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TMI Blog2014 (11) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... Book profit u/s 115JB of the Act, allowing the deduction u/s 10B of the Act to the tune of Rs. 3,49,38,911/-, even though the Certificate given in Form 56G shows the deduction u/s 10B of the Act at NIL amount and e) Directing the AO to allow set off of loss brought forward from assessment year 2006-07, even though the AO has computed positive income u/s 143(3) of the Act. 3. The facts relating to the case are stated in brief. The Assessee company is engaged in the business of manufacturing intermediates of Active Pharma Ingredient (API). The AO computed the total income under regular provisions of the Act by making various disallowances. In the similar manner, the AO also computed the book profit u/s 115JB by altering/rejecting various claims made by the assessee. In the appellate proceedings, the ld. CIT(A) granted relief to the assessee and in respect of the same, the Revenue has filed this appeal before us. 4 The first and third issue pertains to disallowance made u/s 14A of the Act while computing income under regular provisions of the Act and while computing Book Profit under sec. 115JB of the Act. The Assessee had disclosed tax free dividend income of Rs. 10.34 lakhs in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 in view of the decision of Hon'ble Jurisdictional High Court in case of Godrej Boyce Ltd. However, the Hon'ble High Court has given sanction to the Revenue Authorities to compute disallowance on a reasonable basis. The appellant's working of Rs. 13,554/- as disallowance does not appear to be reasonable. For earning a dividend income certain amount of human resources is deployed and so it would be fair to attribute 2% of the expenditure in salary, wages and bonus to be that which can be attributed for managing the investments and the corresponding dividend income. This comes to Rs. 3,38,679/-. Further, though the dividend is credited to the Bank directly, but certain portion of bank charges can be attributed for rendering this service. Thus, 5% of bank charges can be linked to earning of dividend income and the same comes to Rs. 8,062/-. Rest of the expenditure debited to the Profit & Loss Account do not have any proximate or immediate nexus for earning of income not chargeable to tax and so they are not being touched. To sum up, the total disallowance comes to Rs. 3,46,741/-. Since the appellant has already offered Rs. 13,554/-, hence the net disallowance which can be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue. As stated earlier, the AO has recorded in the computation portion of the assessment order that the loss pertaining to 10B unit is not allowed to be carried forward as the same pertains to exempted income. On the contrary, the ld. CIT(A) has, after examining the provisions of section 10B, noted that the provisions of section 10B uses the expression "deduction" for five times and hence the deduction claimed u/s 10B should be construed as a deduction only and not as exemption. Accordingly, the ld. CIT(A) has reversed the decision of the AO and allowed the said loss to be carried forward. 11. We notice that the provisions relating to set off of loss and also carry forward of loss are provided in the Act in sections 70 to 75 of the Act. In some cases, the bar or restriction, if any, is provided in the same section itself or in some other relevant section. We notice that the assessing officer has not drawn support of any of the provisions of the Act or any other authority in support of his decision. We notice that the Ld CIT(A) has allowed the relief by holding that the deduction provided u/s 10B falls in the category of "deduction" and not under the category of "exemption". In e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) and also the decision rendered by the ITAT in the cases of DCIT Vs. Rocksy Investments Pvt Ltd (24 SOT 227)and Mosebear India Ltd Vs. DCIT (17 SOT 510), held that the assessee is eligible to claim of deduction u/s 10B while computing Book Profit u/s 115JB of the Act. Revenue is aggrieved by the said decision. 13. We have heard the parties on this issue. It is true that the Form No.56G submitted by the Assessee shows that the Assessee is not eligible for deduction u/s 10B of the Act. However, it has been held in many decisions that the computation of book profit u/s 115JB is altogether a separate exercise. It is now well established that section 115JB is a separate code by itself and the book profit has to be computed as per the methodology provided in that section. For that purpose, the profit and loss account is required to be prepared as per part II and Part III of Schedule VI of the Companies Act. The Delhi Bench of the Tribunal in the case of Moserbear India Ltd V/s DCIT (supra) has held that, while computing the profit u/s 115JB, the reference is to be made only to profit and loss account prepared in accordance with Companies Act, 1956. It was further held that while compu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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