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2014 (11) TMI 1169 - HC - Income TaxDisallowance u/s 14A - Held that - Tribunal has erred in law in upholding the order of CIT (Appeals) restricting the disallowance under section 14A from ₹ 2,20,15,787/- to ₹ 5,47,433/- relying on the decision of Godrej & Boyce manufacturing Ltd. vs. CIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) Disallowance u/s 14A not to be considered for book profit for calculation of book profit u/s 115JB - Held that - We accept the submission of assessee that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act.
Issues:
1. Disallowance under section 14A of the Income Tax Act 2. Disallowance under Section 14A not considered for book profit calculation under Section 115JB 3. Addition of notional interest on stricky loans 4. Deletion of addition related to agricultural income 5. Depreciation on plant and machinery purchased from NABARD 6. Perversity in the conclusion arrived at by the Tribunal Analysis: 1. The appellant challenged the order of the Tribunal regarding the disallowance under section 14A of the Income Tax Act. The Tribunal had restricted the disallowance, and the appellant questioned the decision based on a specific case law. However, the High Court found no substantial question of law involved in this issue, considering it a question of fact, and also took into account the respondent's cross-objection. 2. The issue of disallowance under Section 14A not being considered for book profit calculation under Section 115JB was raised. The High Court noted that the department had accepted the position in previous orders and appeals, and the issue had been decided in a prior judgment for a different assessment year. The High Court did not find any need to address this issue further. 3. The Tribunal's decision to uphold the order regarding the addition of notional interest on stricky loans was questioned. The High Court observed that the department had not challenged this aspect previously, and the issue had been addressed in a different judgment for another assessment year. Therefore, the High Court did not find any grounds to interfere with this decision. 4. The deletion of the addition related to agricultural income was contested by the appellant. The High Court referred to a previous judgment in a similar case and noted that the matter had already been decided. As a result, the High Court did not find any reason to overturn the Tribunal's decision on this issue. 5. The appellant raised concerns about the depreciation on plant and machinery purchased from NABARD. The High Court examined the relevant provisions of the Income Tax Act and found that the computation of expenditure related to exempted income must be made as per the Act. The High Court remanded the matter to the Tribunal for proper computation based on the Act's provisions. 6. Lastly, the appellant alleged perversity in the Tribunal's conclusion. The High Court considered the arguments presented but did not find any merit in the appellant's contentions. The High Court disposed of the application, appeal, and cross-objection based on the analysis of the various issues raised.
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