2019 (6) TMI 33

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....ion 14A r/w rule 8D, while computing the income under the normal provisions as well as under section 115JB of the Income-tax Act, 1961 (for short "the Act"). 3. Brief facts are, the assessee company is engaged in the business of providing internet data service. In the course of assessment proceedings, the Assessing Officer noticed that in the assessment year 2013-14, the assessee has earned exempt income by way of dividend amounting to Rs. 48,865, and in assessment year 2014-15, it had earned exempt income by way of dividend of Rs. 1,08,136. However, he noticed that the assessee had not disallowed any expenditure under section 14A r/w rule 8D for earning the exempt income. Accordingly, he called upon the assessee to explain why disallowanc....

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....ure while computing book profit under section 115JB of the Act, learned Commissioner (Appeals) relying upon the Special Bench decision of the Tribunal, Delhi Bench, in CIT v/s Vireet Investment Pvt. Ltd., [2017] 82 taxmann.com 415 (Del.), held that while computing the book profit under section 115JB of the Act, no disallowance under section 14A r/w rule 8D can be made. 5. The learned Departmental Representative relying upon the observations of the Assessing Officer submitted that there is no condition under the provisions of section 14A of the Act to restrict the disallowance to the exempt income earned. He submitted, disallowance of expenditure under section 14A of the Act has to be made as per rule 8D(2). Further, he submitted, as per th....

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....owance under section 14A r/w rule 8D cannot exceed the quantum of exempt income earned during the year. The decisions relied upon by the learned Authorised Representative squarely support this view. That being the case, we do not find any reason to interfere with the decision of the learned Commissioner (Appeals) in directing the Assessing Officer to restrict the disallowance under section 14A of the Act to the exempt income earned by the assessee in respective assessment years. 9. As regards disallowance made by the Assessing Officer while computing the book profit under section 115JB of the Act, it is evident that the Assessing Officer has made such disallowance by resorting to the provisions of section 14A r/w rule 8D. In our view, as p....