AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1716
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....nt Pvt. Ltd. and ANR. (2017) 165 ITD 0027 (Delhi) ((SB)). In the said case the Special Bench has held that disallowance u/s.14A cannot be made in computing book profit u/s.115 JB. However, the Special Bench has the remitted the matter to the file of the assessing officer to make the disallowance for earning the exempt income in accordance with Explanation to section 115JB. In accordance with the above ruling of the special bench we remit this issue the file of the assessing officer. The assessing officer shall consider the issue in accordance with the direction of the ITAT special bench as above. Both the counsel fairly agreed to this proposition. Revenues appeal: 5. One common issue raised is whether the ld. CIT(A) was correct in granting relief the disallowance u/s.14A. 6. Since the facts are common we are referring to facts and figures from A.Y. 2009- 10. 7. Brief facts are that the assessee company is an investment company belonging to JSW Group. Search/ Survey Actions were conducted on 16.03.2011 in the case of various JSW Group Companies. Subsequently the assessee's case was subjected to search assessment u/s 153C rws 143(3) of the Act for period AY 2005-06 to 201....
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....th Rule 8D cannot exceed actual expenditure debited to P&L account. I am respectfully following the jurisdictional Mumbai ITATs directions. 6.4 AO is directed to recompute the disallowance u/sl4A applying Rule 8D and restricting the disallowance under rule 8D(iii) to the administrative expenses actually claimed in P&L account. The ground of appeal is allowed. For A.Y. 2008-09, the ld. CIT(A) held as under : 7.3 The facts of case and submission of appellant's AR have been considered. It is 'noticed that AO has simply retained disallowance made u/s 14A in the original assessment order. In the original assessment order the AO had applied Rule 8D after rejecting appellants contention and made disallowance of Rs. 6,67,36,468/- out of interest expenses applying Rule 8D(ii) in addition to demat expenses of Rs. 42,250/-disallowed by appellant thereby making total disallowance u/s. 14A of Rs. 6,67,78,718/-. The disallowance under Rule 8D(ii) and 8D(iii) has been computed with reference to average exempt income generating assets worth Rs. 164,42,43,832/-. It is also noticed that the disallowance of interest included a sum of Rs. 26,02,513/- being interest attributable to inte....
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.... Regarding average value of investment, income from which does or shall not form part of total income for the purposes of application of Rule 8D(ii) and (iii), it is noticed from original assessment order that AO has adopted average value of Rs. 164,42,83,763/- and 164,42,03,902/- as opening and closing value of such investments. The figures adopted by AO are apparently incorrect as the same are even more than total investments appearing in balance sheet. Prima facie the correct values of opening and closing investments in shares are 117,48,93,814/- and Rs. 117,48,13,953/- which should be adopted for computation of disallowance.: 7.4 Regarding the other contention regarding limiting disallowance under third limb of rule 8D, i.e. 0.5% of average investment generating exempt income to actual administrative expense debited to P&L Account, it is noticed that in the original assessment order which has been followed by AO in subsequent order, no disallowance has been made under this head. Appellant has disallowed a sum of Rs. 9,17,015/- being the total of administrative expenses debited to profit and loss account. The issue is not disputed as the AO has neither rejected appellants sta....
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....d u/s 153C rws 143(3), the AO has retained the addition on the basis of original assessment order 14. Upon the assessee's appeal, the ld. CIT(A) granted relief to the assessee by holding as under: 9.2 The facts of the case and submission made by AR have been examined. Assessee has furnished certificate No 1-00527 dated 27.12.2013 issued by RBI, Ahmedabad Regional Office which has been issued in lieu of original certificate No 05.06289 dated 1.04.2004 issued by RBI, Kolkata Regional Office granting registration to appellant to carry on the business of non-banking financial institution in support of its claim that it is indeed a Non-Banking Finance Company registered with Reserve Bank of India since 1.04.2004 and hence at the relevant time bound by directions of RBI. 9.3 It is the argument of appellant that as per prevailing RBI guidelines in respect of NBFCs, interest income in respect of NPAs was to be recognized only upon actual realisation. Appellant has further claimed that the loan in the name of Portfolio Fashions Pvt Ltd had become NPA during FY 2007-08 in so far as interest had become past due for more than six months and hence it had to stop recognition of any i....
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....ained past due for six months; (c) a bill which remains overdue for six months; (d) the interest in respect of a debt or the income on receivables under the head 'other current assets* in the nature of short term loans/advances, which facility remained overdue for a period of six months; (e) any dues on account of sale of assets or services rendered or reimbursement of expenses incurred, which remained overdue for a period of six months; 9.5 From the above, it is agreeable that per guidelines of RBI, the appellant which was a registered NBFC, no interest income was to be recognised in its accounts in respect of loan to Portfolio Fashions which had become NPA due to interest becoming past due six months during FY 2007-08. Appellant claims that the interest income has been recognised in FY 2008-09 pertaining to AY 2009-10 upon receipt of same as issue of preference shares on 30.03.2009 and offered to tax in AY 2009-10. However, the next issue is whether, RBI guidelines override provisions of section of Income Tax Act in so far as accrual of income on NPAs is concerned as it does not allow mixed system of accounting. I find that the issue is now settled in favour of ap....