2015 (2) TMI 1263 - HC - Income Tax

Disallowance u/s. 14A read with Rule 8D - tribunal restoring the issue of disallowance u/s. 14A to the file of the Assessing to decide afresh - Held that - Tribunal has merely followed the decision of this Court in Godrej & Boyce Manufacturing Co. Ltd. v/s. DCIT 2010 (8) TMI 77 - BOMBAY HIGH COURT directing the Assessing Officer to work out the disallowance on a reasonable basis and not under Rule 8D under the Income Tax Rules for the Assessment Year 200708. The Tribunal has merely followed the decision of the jurisdictional High Court and no fault can be found with the same. Accordingly, no substantial question of law arises in Question (a). Hence dismissed. Disallowance u/s 14A to be added to arrive at book profit for purposes of Section 115JB - MAT computation - Held that - The impugned order of the Tribunal followed its decision in M/s. Essar Teleholdings Ltd. v/s. DCIT 2013 (5) TMI 116 - ITAT MUMBAI to held that an amount disallowed under Section 14A of the Act cannot be added to arrive at book profit for purposes of Section 115JB of the Act. The Revenue s Appeal against the order of the Tribunal in M/s. Essar Teleholdings (supra) was dismissed by this Court 2015 (5) TMI 810 - BOMBAY HIGH COURT - For , question (b) does not raise any substantial question of law.

Summary

Issues:
1. Disallowance under Section 14A of the Income Tax Act, 1961
2. Addition under clause (f) of Explanation 1 to Section 115JB

Analysis:

Issue 1: Disallowance under Section 14A
The appellant challenged the Tribunal's order regarding the disallowance under Section 14A for the Assessment Year 2007-08. The Tribunal had directed the Assessing Officer to calculate the disallowance on a reasonable basis, not under Rule 8D, following the decision of the High Court in Godrej & Boyce Manufacturing Co. Ltd. v/s. DCIT 328 ITR 81. The High Court found that the Tribunal's decision was in line with the jurisdictional High Court's ruling and upheld it. Therefore, the Court dismissed the appeal on this issue, stating that no substantial question of law arose.

Issue 2: Addition under clause (f) of Explanation 1 to Section 115JB
Regarding the addition under clause (f) of Explanation 1 to Section 115JB, the Tribunal had relied on its decision in M/s. Essar Teleholdings Ltd. v/s. DCIT to hold that the amount disallowed under Section 14A cannot be added to calculate the book profit under Section 115JB. The Revenue's appeal against this decision was previously dismissed by the High Court in a separate case. As a result, the High Court concluded that this issue did not raise any substantial question of law. Consequently, the Court dismissed the appeal on this issue as well.

In conclusion, the High Court of Bombay dismissed the appeal under Section 260A of the Income Tax Act, 1961, challenging the Tribunal's order for the Assessment Year 2007-08. The Court upheld the Tribunal's decisions on both issues raised by the Revenue, finding that they were in accordance with the law and previous judicial rulings.