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TMI Blog2013 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... nder normal provision while determining whether tax under normal provision or as per book profit u/s 115JB is payable by the assessee. 3.1. The CIT(A) did not appreciate the fact that section 115JB seeks comparison between the income tax payable on the total income as computed under the Act having taken into account all deductions exemptions and rebates provided in the Act and tax computed by taking 10% of book profit after making prescribed adjustments and replaces tax payable on the basis of book profit, if 10% of the same exceeds the tax payable under the normal provisions of the Act. 4. The appellant craves leave to add, to alter or amend any grounds of the appeal raised above at the time of hearing. 2. The brief facts of the case are that the assessee company filed its return of income on 30.9.2008 declaring total income of Rs.37,36,139/- and tax payable at nil after claiming rebate u/s 88E of the Income Tax Act, 1961 of Rs.11,20,842/-. The deemed total income declared u/s 115JB and tax payable thereon as per return are Rs.39,29,145/- and Rs.3,92,915/- respectively. The case of the assessee was selected for scrutiny. During assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred, no nexus between the investment and availability of interest free funds has been established. This failure on the part of the appellant company itself is sufficient to hold that the accounts maintained by the appellant company do not present correct picture of its business affairs. Therefore, I am not persuaded by the arguments of the Id. counsel for the appellant that no expenditure in relation to earning of dividend income was incurred by the assessee company. Therefore, I am of the firm view that disallowance in terms of clauses (ii) & (iii) of sub-rule (2) of rule 8D was called for on the facts and in the circumstances of the present case. Needles to say that the Hon'ble Mumbai High Court has also upheld the authority of the Id. AO to make disallowance of reasonable amount even in the years where Rule 8D was held to be in-applicable. Undisputedly, the provisions of the aforesaid rule are applicable to the facts of the present A Y and therefore, the action of the AO in taking recourse to the provisions of the said rule is being sustained. However, as regards quantum of disallowance, I find that what is to be considered for disallowance is the net interest expenditure and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 115JB or with regard to imposition of STT. In light of the foregoing discussion, the issue in question is allowed in favour of the appellant company and the AO is directed to delete the addition on account of MAT. 5. Aggrieved, the revenue is in appeal before us. 6. At the outset, the Ld DR took us to page 2 & 3 of assessment order and argued that Assessing Officer has rightly taken the amount of interest debited in P&L Account for calculation of disallowance as per provisions of Rule 8D. He further argued that there is no provision in the rule which says that net interest is to be considered for calculation of disallowance. 7. With respect to third ground of appeal, the Ld DR submitted that the same was covered against the revenue in I.T.A. No.4113/Del/2010 vide order dated 23.12.2011 and further submitted that Hon'ble Karnataka High Court in the case of CIT v. Horizon Capital Ltd. 245 CTR 601 has also held the similar view which is against the revenue. 8. The Ld AR arguing the second ground submitted that initially no disallowance was offered u/s 14A and on the insistence of Assessing Officer the same was computed and Assessing Officer did not find any de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd., cited supra. ITAT has decided the issued by relying on the decision of ITAT, Bangalore 'A' Bench in the case of M/s. Horizon Capital Ltd. vs. ITO in ITA No.592/(BHG)/10 dated 16.07.2010 and in this order, the ITAT, Bangalore 'A' Bench has held as under :- Having heard both the parties and having considered the rival contentions, we find that the only dispute is whether the rebate of STT paid by the assessee is allowable from the income tax computed against the total income computed under section 115JB of the Income Tax Act, 1961. The term 'total income' has been defined under the Income Tax Act, 1961 as "the total amount of income referred to in section 5, computed in the manner laid down in this Act." Section 5 of the Income Tax Act, 1961 defines the scope of the total income of a resident or a non-resident person. The total income of the assessee has to be computed under the regular provisions of the Income Tax Act, 1961 and in the case of a company it can be arrived at both under the regular provisions of the Income Tax Act and under the deeming provision under section 115JB of the Act. It has been provided that where the income tax payable by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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