TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 1841
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....d Representative appeared on behalf of assessee and Saurabh Kumar, Ld. Departmental Representative represented on behalf of Revenue. 2. The assessee has raised the following grounds of appeal: "1. That on the facts and circumstances of the case, the ld. CIT(A) erred in confirming the disallowance of Rs.19,23,063/- u/s 14A r.w.r 8D(2)(iii) in as much as the actual expenses debited to P/L A/c & claimed is Rs.51,669/-. 2. That on the facts & circumstances of the case the ld. CIT(A) erred in confirming the addition of Rs.19,52,849/- to book profit u/s 115JB. 3. That on the facts and circumstances of the case and without prejudice to Ground No.2. The addition to Book Profit should not exceed the actual expenses of Rs.51,669/- debited to P....
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....uneration Rs.16854/- Total Rs.51669/- Thus, the assessee submitted that the expenses under Rule 8D(2)(iii) of I.T Rules cannot exceed the expenses actually claimed by it in the P & L A/c. However, the ld. CIT(A) disregarded the contention of the assessee and confirmed the order of Assessing Officer by observing as under: "4.2 I am not in agreement with the views of the AR of the appellant. In his written submissions the AR has stated that the appellant has incurred a total expenditure of only Rs.51,699/- and he has cited case laws to argue that any disallowance cannot be made u/s 14A over and above the expenses claimed. In this context, I have examined the P&L account of the appellant for the period ending 31.03,2008 and I find that ....
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.... AO u/s 14A r.w.r 8D(2)(iii) of the I.T Rules which was subsequently confirmed by ld. CIT(A). 8. From the above discussion, we note that Assessing Officer can resort to make the disallowance u/s 14A of the Act r.w.r. 8D of the IT Rules, 1962 after having regard to the accounts of the assessee and feels dissatisfied with the correctness of the claim of the assessee. Thus, it is clear that the AO can make the disallowances of the expenses incurred in relation to exempt income in pursuance to the provisions as specified u/s 14A of the Act. On perusal of the facts of the present case, we note that the assessee has claimed indirect/administrative expenses during the year to the tune of Rs.51,669/- only. Thus, it is undoubtedly clear that actual....
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....ance made u/s 14A r.w.r 8D under the normal computation of income cannot be imposed to the computation of income determined u/s 115JB of the Act. However, the ld. CIT(A) disregarded the contention of the assessee and confirmed the AO by observing as under: 6.2 I have examined the submission of the AR of the appellant and perused the assessment order. The case laws quoted above by the AR of the appellant are relevant. However, in a subsequent decision, the ITAT Mumbai at ITA No.7546/Mum/2011 and ITA No.6678/Mum/2011 for Assessment Year 2008-09 in the case of ITO vs. RBK Share Broking dated 24/07/2013 has held that the amount disallowable u/s 14A was always a part of expenses specifically debited to P&L Account and hence covered under the cl....
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....sallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Act. Relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 of section 115JB of the Act. However it is also ....