TaxTMI 
TaxTMI 
2018 (12) TMI 916
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....ct. For this assessee has raised the following grounds without prejudice to each other: - "1. In the facts and circumstances of the case and in law, it should be held that the Order u/s. 263 of the Income Tax Act, 1961 (the Act) dated 271h December, 2017 passed by the Pr. Commissioner of Income Tax-2, Mumbai directing the AO to determine expenses incurred in relation to exempt income and add such expenses in computing the books profits u/s. I ISJB of the Act is bad in law in view of the following reasoning's: - (a) Keeping in view the directions contained at Page Nos. 11 and 12 vide Para No. 11 of the said Order i. e "to determine the expenses incurred in relation to exempt income and add such expenses while computing the book profit under Section 1 15. JB of the Act read with clause (t) of Explanation 1 to the said Section of the Act" which tantamounts to passing of the fresh order of assessment, resulting in exceeding his jurisdiction. (b) The AO has determined expenses incurred in relation to exempt income by invoking Section 14A read with Rule SD. The Pr. C. I. T. has not established that expenses so determined are incorrect. (c) Pursuant to ....
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....d in law, it is humbly submitted that it should be held that the computation u/s. clause (f) of Explanation-1 to Section 115JB(2) is to be made without resorting to the computation as contemplated u/ s. 14A read with Rule 8D. 3. It is humbly prayed that the reliefs as prayed for hereinabove and/or such other reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted." 3. Brief facts relating to this issue are that the assessee has claimed exempt income of Rs. 3403. 90 crores on an investment of Rs. 38378. 03 crores. The assessee company suo moto disallowed a sum of Rs. 873. 24 crores as expenditure relatable to exempt income. The AO during the course of assessment proceedings framed under section 143(3) read with section 144C (3) of the Act and recomputed the disallowance under Rule 8D(2)(ii) & (iii) read with section 14A of the Act after going into the details amounting to Rs. 302. 46 crores apart from the disallowance made by assessee suo moto. The AO recomputed the disallowance as under: - Accordingly, the following the calculation u/s made for the purpose of disallowance under section 14A. ....
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..... vs. CIT (32/SOT/101) (ITAT Del) Quippo Telecom Infrastructure Ltd. Vs. ACIT (ITA No. 4931/Del/2010)" 5. Subsequently, the Pr. CIT-2, Mumbai issued show cause notice dated 27. 11. 2017 bearing No. Pr. CIT-2/263/2017-18 dated 04. 12. 2017, for revising the assessment dated 30. 03. 2016 passed by the AO due to the following reasons: - "In this case during the assessment under section 143(3) read with section 144C an addition of Rs. 3, 02, 46, 000/- was made under section 14A, calculated on the basis of methodology prescribed in Rule 8D. However, the same was not included in computing the book profit under the provisions of section 115Jb of the Act by the Assessing Officer in the assessment order dated 30. 03. 2016. the failure to add the aforesaid amount to book profit has rendered the assessment order dated 30. 03. 2016 erroneous in so far it is prejudicial to the interest of revenue. " 6. The assessee subsequently replied that this aspect has been considered by the AO in the original assessment order and he specifically referred to the observations of the CIT(A) which are already reproduced in this order. The assessee also contended that the AO has taken on....
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....section 115JB. 9. As already mentioned in para S of this order, as per the provisions of clause (f) of Explanation 1 to section 115JB(2), the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof or section 11 or section 12 apply / is/are required to be added to the book profit. Further, as per section 14A(1), for the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. The incomes which do not form part of the total income are enumerated in Chapter III in section 10 to 136. From the aforesaid provisions of law, it is absolutely clear that the expenses related to exempt income are required to be added in computation of book profit under section 115JB. 10. In the instant case, the Assessing Officer determined the expenses relatable to exempt income invoking the provisions of section 14A read with Rule 8D for computation of total income under the normal provisions of the Act. However, no such exercise was undertaken b....
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....rder. Accordingly, we are of the view that this is one of the permissible view because the Hon'ble Delhi High Court in the case of Goetze (India) Ltd. (supra) and CIT vs. Bhushan Steels And Strips Ltd (supra) has taken a contrary view. We also find that the Special Bench of ITAT Delhi has considered this issue and also considered the decisions of Hon'ble Delhi High Court in the case of Goetze (India) Ltd. (supra) and Bhushan Steels And Strips Ltd. (supra) and held as under: - "6. 20 Thus, it cannot be said that Hon'ble Delhi High Court has not considered this issue and merely allowed the revenue's appeal on concession. The substantial question of law framed by Hon'ble Delhi High Court clearly shows that the specific issue was whether disallowance u/s 14A was required to be made while computing book profit u/s 115JA/ 115JB. The Hon'ble Delhi High Court has not only recorded assessee's plea of merely not contesting the issue in view of specific provisions but has recorded that the counsel fairly conceded. The expression "fairly" implies that Hon'ble High Court was also of the view that the provisions of section 14A were applicable with full force to t....
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....ely. It was clear that Sampangappa had not advanced at the material time any amount to the assessees. The explanation of the assessees was, therefore, untrue. ' Thus, it is evident that in every case it is not necessary that long drawn reasoning should be given before arriving at any conclusion more particularly when both the parties are agreed on certain provision of law. We, therefore, reject the assessee's contention that the decision of Ho'nble jurisdictional High Court in Goetze (India) Ltd's. case (supra) does not constitute a binding precedent more particularly in respect of subordinate courts including Tribunal functioning within its jurisdiction. However. Ld. Senior Counsel has relied on the decision in the case of Bhushan Steel Ltd. (supra) wherein it has been held as under:- "ITA 593/2015 PR. CIT . . . . . . . . . . Appellant Through: Mr. N. P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate. versus BHUSHAN STEEL LTD Respondent Through: Ms. Kavita Jha, Advocate with Ms. Roopali Gupta, Advocate. ORDER 29. 09. 2015 ** ....
