TaxTMI 
TaxTMI 
2024 (3) TMI 826
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...., 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2014-15. 2. The interconnected issue raised by the assessee in ground numbers 1 to 6 is that the Ld. CIT(A) erred in confirming the order of the AO by sustaining the addition of Rs. 99,34,511/- under the provisions of section 14A r.w. Rule 8D of Income Tax Rules. 3. The AO during the assessment proceedings found that the assessee has shown exempted income of Rs. 1,08,650/- only but no disallowance against such exempted income was made under the provision of section 14A r.w. Rule 8D of Income tax Rules. Therefore, the AO made the disallowance u/s 14A r.w. rule 8D of Income Tax Rules for Rs. 88,01,957/- and Rs. 11,32,554/- on account of interest and administ....
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.... assessee] 8.1 Likewise, the Hon'ble SC in the case of Craft Builder Construction private limited reported in 112 taxmann.com 322 has held as under: SLP dismissed against High Court ruling that disallowance under section 14A cannot exceed exempt income of relevant year. 8.2 Now coming to the facts of the case on hand, admittedly the exempted income is of Rs. 1,08,650/- only and therefore, respectfully following the judgments as discussed above, the disallowance cannot exceed the amount of exempted income. Hence, the ground of appeal of the assessee is partly allowed. 9. The next issue by the assessee in ground No. 7 is that the Ld. CIT(A) erred in confirming the order of the AO by making addition to the book profit u/s 115JB of the....
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....llowance while determining the net profit u/s 115JB of the Act. The 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." 14.1 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus, it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expense as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 14.2 However, it is pertinent to note that the disallowance ne....
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....determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we note that there is no mechanism/ manner given under clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore, in the given facts & circumstances, we feel that an ad-hoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus, we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving....