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TMI Blog2016 (5) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... that 1% of the exempt income alone should be disallowed u/s.14A of the Act. MAT applicability - Held that:- provisions of section 115JB of the Act are not applicable to the assessee which is a banking company. X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rule could be applied only with effect from the Assessment Year 2008-09. Further, the Bombay High Court also observed in the above-referred case that the Assessing Officer would first be required to check the concerned assessee's offer of disallowance and only after recording his dissatisfaction, if any, the Assessing Officer could commute the amount to be disallowed in accordance with sub-section (2) of section 14A. The Assessee submitted that the above-referred subsection (2) of section 14A was inserted by the Finance Act, 2006, with effect from the Assessment Year 2007-08. It was pointed out that the present case of the Assessee's being one for the Assessment Year 2003-04, there cannot be any applicability of the above-referred sub-section (2) of section 14A of the Act read with Rule 8D of the Rules in the Assessee's case for the Assessment Year 2003-04. Hence, the Assessee submitted that the computation of alleged disallowable sum made by the Assessing Officer after applying Rule 8D, should be held to bad. Without prejudice to the above, the Assessee submitted that while computing the disallowable sum u/s 14A the Assessing Officer took into account all the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3019 of 2012 in ITA No.243 of 2012 dated 4.1.2013 held that computation of 1% of exempt income as disallowance u/s.14A of the Act was proper. 7. We have considered the rival submissions. The Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010J 328 ITR 87(Bom) has held that Rule 8D could not be considered as retrospective and the said Rule could be applied only with effect from the Assessment Year 2008-09. Further, the Bombay High Court also observed in the above-referred case that the Assessing Officer would first be required to check the concerned assessee's offer of disallowance and only after recording his dissatisfaction, if any, the Assessing Officer could commute the amount to be disallowed in accordance with sub-section (2) of section 14A. The abovereferred subsection (2) of section 14A was inserted by the Finance Act, 2006, with effect from the Assessment Year 2007-08. The Assessee's case being for the Assessment Year 2003-04, there cannot be any applicability of the above-referred subsection (2) of section 14A or Rule 8D in the Assessee's case for the Assessment Year 2006-07. In the given circumstances, the quantum of disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent the same was not acceptable to the Assessee, the Assessee challenged the same before CIT(A). To the extent the Assessee was not successful before CIT(A), the Assessee preferred further appeal before the Hon'ble ITAT in ITA No.2486/Kol/2007. The grounds raised by the Assessee before ITAT was as follows: "8. That the Ld.CIT(A) was unjustified in confirming the addition made by the ld. A.O. of the following ascertained liabilities in computing the book profit for MAT purposes. Amount (Rs.) (i) Provision for Bad & Doubtful Debt 1,73,13,11,000 (ii) Provision for Standard asset 4,50,77,500 (iii) Provision for depreciation on investment 19,43,38,211 (iv) Provision for legal expenses 27,00,000 (v) Provision for Fraud & Forgery 2,80,00,000 (vi) Provision for Wealth-tax 3,00,000 (vii) Provision for Stationery Wastage 57,00,000 (viii) Provision for Tangible asset 8,08,94,719 (ix) Provision for Pension 16,96,86,145" 10. The Hon'ble ITAT vide its order dated 30.9.2009 (vide para-18 & 19) held as follows: "18. In respect of ground No.8 of the appeal, the learned submitted that- (a) claim of ₹ 27 lakhs for legal expenses was actual expenses and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion ground vide its letter dated 19.7.2011: "Additional Ground of Appeal "That, without prejudice to the Ground Nos.4 and 5 relating to computation of 'book profit 'under section 115JB of Income tax Act, 1961 for ascertaining liability in respect of minimum alternate tax, the Learned Assessing Officer has erred in applying the provision of section 115JB of Income tax Act, 1961 in disregard of the referred judicial pronouncements." 13. The following were the judicial pronouncements referred to in the grounds of appeal viz.: (1) Order dated 30.09.2010 in ITA No.3390/2009 passed by ITAT 'G' Bench, Mumbai in the case of Krung Thai Bank wherein it was held that The provisions of Section 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions of Part II and I II of Schedule VI to the Companies Act . The starting point of computation of minimum alternate tax under section 115 JB is the result shown by such a profit and loss account. In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to Section 211 (2) of the Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 115JB(2),every assessee is required to prepare its profit and loss account in terms of the provisions of Part II and II I of Schedule VI to the Companies Act . Unless the profit and loss is so prepared, the provisions of Section 115 JB cannot come into play at all. However, the assessee is a banking company and under proviso to Section 211 (2) of the Act , the assessee is exempted from preparing its books of accounts in terms of requirements of Schedule VI to the Companies Act , and the assessee is to prepare its books of accounts in terms of the provisions of Banking Regulation Act . It is thus contended that the provisions of Section 115 JB do not apply in the case of banking companies which are not required to prepare the profit and loss account as per the requirements of Part II and III of Schedule VI to the Companies Act . Since the provisions of Section 115 JB do not apply to the assessee company, the reasons recorded for reopening the assessment are clearly wrong and insufficient . We are urged to quash the reassessment proceedings on this short ground. 6. Learned Departmental Representative, on the other hand, vehemently relies upon the orders of the authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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