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2016 (10) TMI 393 - AT - Income TaxDisallowance of expenses u/s 14A - Held that - We find that the ld. CIT(A) has passed the order after taking into account the complete matter and reduced the disallowance to ₹ 759,39,128/-. We are in agreement with the ld.CIT(A) that the rule 8D is not applicable in the current assessment year as the same is effective from the assessment year 2008-09 and reasonable basis has to be followed in order to work out the disallowance u/s 14A of the Act. Thus, finding no infirmity in the order of ld. CIT(A) on this issue of disallowance of expenses u/s 14A. We find that the appeal filed by the department on this issue cannot be allowed and accordingly this ground of appeal is dismissed. Disallowance made under section 14A while computing the book profit under the provisions of section 115JB deleted MAT computation - interest u/s 234B - Held that - AO is directed to recomputed interest u/s 234B by excluding MAT liability arising due to retrospective amendment in the provisions of section 115JB
Issues:
1. Disallowance under section 14A of the Income Tax Act, 1961. 2. Addition made by AO for computing book profit under section 115JB of the Act. 3. Charging of interest under section 234B of the Act. Issue 1 - Disallowance under section 14A: The appeal was against the order passed by the Ld.CIT(A) for the assessment year 2006-07. The main issue raised was regarding the disallowance under section 14A of the Income Tax Act, 1961. The AO disallowed &8377; 8,94,26,131/-, which was reduced to &8377; 7,59,39,128/- by the Ld.CIT(A). The Ld.CIT(A) observed that Rule 8D was not applicable for the current assessment year, and a reasonable basis should be followed for the disallowance u/s 14A. The disallowance was confirmed to the extent of &8377; 7,59,39,128/-. The Tribunal upheld the decision of the Ld.CIT(A) and dismissed the appeal filed by the department on this issue. Issue 2 - Addition for computing book profit under section 115JB: The second issue was the addition made by the AO for computing book profit under section 115JB of the Act. The Ld.CIT(A) deleted the addition of &8377; 8,94,26,131/- made under section 14A while computing the book profit. This decision was based on a previous order of the co-ordinate Bench of the Tribunal. The Tribunal upheld the decision of the Ld.CIT(A) on this issue as well, stating that the current year was not covered by the relevant explanation to section 115JB. Issue 3 - Charging of interest under section 234B: The third issue raised was regarding the charging of interest under section 234B for the inclusion of various items in computing profit under section 115JB of the Act. The Ld.CIT(A) held that interest u/s 234B should not be charged in this scenario. This decision was based on a previous order of the ITAT. The Tribunal upheld the decision of the Ld.CIT(A) on this issue, directing the AO to recompute interest u/s 234B by excluding MAT liability arising due to retrospective amendment in the provisions of section 115JB. In conclusion, the Tribunal dismissed the appeal of the revenue on all three issues, upholding the decisions of the Ld.CIT(A) based on legal precedents and the specific circumstances of the case.
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