TaxTMI 
TaxTMI 
2017 (5) TMI 161
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.... computation of book profit u/s 115JB. 2. Briefly stated, the assessee, being resident corporate assessee, was subjected to an assessment u/s 143(3) of the Income Tax Act, 1961 for impugned AY vide Assessing Officer [AO] order dated 27/03/2014, wherein the total loss of the assessee was determined at Rs. 4,51,53,615/- under normal provision, Book Profit u/s 115JB at Rs. 7,09,59,812/- as against returned loss of Rs. 4,40,76,922/- e-filed by assessee on 30/09/2011 after making certain adjustments / disallowances including disallowance u/s 14A for Rs. 14,49,584/-. The assessee was engaged in the business of Leasing, Business Process outsourcing [BPO] and Transport Services. During assessment proceedings, it was noticed that the assessee had....
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....cs & Rs. 13.62 Lacs respectively. The disallowance computed by AO u/r 8D(2)(iii) towards administrative expenses @0.5% was Rs. 13.62 Lacs which was the same that had already been disallowed suo-moto by the assessee in the return of income. Therefore, the net addition made by AO was under Rule 8D(2)(ii) which amounted to Rs. 14.49 Lacs. The same was contested with partial success before Ld. CIT(A) vide order dated 10/03/2016 where the assessee contested not only the interest disallowance but even the suo-moto disallowance of 0.5% made by him by placing reliance on various judicial pronouncements. The Ld. CIT(A) concluded that in view of the fact that the assessee had sufficient interest free owned funds so as to cover the said investments an....
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....the investment during the impugned AY rose substantially and therefore, it was difficult to digest the fact that no expenses qua administrative expenses were incurred by the assessee to make those investments. Reliance was placed on the judgment of The Saraswat Co-operative Bank Limited Vs DCIT [ITA No. 8622/Mum/2010 order dated 31/10/2016]. In the rejoinder, Ld. AR contended that the issue was legal one which could be admitted at any stage. Reliance was placed on various judgments placed in the paper book to contend that no such disallowance could be made against the strategic investments. 4. We have heard the rival contentions and perused relevant material on record. We note that the additions made by the Ld. AO in the quantum order wa....
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....ng expression:- (iii) an amount equal to 0.5% of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. (emphasis, being supplied by us) Therefore, no distinction has been made between strategic and non-strategic investments. The Ld. AR has contested that the disallowance could not be made as the assessee did not earn any dividend and secondly, the investments were strategic and placed reliance various judicial pronouncements in this regard placed in the paper book. However, we have already noted that Rule 8D(2)(iii) uses the expression 'shall not form' which ....