2020 (7) TMI 842 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - HELD THAT - We find that the claim of the assessee was allowed on the basis of the decision of the Hon ble ITAT in the assessee s own case for the A.Y.2008-09, 2009-10, 2010-11, 2011-12 2012-13 2014 (1) TMI 1183 - ITAT MUMBAI , 2016 (3) TMI 1351 - ITAT MUMBAI , . 2016 (3) TMI 1387 - ITAT MUMBAI and 2018 (7) TMI 2141 - ITAT MUMBAI The issue has already been allowed by the Hon ble ITAT in the assessee s own case. No law contrary to the law relied by the Hon ble ITAT as well as by the CIT(A) in his order has been produced before us. We nowhere found any material to interfere with the finding of the CIT(A). We are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Applicability of the provisions u/s 14A r.w.r 8D while computing the Book Profit u/s 115JB - CIT(A) has decided the matter of controversy on the basis of decision in the case of ACIT Vs. Vireet Investment P. Ltd. 2017 (6) TMI 1124 - ITAT DELHI It is specifically held that the provisions u/s 14A r.w.r 8D is not applicable while computing the book profit u/s 115JB. No law contrary to the law relied by the CIT(A) in his order has been produced before us. CIT(A) has correctly applied the decision in the case of ACIT Vs. Vireet Investment P. Ltd.(supra). The facts are not distinguishable.

Summary

Issues Involved:

1. Disallowance under Section 14A read with Rule 8D.
2. Applicability of Section 14A while computing Book Profit under Section 115JB.
3. Delay in pronouncement of the order due to COVID-19 pandemic.

Issue-wise Detailed Analysis:

1. Disallowance under Section 14A read with Rule 8D:

The primary issue in this case was whether the Commissioner of Income Tax (Appeals) [CIT(A)] erred in restricting the disallowance made by the Assessing Officer (AO) under Section 14A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962. The AO had disallowed a sum of Rs. 3,49,64,447/- as expenditure incurred to earn exempt income. The CIT(A), however, restricted this disallowance based on the assessee's past cases where the Income Tax Appellate Tribunal (ITAT) had held that a reasonable allocation of expenditure should be made. The CIT(A) relied on the ITAT's decisions in the assessee's own cases for previous assessment years, where similar disallowances were made and subsequently reduced by the Tribunal. The Tribunal found no reason to interfere with the CIT(A)'s decision, as it was consistent with the Tribunal's earlier rulings in the assessee's own cases.

2. Applicability of Section 14A while computing Book Profit under Section 115JB:

The second issue was whether the disallowance under Section 14A should be added back while computing the Book Profit under Section 115JB of the Income Tax Act. The CIT(A) deleted the addition made by the AO under this section, relying on the decision of the ITAT Special Bench in the case of ACIT vs. Vireet Investment P. Ltd., which held that disallowance under Section 14A cannot be added back while computing Book Profit as per Section 115JB. The Tribunal upheld the CIT(A)'s decision, agreeing that the provisions of Section 14A read with Rule 8D are not applicable for computing Book Profit under Section 115JB. The Tribunal found that the CIT(A) had applied the correct legal principles, and no contrary law was presented by the revenue.

3. Delay in Pronouncement of the Order due to COVID-19 Pandemic:

The pronouncement of the order was delayed due to the nationwide lockdown imposed by the Government of India in response to the COVID-19 pandemic. The Tribunal explained that although the order was drafted and approved before the expiry of the 90-day period prescribed by Rule 34(5) of the Income Tax (Appellate Tribunal) Rules, 1963, the lockdown led to unprecedented disruption of judicial work, making it impractical to pronounce the order within the stipulated time. The Tribunal cited the decision in DCIT vs. JSW Limited, where it was held that the period of lockdown should be excluded when computing the limitation period for pronouncing orders. Consequently, the Tribunal proceeded with the pronouncement after the reopening of offices, considering the pandemic as an extraordinary circumstance.

Conclusion:

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision on both the disallowance under Section 14A and its non-applicability while computing Book Profit under Section 115JB. The Tribunal also justified the delay in pronouncement due to the exceptional circumstances created by the COVID-19 pandemic.