TaxTMI 
TaxTMI 
2024 (2) TMI 691
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....It filed its return of income on 26/11/2015 at the business loss of Rs. 600,614,160/- under the normal provisions of the income tax act and book profit was computed at Rs. 263,066,118/-. The return of income was picked up for scrutiny and the notices were issued. 3) The assessment order under section 143 (3) of the act was passed on 22/12/2017 wherein disallowance under section 14A read with rule 8D of the act was made of Rs. 705,409,746/- as per the normal computation of total income and further the identical amount was also added under the book profit computed under section 115JB of the act. Accordingly, the total income of the assessee as per normal computation was assessed at Rs. 104,795,586/- and it was computed at Rs. 96,84,75,864/-. 4) Assessee aggrieved with that has preferred an appeal before the learned CIT - A. The learned and CIT - A passed an appellate order on 31/7/2023 wherein the disallowance under section 14 A was restricted disallowance to the extent of exempt income while computing income as per normal computation and further while computing the book profit he restricted the addition to Rs. 112,000/- as same was offered by the assessee and agreed. 5) The....
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....e submitted that there is no error in the order of the learned CIT - A in restricting the disallowance under section 14 A of the act to the extent of the exempt income earned by the assessee relying on the decision of the State Bank of Patiala and Maxopp investment Ltd. He therefore submitted that when the learned CIT - A has followed binding judicial precedents, the order cannot be challenged. With respect to the adjustment made under the computation of book profit under section 115 JB of the act and submitted that issue is squarely covered in favour of the assessee by the decision of the special bench in case of Vireet investments private limited 82 taxmann.com 415. 11) Coming back to the issue in assessee's appeal he submitted that while working out disallowance under section 14 A [i] only those investments which have yielded exempt income during the year should only be considered and further [ii] when the own funds are more than the value of investments the disallowance of interest under rule 8D (2) (ii) cannot be made. For this proposition the learned authorised representative referred to the order of the coordinate bench in assessee's own case for assessment year 2014 - 15....
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....rplus amounting to Rs. 16,891 crores where the total value of the investment is only Rs. 14,892 crores which included the average of investment in equity and preference shares of the domestic company along with the value of dividend on mutual funds. On appraisal of above figures, it is clear that the assessee has more interest free funds available with it in the form of share capital and reserves and surplus then the amount of investment made which yielded tax free income during the year. Therefore, the presumption would be available in favour of the assessee that amount of investment made in such exempt income yielding investments are made of interest free funds available. Therefore, there could not have been any disallowance under rule 8D (2) (ii)of the income tax rules 1962 under section 14 A of the Act.Such a finding was given in the case of the assessee for assessment year 2014 - 15 by the coordinate bench vide order dated 25/10/2023. The same is also covered by the decision of honourable Supreme Court in case of South Indian bank Ltd versus CIT 130 taxmann.com 178.Accordingly, we hold that such disallowance made of Rs. 198,245,193/- by the learned assessing officer is not cor....
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.... taxmann.com 135 (Gujarat).accordingly we do not find any merit in the appeal of the learned assessing officer. 16) In result , for assessment year 2015-16 ITA number 3424/M/2023 filed by the learned assessing officer is dismissed and appeal number 3043/M/2023 of the assessee is allowed. 17) Now coming to the appeal of the assessee for assessment year 2018 - 19 in ITA number 3044/M/2023 and the cross appeal of the learned assessing officer in ITA number 3423/M/2023 against the order of the learned CIT - A. The issue involved in this appeal is also disallowance under section 14 A of the act. 18) The facts clearly the assessee did not any exempt income during the year and therefore while filing the return of income did not make any disallowance under section 14 A return of income. The learned assessing officer invoke the provisions of section 14 A and also computed the disallowance under rule 8D (2) (ii) of the act computed such disallowance at Rs. 1,682,398,967/-while computing taxable income of the assessee as per normal computation provisions. The AO also imputed the disallowance while working out taxable income to the provisions of section 115JB of the act. 19) Assess....