Appeal allowed due to assessment scope exceeding limits, rendering entire assessment void. Issues with disallowance not addressed.

The appeal was allowed primarily on the grounds of the limited scrutiny assessment being beyond the authorized scope, rendering the entire assessment void ab initio. The specific issues related to disallowance u/s 14A read with Rule 8D and its impact on Book Profit u/s 115JB were not individually addressed due to the overarching finding of the assessment order being invalid.

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Issues:
Limited scrutiny assessment beyond scope - Void ab initio
Disallowance u/s 14A read with Rule 8D
Addition to Book Profit u/s 115JB

Analysis:
1. Limited scrutiny assessment beyond scope - Void ab initio:
The appeal was filed against an order passed by CIT(A) for Assessment Year 2015-16. The grounds of appeal included challenging the addition/disallowance made u/s 14A read with Rule 8D. The assessee argued that the case was selected for limited scrutiny, and the 14A disallowance was not within the scope of scrutiny, rendering the assessment void ab initio. The Appellate Tribunal noted that the Assessing Officer did not have written approval to extend the scope of scrutiny to Section 14A disallowance. Referring to CBDT Instruction No.7/2014, it was established that the AO was not permitted to extend the scope of scrutiny beyond the authorized issues. As the assessment order was for limited scrutiny and did not include scrutiny of Section 14A disallowance, it was deemed bad in law and void ab initio. Therefore, the appeal was allowed based on this issue.

2. Disallowance u/s 14A read with Rule 8D:
The Assessing Officer made an addition/disallowance of &8377; 33,03,808 u/s 14A read with Rule 8D. The CIT(A) partly allowed the appeal, restricting the disallowance to &8377; 4,27,000, which was the amount of dividend earned on shares held as stock-in-trade. The issue arose whether this amount should be included in the computation of Book Profit u/s 115JB. The Appellate Tribunal did not adjudicate on the merits of this issue as the assessment order was deemed void ab initio due to being beyond the scope of limited scrutiny. Therefore, the specific disallowance u/s 14A read with Rule 8D was not addressed on its own merits.

3. Addition to Book Profit u/s 115JB:
The Assessing Officer mentioned in the assessment order that the disallowance made u/s 14A read with Rule 8D would be added to the computation of Book Profit u/s 115JB. However, due to the assessment order being declared void ab initio, the Appellate Tribunal did not delve into the specifics of including the disallowance in the Book Profit u/s 115JB. As a result, this aspect was not separately analyzed or adjudicated upon.

In conclusion, the appeal was allowed primarily on the grounds of the limited scrutiny assessment being beyond the authorized scope, rendering the entire assessment void ab initio. The specific issues related to disallowance u/s 14A read with Rule 8D and its impact on Book Profit u/s 115JB were not individually addressed due to the overarching finding of the assessment order being invalid.

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