2020 (1) TMI 1568 - AT - Income Tax

Disallowance u/s 14A in computing the Book Profits u/sec 115JB - HELD THAT - Though the Revenue has raised the objections we found the Special Bench decision in the case of ACIT Vs. Vireet Investments Pvt. Ltd. 2017 (6) TMI 1124 - ITAT DELHI is superior and Tribunal was correct in accepting the view and granted the relief to the assessee. Hence we found no merits in the Misc. Petition filed by the Revenue and the Misc. Petition is dismissed.

Summary

Issues:
1. Rectification of order by the Tribunal regarding disallowance under Section 14A and addition in computing Book Profits u/sec115JB of the Income Tax Act, 1961.

Analysis:
The Appellate Tribunal, ITAT Bangalore, considered a Misc. Petition filed by the Revenue seeking rectification of the Tribunal's order. The Revenue contended that the Tribunal did not consider a co-ordinate bench decision, while the Tribunal had relied on a Special Bench decision in the case of ACIT Vs. Vireet Investment Pvt. Ltd. regarding disallowance under Section 14A and addition in computing Book Profits u/sec115JB. The Tribunal highlighted the observations made in the order, emphasizing that the disputed issue was the disallowance u/s 14A for determining Book Profits u/s 115JB. The Tribunal noted that the Ld AR substantiated the claim with judicial decisions and the Coordinate Bench decision, supporting the disallowance u/s 14A. The Tribunal concluded that the Special Bench decision in the case of ACIT Vs. Vireet Investments Pvt. Ltd. was superior, and the Tribunal was correct in accepting that view, ultimately granting relief to the assessee. Consequently, the Misc. Petition filed by the Revenue was found to have no merits and was dismissed.

In summary, the Tribunal's decision was based on the interpretation of provisions under Section 14A and Section 115JB of the Income Tax Act, 1961. The Tribunal considered the applicability of the computation provisions prescribed for the total income under normal provisions with reference to Section 14A while computing Book Profits under MAT provisions. The Tribunal found the Special Bench decision to be superior and upheld the view that the computation provisions for total income under normal provisions could be taken into consideration when computing Book Profits under MAT provisions. This analysis led to the dismissal of the Revenue's Misc. Petition, affirming the Tribunal's decision in favor of the assessee.