2014 (9) TMI 1005

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....w and facts in not deleting the addition of Rs. 6206581/- made by the assessing officer u/s 14A by applying rule 8D of the Income Tax Rules on account of expenses deemed to have been incurred to earn Dividend Income and Long Term Capital Gain. Directions be given to delete the addition of Rs. 6206581/- sustained by CIT(A) on surmises and conjectures and without any nexus of expenditure having being incurred to earn Dividend Income and Long Term Capital Gain. The lower authorities erred is low and facts in applying Rule 8D read with Section 14 A of the Act for computing disallowance for the purpose of computing Book Profits u/s 115 JB of the Act . Directions be given not to apply Rule 8D for the purpose of computing Book Profits u/s 115 JB ....

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....the Revenue placed reliance on the orders of the authorities below. 6. We have heard the rival contentions and perused the record. We find that recomputation of book profits under section 115JB of the Act arose before the Tribunal in ACIT Vs. M/s Nahar Capital & Financial Services Ltd. and the Tribunal in ITA No.870/Chd/2013 relating to assessment year 2010-11 vide order dated 6.6.2014 held as under:  "5. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to computation of book profits under section 115JB. The Assessing Officer while computing the book profits had added back disallowance worked out under section 14A of the Act to the net profits of the business. The plea....

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....DCIT Vs. Ind-Swift Ltd. (supra) where vide order dated 30.11.2009 vide para 8 it was held as under: "8. The ground 1(iv) raised by the Revenue is against the computation of book profits u/s 115 JB of the Act. The Assessing Officer while computing the book profit u/s 115 JB of the Act had added back the disallowance worked u/s 14A of the I.T. Act to the net profit shown in the profit and loss account and computed the profits for the year. The CIT (A) reworked the book profits by excluding the said notional disallowance u/s 115 JB of the Act, in turn following the ratio laid down by the Apex Court in Apollo Tyres Ltd. 255 ITR 273 (SC). We are in conformity with the order of CIT(A). The adjustments, if any, to be made to the profit shown in ....