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TMI Blog2016 (11) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A so as to bring it in line with the judgement of Hon’ble jurisdictional High Court in the case of HDFC Bank Ltd (2016 (3) TMI 755 - BOMBAY HIGH COURT ). (2) The assessee shall furnish requisite details and working of the amount of expenditure relatable to any income exempt u/s 10 [excluding income exempt u/s 10(38)], as envisaged in clause (f) of Explanation 1 to section 115JB (2). The AO shall examine the same and determine the amount to be added under clause (f) keeping in view the provisions of law and facts of the case; (3) In case, the assessee does not furnish requisite information to enable the AO to compute amount disallowable under clause (f) as directed above in point no (2), then the AO shall be free to treat the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made on the subject and erred in relying upon the judgment in the case of Esquire Pvt Ltd where only passing remarks were given without much detailed discussion on the subject. 2. The solitary issue raised in this appeal by the assessee is with regard to action of the lower authorities in making an addition of ₹ 35,13,921/- being the amount disallowed u/s 14A, while computing the book profit u/s 115JB of the Act. It was contended by the Ld. Counsel during the course of hearing that though disallowance was made u/s 14A, but, in view of the legal developments that have taken place in the country, if applied on the facts of the case, it would show that no disallowance was liable to be made u/s 14A under clauses 8D(2)(ii) (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in case disallowance is made u/s 14A, then automatically an adjustment has to be made in view of clause (f) to Explanation 1 to section 115JB (2). In his support, he placed reliance upon the following judgments: 1. Dy. CIT vs Sobha Devlopers ITA No.1410/Bang/2013 |(Bang) 2. Dabur India Ltd vs ACIT 37 Taxmann.com 289(Mum) 3. ITO vs RBK Share Broking Pvt Ltd 37 Taxman.com 128 (Bom) He, therefore, requested that orders of the lower authorities should be upheld. 4. We have gone through the orders of the lower authorities as well as submissions made by both the sides. It is well settled that there is no estoppel against law. Thus, merely because disallowance made by the AO u/s 14A was not contested by the assessee due to nil t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been possible as per law and facts of this case was under rule 8D(2)(i) and no disallowance was liable to be made in clauses (ii) (iii) in view of the latest judgement of Hon ble Bombay High Court in the case of HDFC Bank Ltd vs DCIT 383 ITR 529. On the other hand, perusal of section 14A reveals that disallowance therein can be made with respect to expenditure incurred by the assessee in relation to income which does not form part of total income under this Act. Thus, comparison of clause (f) of Explanation 1 to section 115JB with section 14A, reveals that though both may appear to be identical, but actually there is a clear distinction in the scope of these two sets of provisions. The former i.e. clause (f) is narrower in scope than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon understanding applying normal provisions of the Act. Under these circumstances, the AO is not permitted to add to the book profits u/s 115JB, the amount of disallowance made u/s 14A, in a routine, blindfolded or automatic manner presuming it to be expenses relatable to income exempt u/s 10 as stipulated in clause (f), especially when the assessee is agitating that even the disallowance u/s 14A is beyond the provisions of law in view of judgement of the Hon ble jurisdictional High Court. 4.3. It is noted by us that perusal of the assessment order reveals that the AO has blindly added disallowance made u/s 14A r.w.r. 8D of ₹ 35,13,921/- while computing book profits u/s 115JB without testing it independently under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowable u/s 14A in terms of our first direction above, as the amount to be added under clause (f) of explanation 1 to section 115JB. (4) In any case, amount to be added under clause (f) of explanation 1 to section 115JB (2) cannot exceed amount of disallowance that can be made u/s 14A, the latter being wider in its scope. 5. It is clarified to remove any doubts that this exercise is being done only for the limited purpose of computing taxable amount of book profits u/s 115JB and thus original disallowance made by the AO u/s 14A , having not been contested by the assessee, shall remain unaffected by our order 6. Thus, with these directions, the grounds raised by the assessee are sent back to the AO and may be treated as partly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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