2016 (4) TMI 915

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.....Vijayaraghavan, ld. Counsel for the assessee submitted that the assessee has declared a sum of Rs. 2,18,89,817/- as dividend income and claimed exemption u/s 10(35) of the Act. The assessee has not incurred any expenditure for earning the income and therefore, no expenditure was claimed. According to the ld. Counsel, the entire investments were made out of the surplus funds of the company. The assessee has not borrowed any funds for making investments. The entire dividend income was received through banking channel, therefore, no expenditure was incurred in earning the dividend income. However, the Assessing Officer disallowed a sum of Rs. 24,61,662/- by applying the provisions of Rule 8D of the Income-tax Rules. According to the ld. Couns....

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....aking the investments. It is not the case of the assessee that no funds were borrowed for business purposes. When the assessee pays interest which is not attributable to any part of the income or receipt of the assessee, this Tribunal is of the considered opinion that second limb of Rule 8D would come into operation. Even in case no expenditure was incurred, third limb of Rule 8D provides for computation of expenditure. In the case before us, the Assessing Officer has applied the provisions of Rule 8D and computed the disallowance at Rs. 24,61,662/-. There is no dispute about the computation of expenditure as made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly....

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....u/s 143(1) only. Therefore, as rightly submitted by the ld. DR, proviso to sec. 147 is not applicable at all. The Assessing Officer found that a sum of Rs. 3.5 crores was not added to the book profit u/s 115 JB of the Act. In those circumstances, this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment by issuing notice u/s 148 of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. 10. Now coming to the merit of the addition made by the Assessing Officer, Shri R.Vijayaraghavan, ld. Counsel for the assessee submitted that during the year under consideration a provision was made to the extent of Rs. 3,....

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....g the return of income. It does not mean that the provision made for bad and doubtful debt cannot be added back to the book profit as provided in Explanation 1 to sec. 115JB(2) of the Act. This Tribunal is of the considered opinion that since Explanation 1 to sec. 115JB(2) of the Act is applicable retrospectively with effect from 1.4.2001, the provision for bad and doubtful debt has to be increased as provided therein. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. 12. Now coming to I.T.A.No.1391/Mds/2014 for assessment year 2004-05, this appeal of the assessee is against the order passed by the Assessing Officer in the proceedings u/s 154 of the Act. ....