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TMI Blog2016 (10) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) For The Appellant : Shri Ramchandran For The Respondent : Shri Hirva Shah ORDER Per RAJESH KUMAR, Accountant Member: This is an appeal filed by the revenue and is directed against the order dated 18.11.2014 passed by the Ld.CIT(A)-47,Mumbai for the assessment year 2006-07. 2. The issue raised in ground No.1 of appeal is against the restricting the disallowance u/s 14A of the Income Tax Act, 1961(hereinafter called and referred to the Act) read with Rule 8D of the Income Tax Rules, 1962(hereinafter called and referred to as the Rules) to ₹ 7,59,39,128/- by CIT(A) by rejecting the disallowance u/s 14A of ₹ 894,26,131/- made by the AO. In the ground no.2, the issue raised is the deletion the addition made by the AO u/s 14A for the purpose of computing book profit u/s 115JB of the Act. In the third ground the revenue raised the issue of charging of interest u/s 234B of the Act. 3. Brief facts of the case are that the assessee filed its return of income on 21.11.2006 declaring total income at ₹ 7,76,71,388/- after claiming deduction under section 80IA to the tune of ₹ 1,00,84,71,662/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has followed rule 8D without finding any infirmity in the method adopted by it. 7.3 It is noticed from computation of disallowance u/ s 14A that both the appellant and AO agree with regards to disallowance out of interest expenditure. Only dispute is with regards to disallowance out of administrative expenses. While the AO has calculated this amount at ₹ 1,74,03,734/- being 0.5% of average investment as per Rule 8D(iii), the appellant has made adhoc disallowance of ₹ 6,16,731/ -. The computation made by AO following Rule 8D(iii) for disallowance of administrative expense is not sustainable. However, the ad hoc disallowance made by appellant is also too meagre in comparison to AO's working. The appellant has offered a lump sum disallowance of ₹ 3,00,000/- out of other administrative expenses. I find that CIT(A)-38, Mumbai in appellants own case for AY 2007-08 vide order dated 19.11.2013 had considered a reasonable disallowance of ₹ 3,00,000/per month our of other administrative expenses in the facts and circumstances of the case. To adopt a consistent policy to determine reasonable disallowance, I also adopt the same disallowance and work out tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is a well settled proposition of law that the assessee is required to prepare its profit and loss account in accordance with the provisions of Part -II and Schedule VI of the companies Act 1956. Hence these accounts are in accordance with the provisions of Companies Act ,1956 and has been approved by the registrar of companies, the assessing officer does not have much scope to tinker with the accounts. Since the assessee has not debited any actual expenditure relating to the earning of exempt income, therefore, the provisions section 14A, cannot be imported into computation of book profit u/s.115JB. Even clause (j) of explanation to section 115J8 refers to those amounts which are debited to the profit and loss account, can be added to book profit. This issue has already been decided by co-ordinate bench of tribunal in the case of M/s. Essar Teleholdings Limited vs. DCIT (ITA No.3850/Mum/2010) and in the case of of M/s. Quippo Telecom Infrastructure Ltd.Vs. ACIT (ITA No.4931/Del/2010) order dated is 18th Feb 2011 wherein the decision of Delhi tribunal in the case of Goetze India Ltd vs CIT 32 SOT 101 has been followed. Thus respectfully following the same, we allow the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in the Working of the Book Profits u/s.1151B were on account of retrospective amendments made in the Finance Act of 2008 in respect of provision for deferred tax. It is submitted that the interest u/s.234B of the Income Tax Act' 1961 was not payable on the additional tax payable by virtue of the said retrospective amendment as at the time of payment of advance tax in FY 2005-06, no such liability could have been anticipated or comprehended by appellant which has been fastened retrospectively by Finance Act, 2008. In appeal, the Hon'ble ITAT, Mumbai in ITA No 244/Bang/2010 deleted the aforesaid addition vide order dated 22-02-2013. The operating part of the order (Para 14, Page 12) read as under : We, thus, respectfully following the aforesaid proposition laid down by the Hon'ble Calcutta High Court that no interest u/s.234B Cm be levied on account of inclusion of various items in the Explanation brought on the statute by the Finance Act 2008 with retrospective effect from 1st April 2001, as at the time of preparing the accounts, the assessee cannot be held to be defaulter of payment of advance tax which has to be paid as per the law then prevailing. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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