2020 (3) TMI 1024

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...."Tribunal") in the ITA No.3213/Ahd/2016 for the Assessment Year 2012-13. 2. The Revenue has proposed the following two questions as substantial questions of law: "2(A) Whether Appellate Tribunal has erred in law and on facts in deleting the disallowance of Rs. 35,825/made under Section 14A r.w. Rule 8D? (B) Whether Appellate Tribunal has erred in law and on facts deleting the addition of disallowance made under Section 14A to the book profit under Section 115JB of the Act?   3. The Assessing Officer, during the course of the proceedings, disallowed the amount of Rs. 35,825/under Section 14A of the Act 1961. The Assessing Officer was of the view that though the assessee has disallowed the amount of Rs. 5500/under....

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....l filed by the assessee deleting the disallowance made under Section 14A of the Act 1961 by the Assessing Officer. 6. In order to consider whether the Tribunal has the correctly deleted disallowance made under Section 14A of the Act 1961 read with Rule 8D of the Rules 1962, it would be germane to refer section 14A of the Act 1961, which reads thus: "Expenditure incurred in relation to income not includible in total income: 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. (2) The Assessing Officer shall determine the amount ....

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....ct of such expenditure in relation to the exempted income under the Act 1961. Thus, precondition for applying Rule 8D of the Rules 1962, the Assessing Officer is required to be satisfied as provided in subsection 2 of Section 14A of the Act 1961. 8. In the aforesaid context, we may refer recent pronouncement of this Court in the case of Principal Commissioner of Income Tax Vs. Gujarat State Fertilizer and Chemical Ltd [(2019) 416 ITR 13 (Guj)], wherein this Court has observed as under: "17. This Court, in Shreno Limited (supra), has taken the view that Maxopp Investment Limited (supra) cannot be seen or understood to be fundamentally changing the understanding and interpretation of Section 14A and Rule 8D. It went on to hold ....