TaxTMI 
TaxTMI 
2013 (5) TMI 473
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....e JCI) by estimating expenses under section 14A of the Income tax Act, being expenditure incurred in relation to earning of exempt income to the extent of Rs.54,77,3311-, while computing income under the normal provisions of the Act (Section 28 to 42 of the Act) and also making consequential adjustments while computing book profits under section 115JB of the Act. The Appellant submits that it has not incurred any expenditure in relation to earning such income. Therefore, the disallowance of the estimated expenditure ought to be deleted under normal computation of income as well as for computation of book profits under section 115JB of the Act." 3 The assessee claimed interest income as well as dividend income being exempt u/s 10(23G) and ....
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....orted in 254 ITR 203 and submitted that when the assessee has not incurred any specific expenditure for earning the exempt income, then in view of the decision of the Hon'ble jurisdictional High Court, no disallowance can be made u/s 14A. 5. Alternatively, the ld AR has submitted that a reasonable disallowance may be made restricting 2% of the exempt income on account of administrative expenses. In support of his contention, he has relied upon the decision of the coordinate Bench of this Tribunal in the case of M/s Godrej Agrovet Ltd in ITA No.1629/Mum/2009 vide order dated 17.9.2010 and submitted that the coordinate Bench of this Tribunal has considered 2% of the exempt income as reasonable disallowance u/s 14A. 5.2 On the other hand, th....
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....not given a finding that the assessee has incurred any expenditure exclusively for earning of the exempt income in the shape of interest and dividend; however, section 14A has an implicit principle of apportionment in the cases where the expenditure is incurred for composite/indivisible activity, in which taxation and non taxable income is received. The administrative expense is such an expenditure which falls under the category of the expenditure incurred for composite activity. Therefore, in view of the decision of the Hon'ble jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd. v. Deputy Commissioner of Income-tax., reported in 328 ITR 81, a reasonable disallowance has to be made u/s 14A on account of administrative ex....
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....mon administrative expenses to 2% of the total exempt income. Ground No. 8 of the assessee's appeal is thus partly allowed." 7.2 No contrary decision has been brought before us; therefore, following the order of the coordinate Bench of this Tribunal (supra), we direct the Assessing Officer to restrict the disallowance on account of administrative expenditure u/s 14A to 2% of the total exempt income. 8. As regards the addition of the amount of disallowance, as computed u/s 14A while computing the book profit u/s 115JB is concerned, we note that the Delhi Bench of this Tribunal in the case of Goetze (India) Ltd (supra) has held that for computation of adjusted book profit, the provisions of sec.14A cannot be imported into clause (f) of the ....
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.... u/s 14A cannot be considered while computing book profit u/s 115JB of the Act. No contrary decision has been brought on record by the learned Departmental Representative. In view of these facts, we are of the considered opinion that the learned CIT(A) was justified in directing that the amount of disallowance u/s 14A cannot be considered while computing book profit u/s 115JB." 8.2 Therefore, it is clear that the amount disallowed u/s 14A cannot be considered while computing the book profit u/s 115JB of the Act. There are other decisions of the Tribunal as relied upon the ld AR wherein the Tribunal has taken a similar view. 8.3 As regards the decision in the case of Esquire Pvt Ltd (supra), relied upon by the ld DR, we note that in the sa....