2017 (9) TMI 1219

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.... r.w. Rule 8D(2)(ii)/(iii) of the Act while computing the income under normal provisions of the Act. In all these three Assessment Years the Assessing Officer computed the disallowance u/s 14A r.w. Rule 8D of the Act as under: - Assessment Year Disallowance u/s 14A r.w. Rule 8D2(i) Disallowance u/s 14A r.w. Rule 8D2(ii) Disallowance u/s 14A r.w. Rule 8D2(iii) Dividend income earned 2008-09 -Nil- 1,22,47,472 12,16,787 9,62,500 2009-10 -Nil- 1,64,73,251 19,02,859 8,75,200 2010-11 -Nil- 2,50,17,377 20,12,296 5,50,000 3. The assessee preferred appeals before the Ld.CIT(A) contending that the investments were made out of surplus own funds which are much more than the investments made in the shares by the assessee. The Ld....

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....e for the Assessment Years 2008-09, 2009-10 and 2010-11 in the form of share capital and reserves stood at Rs..262.02 crores, Rs..219.76 crores and Rs..237.29 crores and whereas the investments in domestic companies capable of generating tax free income stood at Rs.31.08 crores, Rs..31.88 crores and Rs..32.49 crores and the percentage of investments out of own funds stood at 12%, 15% and 14% respectively. Therefore, Learned Counsel for the assessee submits that since own funds are much more than the investments made there should not be any disallowance u/s 14A r.w. Rule 8D(2)(ii) in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd (supra). 6. Heard both sides perused t....

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....t of expenses relatable to exempt income u/s 14A r.w. Rule 8D of the I.T. Rules. 9. This issue now stands squarely covered by the decision of the Special Bench Delhi in the case of ACIT v. Vireet Investments Private Limited [165 ITD 27] wherein the Special Bench held that the computation under clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules. Thus, respectfully following the said decision we restore this issue to the file of the Assessing Officer who shall compute the book profit u/s 115JB following the decision of the Special Bench. This Ground is partly allowed for statistical purposes. 10. The last issue in the appeal of the Revenue for ....

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....at assessee himself treated this provision as not allowable while computing the normal provisions of the Act. Therefore, this shows that it is only an unascertained liability and the Ld.CIT(A) is not justified in deleting the adjustment made by the Assessing Officer to the book profit. 14. The Learned Counsel for the assessee before us vehemently supported the orders of the Ld.CIT(A) and further placed reliance on the following decisions: - (1) M/S. Rotork Controla India (P) Ltd v. CIT [314 ITR 62 (SC)] (2) CIT v. Becton Dickinson India (Purchase) Ltd. [(2013) 29 taxmann.com 80 (Delhi)] (3) Anchor Electricals (P.) Ltd v. DCIT [(2017) 81 taxmann.com 250 (Mumbai -Trib.)] (4) DCIT v. M/s. Century Appliances Private Limited [ITA.No.513....