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2019 (9) TMI 402 - AT - Income TaxDisallowance of expenditure u/s 14A - no dividend income earned - HELD THAT - Since, the assessee has not earned any dividend income in the assessment years under consideration, we are of the considered opinion that the ld. CIT(A) has rightly followed the decision of the Hon ble Jurisdictional High Court in the case of Redington (India) Ltd. v. Addl. CIT 2017 (1) TMI 318 - MADRAS HIGH COURT and directed the Assessing Officer to delete the addition. DR could not controvert the above judgement. MAT - disallowance under section 14A for book profit calculation under section 115JB - HELD THAT - In the case of ACIT v. Vireet Investment (P) Ltd. 2017 (6) TMI 1124 - ITAT DELHI the Delhi Special Bench of the Tribunal has given a categorical findings that the computation under clause (f) of Explanation 1 to section 115JB(2) of the Act is to be made without resorting to computation as contemplated under section 14A read with rule 8D. By following the above decisions, the ld. CIT(A) directed the Assessing Officer to exclude the disallowance under section 14A r.w. rule 8D while computing MAT under section 115JB of the Act. The ld. DR could not controvert the above decisions of the Tribunal. Revenue appeal dismissed.
Issues:
1. Disallowance under section 14A of the Income Tax Act, 1961 r.w. Rule 8D for assessment years 2013-14 & 2014-15. 2. Disallowance under section 14A for book profit calculation under section 115JB of the Act. Issue 1: Disallowance under section 14A of the Income Tax Act, 1961 r.w. Rule 8D for assessment years 2013-14 & 2014-15: - The Revenue appealed against the CIT(A)'s order restricting disallowance under section 14A r.w. Rule 8D to the extent of exempt income earned and deleting the addition made to book profits under section 115JB of the Act. - The Assessing Officer determined disallowance under section 14A r.w. Rule 8D even though no exempt income was earned based on CBDT Circular No. 5 of 2014. - The CIT(A) directed the Assessing Officer to delete the addition based on the decision of the Hon’ble Jurisdictional High Court in a relevant case. - The Tribunal upheld the CIT(A)'s decision, citing that where no exempt income was earned, there cannot be any disallowance under section 14A of the Act, as per the relevant court decision. - The Tribunal dismissed the Revenue's appeal for both assessment years, as the assessee had not earned any exempt income during the years in question. Issue 2: Disallowance under section 14A for book profit calculation under section 115JB of the Act: - The Revenue appealed against the exclusion of disallowance under section 14A r.w. Rule 8D for calculating MAT under section 115JB of the Act. - The Assessing Officer included the disallowance under section 14A while computing MAT under section 115JB. - The CIT(A) directed the Assessing Officer to exclude the disallowance under section 14A r.w. Rule 8D for MAT calculation, following various decisions. - The Tribunal referred to decisions in similar cases and the Delhi Special Bench's findings to support excluding disallowance under section 14A for MAT calculation under section 115JB. - The Tribunal dismissed the Revenue's appeal, stating that the issue was covered by previous decisions and found no fault in the CIT(A)'s order on this matter. In conclusion, the Tribunal dismissed both appeals filed by the Revenue, upholding the decisions of the CIT(A) regarding the disallowance under section 14A of the Income Tax Act, 1961 and its impact on book profit calculation under section 115JB of the Act for the relevant assessment years.
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