TaxTMI 
TaxTMI 
2022 (4) TMI 868
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....w. Rule 8D. The disallowance also made for Rs..34,28,05,564/- while computing book profit under section 115JB of the Act towards expenditure related to exempt income. On appeal, the ld. CIT(A) directed the Assessing Officer to exclude the investments made by the assessee in subsidiary companies after proper verification from the calculations in the Rule 8D(2) r.w. section 14A in computing the regular income. As regards the disallowance made under section 14A r.w. Rule 8D in computing the book profit under section 115JB of the Act, the ld. CIT(A) deleted the addition. Against the order passed by the ld. CIT(A), the assessee as well as Revenue preferred appeal before the Tribunal. Vide order in I.T.A. No. 326/Mds/2016 dated 05.08.2016, the Tribunal remitted the matter back to the file of the Assessing Officer for re-examination. 2.2 In view of the order of the Tribunal, the Assessing Officer issued a notice to the assessee for hearing. After considering the submissions of the assessee and examination of the details filed, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 254 of the Act by recomputing the income of the assessee at Rs..3,48,31,838/- after....
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....risdictional High Court, which is still pending, it was pleaded that the order of the ld. CIT(A) be set aside and that of the Assessing Officer be restored. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including the case law relied on by the assessee. In this case, the assessee is engaged in the business of investment promotion and during the year, the assessee has earned dividend income of Rs..17,10,42,084/-. In the return of income, the assessee has suo motu disallowed Rs..8,000/- under section 14A of the Act. However, the Assessing Officer disallowed an additional amount of Rs..34,28,05,564/-. However, while making additional disallowance under section 14A of the Act, the Assessing Officer has not recorded any satisfaction as to how the claim of the assessee was incorrect and had resorted to the provisions under section 14A r.w. Rule 8D. By relying upon decision of the Tribunal in assessee's own case for the assessment year 2013-14, wherein, the decision in the case of Maxopp Investment Ltd. v. CIT (supra) has been followed, the ld. Counsel for the assessee has prayed for following the order of the ....
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....ing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/ making the investment in shares is to be examined by the Assessing Officer''. Recently, the Co-ordinate Bench of the Tribunal to which one of us i.e. the Accountant Member is the author of the order, in the case of City Union Bank Ltd vs. Assistant Commissioner of Income Tax, (2019) 74 ITR Trib (644) Chennai held as follows:- "As regards to other limb of the argument of the assessee that in the absences of any finding by the Assessing Officer as to how the contention of the assessee that no expenditure was incurred is incorrect no disallowance should be made. We find from the assessment order that the assessee bank itself has offered a sum of Rs.2,19,751/- under the provisions of Section 14A of the Act. From the perusal of the order of the Assessing Officer, it is clear that the Assessing Officer had not assigned any reason whatsoever as to how the claim of the assessee is incorrect. In the similar facts, the Hon'ble Supreme Court ....
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....ainst the voluntary disallowance made under section 14A of the Act by the assessee, the Assessing Officer has not recorded any satisfaction as to how the disallowance voluntarily made by the assessee is not correct and moreover, the Assessing Officer has not given any findings in the assessment order with regard to the correctness in respect of expenditure incurred to earn exempt income. The ld. DR could not controvert the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), which was followed by the Coordinate Benches of the Tribunal in assessee's own case for the assessment year 2013-14 to decide the issue in favour of the assessee. Thus, respectfully following the decision of the Coordinate Benches of the Tribunal in assessee's own case for the assessment year 2013-14 as well as the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT (supra), we hold that the Assessing Officer was not justified in making disallowance under section 14A of the Act. Thus, the ground raised by the assessee is allowed. 6.1 However, the only objection raised by the ld. DR is that the issue of recording satisfaction has been raised....
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....uestion of law raised before the Hon'ble Karnataka High Court is reproduced as under: "Whether the tribunal is justified in law in holding that the indirect expenditure disallowed under Section 14A read with rule 8D(iii) of Rs. 24,64,632/- in computing the total income under normal provisions of the Act, is to be added to the net profit in computation of book profit for MAT purposes under Section 115JB and thereby importing the provision of Section 14A read with rule 8D into the MAT provisions on the facts and circumstances of the case?" 7.4 After considering the arguments of the both sides, the Hon'ble Karnataka High Court has observed and held as under: "6. We have considered the submissions made on both sides and have perused the record. Before proceeding further, it is apposite to take note of relevant extract of Section 115JB of the Act, which reads as under: 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April,....
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....ed back to book profit under clause (f) of Section 115JB of the Act. It is also pertinent to mention here that similar view, which has been taken by this court in Gokaldas Images (P) Ltd. supra was also taken by High Court of Bombay in 'The Commissioner of Income Tax-8 Vs. M/s. Bengal Finance & Investments Pvt. Ltd.', I.T.A. No. 337/2013. It is pertinent to note that in Rolta India Ltd., the Supreme Court was dealing with the issue of chargeability of interest under Section 234B and 234C of the ct on failure to pay advance tax in respect of tax payable under Section 115JA/ 115JB of the Act and therefore, the aforesaid decision has no impact on the issue involved in this appeal. Similarly, in MAXOPP Investment Ltd., supra the Supreme Court has dealt with Section 14A of the Act and has not dealt with Section 115JB of the Act. Therefore, the aforesaid decision also does not apply to the fact situation of the case. In view of preceding analysis, the substantial questions of law framed by a bench of this court are answered in favour of the assessee and against the revenue. In the result, the order passed by the tribunal dated 09.01.2015 insofar as it pertains to the findings ....