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TMI Blog2013 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... amount disallowable u/s 14A is covered under clause (f) of Explanation (1) to section 115JB(2) - Following Esquire P. Ltd, Mumbai [2012 (9) TMI 134 - ITAT MUMBAI] - Decided against assessee. Rebate u/s 88E - Held that:- The learned CIT(A) directed to allow rebate u/s 88E subject to the provisions u/s 87(2) as relevant to assessment year 2008-2009 - Decided against Revenue. - ITA No.7546/Mum/2011, ITA No.6678/Mum/2011 - - - Dated:- 24-7-2013 - Shri R. S. Syal, AM And Dr. S. T. M. Pavalan, JM,JJ. For the Petitioner : Shri S. D. Srivastava (CIT-DR) For the Respondent : Shri Prakash K. Jotwani ORDER Per R. S. Syal (AM) : These two cross appeals - one by the assessee and the other by the Revenue - arise out of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. It is in the background of this scenario that the disallowance at 0.5% has been made towards expenses other than interest. As this disallowance has been computed as per the mandate of Rule 8D, which is applicable for the year under consideration, we see no reason to interfere with the impugned order on this issue. This ground is not allowed. 4. Second ground of the assessee's appeal is as under:- "The learned Commissioner of Income-tax (Appeals) erred in conforming addition of Rs. 7,39,752/- made while computing book profit u/s 115JB ignoring the fact that Supreme Court in the case of Apollo Tyres Ltd. held that book profit prepared in accordance with Schedule VI of the Companies Act cannot be disturbed." 5. Pursuant to the mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 115JB is computed as per Explanation (1) to sub-section (2) of section 115JB. This Explanation provides that "book profit" means net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by certain amounts specified under clauses (a) to (i) if debited to the profit and loss account and clause (j) if not credited to the profit and loss account. The amount so determined is further adjusted by reducing the amounts specified in clauses (i) to (vii). The amount which eventually results is the amount of book profit' on which tax liability is determined u/s 115JB. Clause (f) to Explanation (1) provides that the net profit shown in the profit and loss account shall be increased b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5JB(2). He stated that since the disallowance u/s 14A is computed as per rule 8D, the origin of the expenses disallowed cannot be traced to the profit and loss account and hence it cannot be covered within the mischief of clause (f) of the Explanation. We fail to find any logic in this submission because of the clear language of the Explanation 1, which provides in unequivocal terms that the amount of expenditure relatable to' the exempt income shall be added back. Neither the language of clause (f) expressly refers to the amount specifically debited to the profit and loss account nor there can be an implication in this regard. What has been contemplated by the provision is the amount of the expenditure relatable to' the exempt income. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he held that the benefit of rebate u/s 88E could not be allowed. The learned CIT(A) directed to allow rebate u/s 88E subject to the provisions u/s 87(2) as relevant to assessment year 2008-2009. In reaching this conclusion he relied on certain decisions including an order passed by the Bangalore Bench of the Tribunal. 8. Having heard the rival submissions and perused the relevant material on record, we find that the learned CIT(A) was right in directing the Assessing Officer to allow rebate u/s 80E subject to amended sub-section (2) of section 87. The learned Departmental Representative was fair enough not to press this point beyond the limit. As the direction is only for allowing the rebate after verification as per law applicable for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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