2026 (8) TMI 762

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....dated 23.04.2021 passed by the Assessing Officer ('AO' for short) for assessment year 2018-19. 2. The respondent-assessee is a company engaged in real estate development, leasing and licensing of premises, service centre, commodities trading, etc. The assessee filed its Return of Income (RoI) for the relevant year declaring NIL income after claiming carry forward of current year's loss of Rs. 30,58,35,626/-. The case was selected for scrutiny under CASS and statutory notices were issued asking the assessee to submit details/documents. 3. It is necessary to note that the respondent-assessee had suo moto disallowed an amount of Rs. 10,250/- towards expenditure for earning exempt income, viz. investment in certain equity shares and mutua....

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....made the twin disallowance of Rs. 6,51,77,331/- under Section 14A and Rs. 5,00,00,000/- under Section 35DD of the Act. The total income was assessed at (-) Rs. 18,17,75,889/-. The learned AO thereafter computed the book profits and arrived at the figure of adjusted book profits of (-) Rs. 40,18,14,804/- by virtue of the order passed under Section 143(3) r.w.s. 144B of the Act. 5. In appeal, it was contended on behalf of the assessee that the amendment brought about by the introduction of Explanation to Section 14A of the Finance Act, 2022 was prospective in nature. Reliance was placed on the decision of this Tribunal in assessee's own case for assessment year 2017-18 in which this Tribunal placing reliance on the decision of the Delhi Hi....

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....disallowance under Section 14A and 35DD cannot be added back to the book profits under Section 115JB of the Act. The learned CIT(A) has found in para 4.3.7 that these provisions do not find place in the exhaustive "add back" list provided under clauses (a) to (k) of Explanation 1 to Section 115JB(2) of the Act. 7. The assessee had not pressed ground nos. 5, 6 and 7 before the learned CIT(A), which were essentially computational in nature and which were decided in favour of the assessee in the rectification order dated 12.06.2025 passed by the AO under Section 154 of the Act. Thus, we are not concerned with these grounds in the present appeal. 8. The Revenue has challenged the order passed by the learned CIT(A) on the following grounds....

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.... parties. Perused record. 10. It is submitted by the learned DR that the disallowance under Section 14A of the Act could be added back while computing the book profits under Section 115JB of the Act in view of clause (f) of Explanation 1 to Section 115JB(2) of the Act. It is submitted that the impugned order passed by the learned CIT(A) ignores the fact that such adjustments are necessary to bring out the legislative intent for MAT provisions which aim to tax the real economic profit of a company. Insofar as the deletion of disallowance under Section 35DD of the Act is concerned, it is submitted that the learned CIT(A) after having held that the disallowance was properly made, could not have directed its deletion on the ground that the s....