CIT(A) upheld the disallowance citing relevant case laws. However, the Appellate Tribunal referred to a Special Bench judgment stating that disallowances under section 14A r.w.r 8D cannot be applied to section 115JB. The Tribunal relied on a High Court judgment, directing the AO to compute disallowances independently under section 115JB. The issue was remanded to the AO for fresh adjudication. The appeal was allowed for statistical purposes.

In conclusion, the Appellate Tribunal ruled in favor of the appellant on both issues, directing the Assessing Officer to delete the disallowed amount under section 14A and remanding the computation under section 115JB for fresh adjudication in accordance with the law.

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