Tax Tribunal allows appeal, deletes disallowances under section 14A & Rule 8D, directs AO review under 115JB. Excess interest deleted.

The Tribunal allowed the assessee's appeal by directing the deletion of disallowances under section 14A read with Rule 8D. The issue of adjusting the disallowance with book profit under section 115JB was restored to the AO for reconsideration. Additionally, the excess interest levied under sections 234B and 234C was ordered to be deleted. The decision was rendered on 20.06.2018.

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Issues:
1. Disallowance under section 14A of the Act
2. Adjustment of Section 14A disallowance with book profit u/s 115JB of the Act
3. Levy of interest under section 234B and 234C of the Act

Issue 1: Disallowance under section 14A of the Act:
The appeal was against the upholding of disallowance of Rs. 1,75,13,525/- by the CIT(A) as made by the AO, despite the assessee's suo moto disallowance of Rs. 52,05,005/- towards expenses incurred on earning exempt income. The Tribunal considered the facts, including the assessee's earnings and disallowances, along with the availability of interest-free funds for investments. Relying on a previous decision, the Tribunal held that no further disallowance should be made under section 14A read with Rule 8D, as the assessee's own funds covered the investments made. Thus, the Tribunal directed the AO to delete the additions made under section 14A read with Rule 8D.

Issue 2: Adjustment of Section 14A disallowance with book profit u/s 115JB of the Act:
The appeal challenged the addition of disallowance under section 14A to the book profit computed u/s 115JB of the Act. Citing a Special Bench decision, the Tribunal ruled that the computation under section 115JB(2) should not resort to the calculation under section 14A read with Rule 8D. Consequently, the Tribunal restored this issue to the AO for reconsideration in line with the Special Bench decision.

Issue 3: Levy of interest under section 234B and 234C of the Act:
The AO was criticized for levying excess interest under sections 234B and 234C of the Act. The Tribunal granted the appellant's request to delete the additional interest levied, without further elaboration as the issue was deemed consequential.

In conclusion, the Tribunal partly allowed the assessee's appeal, directing the deletion of the disallowances under section 14A read with Rule 8D and restoring the issue of adjustment with book profit to the AO. The excess interest levied under sections 234B and 234C was also directed to be deleted. The decision was pronounced openly on 20.06.2018.

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