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....is reproduced hereunder:- "6. Coming to the sustenance of disallowance of Rs. 88, 290/- u/s 115JB, the Commissioner of Income-tax (Appeals) has upheld the ITA Nos. 1213/Mum/2018 disallowance under clause (f) of Explanation to section 115JB(2) of the Act. Under section 115JB of the Act, the assessee is required to pay tax on its book profit subject to certain conditions. The books profit is to be determined u/s 115JB(2) as per Part II & III of Schedule VI to Company's Act, 1956. Explanation (I) to section II5JB(2) defines the expression "book profit" and means the net profit as shown in the P&L A/c for the relevant previous year prepared under sub-section (2) as increased by the amounts specified in clause (a) to (h) of the Explanation I. Clause (f) of the Explanation 1 refers to the amount or amounts or expenditure retable to any income to which section 10 (other than provisions contained in clause 38 thereof or section 11 or section 12 apply. For applying the provisions of clause (f) of Explanation to section 1I5JB(2), there should be nexus between the amount of expenditure relatable to the income exempt u/s 10 of the Act. The dividend income is exempt u/s 10(33) for ....
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.... decision is taken on appeal and is reversed by the higher court, while overruling occurs when the higher court declares in another case that the earlier case was wrong decided; (ii) when it is affirmed or reversed on a different ground, depending on the circumstances of such affirmation or reversal; (iii) when the legislature enacts a state that is inconsistent with the precedent; (iv) when it is inconsistent with the earlier decisions of a higher court or a court of the same rank; (v) if it is a precedent sub silentio or not fully argued; (vi) when it is rendered per incuriam, i. e. , in ignorance of a statutory provision or binding precedent - however, the rule of per incuriam is of limited application, and if the provision of the Act was noticed and considered, then the judgment cannot be ignored as being per incuriam merely on the ground that it has erroneously reached the conclusion; and (vii) when it is an erroneous decision, i. e, a decision conflicting with the fundamental principles of law. Ld. Principal CIT(DR) further relied on the decision of Hon'ble Bombay High Court in the case of CIT v. Thana Electri....
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....cilable decisions of the Supreme Court are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of 'per incuriam'. Thus, both paras 12 and para 15 cited above, in the Supreme Court judgement in Sandeep Kumar Bafna 's case (supra) hold very clearly that the earlier decision is to be followed and not the later one of co-qual bench - when given in ignorance of the earlier decision -which in the present case - makes it very clear that the decision rendered in the case of Goetze should be followed and not the later decision given in the case of Bhushan Steel. Further, the Hon'ble Supreme Court in the case of Mamaleshwar Prasad v. Kanhaiya Lal (Dead) AIR 1975 SC 907 observed as follows :- "Certainity of the law, consistency of rulings and comity of Courts all flowering from the same principle converge to the conclusion that a decision once rendered must later bind like cases. We do not intend to detract from the rule that, in exceptional instances where by obvious inadvertence or over sight a judgement fails to notice a plain statutory provision or obligatory auth....
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....Delhi). 2. Govindanaik G. Kalaghtigi v. West Patent Press Co. Ltd. : AIR 1980 Kar 92 (FB). 3. Vasant Tatoba Hargude v. Dikkaya Muttaya Pujari : AIR 1980 Bom. 341. 4. Peedikkakumbhi Joseph v. Special Tahsildar : 2001 (1) KLT 747 (FB). 5. Datamatics Financial Services Ltd. v. Jt. CIT [2005] 95 ITD 23 (Mum. - Trib. ) The second proposition advanced by Ld. Senior Counsel is that in case of conflict/divergent view expressed in two separate pronouncements of a Court by a Bench of co-equal strength, the lower Court shall follow the judgment which appears to it to state the law more elaborately and accurately, in this regard he has relied on following decisions :- 1. Indo Swiss Time Ltd. v. Umrao AIR 1981 Punj. & Har. 213 2. Amar Singh Yadav v. Shanti Devi AIR 1987 Pat 191 3. T. P. Naik v. Union of India AIR 1998 MP 83 Third proposition advanced by Ld. Senior Counsel is that a lower authority/Court cannot declare a judgment of a higher Court as per incurium. In this regard he has relied on following decisions:- 1. Cassel & Co. Ltd. v. Broome [1972] 1 All ER 801 (HL)uoted in ITO v. Modern International....
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....rn on or before July 18, 1960. Assessee sought extension of time for submitting its return which was extended by ITO for two months with rider for no further extension. The assessee failed to furnish the Return of Income within the extended time. Thereafter, a notice under section 28(3) of the 1922 Act was served on the assessee on January 16, 1961. On the very next day, viz. , January 17, 1961, the assessee filed its return for the assessment year in question. The assessment was completed by ITO on October 31, 1962. Meanwhile, on April 1, 1962, the Income-tax Act, 1962( came into force. As under the provisions of section 297(2)(g) of the Act the proceedings for the imposition of the penalty had to be initiated and completed under the Act, a fresh notice was served on the assessee. The ITO determined the tax due from the assessee for the assessment year at Rs. 1, 25, 512, 10, and on that basis, the penalty payable by the assessee was fixed at Rs. 12, 734. 10. It may be pointed out that on February 2, 1961. a provisional assessment was made by the ITO under section 23B of the 1922 Act. Immediately thereafter , the assessee deposited Rs. 92, 294. 55. In determining the penalty due fr....