2019 (2) TMI 621

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....concerning assessment year 2012-13. 2. The grounds of appeal raised by the assessee read as under:- "1. The order passed by the learned CIT(A) is erroneous and contrary to the provisions of law & facts of the case and therefore needs to be suitably modified. It is submitted that it be so held now. 2. The learned CIT(A) erred in confirming the disallowance made by AO u/s 14A read with Rule 8D of Rs. 7,40,472/- net of disallowance made by appellant of Rs. 25,000/-. It be so held now. 2.1 The CIT(A) erred in not appreciating that Section 14A is not applicable to the appellant as the investments in securities yielding tax free income were made from own funds of the appellant and no expenses were incurred in relation to the exempt income.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ent order without appreciating that the disputed issues have not reached finality. 3. Ground No.1 concerns disallowance of expenditure in terms of Section 14A of the Act in relation to income which does not form part of the total income under the Income Tax Act. 3.1 At the time of hearing, the learned AR in support of its grievance for non-applicability of Section 14A of the Act contended that the total disallowance of Rs. 7,40,472/- comprises of (i) proportionate interest disallowance of Rs. 6,64,777/- [as per Rule 8D(2)(ii)] and (ii) administrative expenditure of Rs. 75,695/- as per Rule 8D(2)(iii) of the Income Tax Rules. The learned AR submitted that it is a matter of record that own funds of the assessee (Rs.28.21 Crore) are far in e....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ncerns book profit under s.115JB of the Act. The controversy is whether, for the purposes of the computation of 'book profit' under s.115JB, the AO is entitled to increase 'book profit' by the equivalent amount of disallowances as found attributable to exempt income under normal provisions or not. With the assistance of the learned AR for the assessee, we find that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Gujarat High Court in Alembic Ltd. Tax Appeal No. 1249 of 2014 (Guj) as well as the decision of the special Bench in Vireet Investments 165 ITD 27 (SB). Similar view has been expressed by co ordinate bench in Arvind Ltd. vs. DCIT ITA No.1816/Ahd/2011 & Anr. Order dated 08.03.2018. The relevant ope....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... that the AO was not entitled to tinker with book profits contemplated under s.115JB towards disallowance made under s.14A of the Act. We similarly find that judgement of Hon'ble Bombay High Court in CIT vs. Bengal Finance and Investments Pvt. Ltd. in ITA No.337 of 2013 order dated 10/02/2015 also complements the issue. Thus, seen on the anvil of the judicial fiat available squarely on the issue, we are disposed to assign merits to the contentions on behalf of the assessee. At this juncture, we pause to note the concern of revenue seeking to plead possible redundancy of clause(f) to Explanation to s.115JB in the event of disagreement with the action of AO. We are alive to such concerns. However, as noted, we are governed by the superior wis....