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TMI Blog2017 (1) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, considering the factual position and the precedence cited by the Ld. AR for the Assessee, we direct the AO to consider the net interest amount for the purpose of disallowance u/s. 14A read with Rule 8D(2)(ii) of the I.T. Rules and also should not disallow the amount beyond the exempt income. Disallowance u/s. 14A for the purpose of computation of book profit u/s. 115JB - Held that:- The disallowance made u/s. 14A of the Act cannot be added to the net profit for computing book profit u/s. 115JB of the Act. - I.T.A No. 1624/Kol/2016 - - - Dated:- 13-1-2017 - Shri S. S. Viswanethra Ravi, JM And Dr. A. L. Saini, AM For the Appellant: Shri Manish Tiwari, FCA For the Respondent: Shri SallongYaden, Addl.CIT ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble ITAT, Kolkata has held in its order dated 30.03.2012 in ITA No. 1277/Kol/2011 in the case of DCIT v Trade Apartment Ltd. that where net interest after setting of interest income is nil, there can be no disallowance. The same view has been taken by the jurisdictional tribunal also in its order dated 06.03.2013 in ITA No. 1682/Kol/2011 in BiswanathPasari v ACIT, Circle-34, Kolkata after referring to the above decision and the judgement of Hon'ble Calcutta High Court in the case of ISG Traders Ltd. v CIT(2011-TIOL-621-HC-Kol). Considering the same, the disallowance under Rule 8D(2)(ii) has to be done on the basis of net interest. The appellant has claimed that the net interestis ₹ 39,42,331/ - after deducting interest receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration in accordance with its direction. Thus, the judgement does not lay down any precedent that disallowance under rule 8D cannot exceed exempt income. Hence, the disallowance of ₹ 53,08,614/- u/s. 14A is confirmed. For issue u/s. 115JB of the Act (ground no.3) 4.2. I have considered the facts of the case and the appellant's submission. As regards the appellant's contention that the dividend income of ₹ 18,29,640/- exempt u/s. 10 should have been reduced while computing the book profit, it is in accordance with the plain language of clause (ii) of Explanation 1 to section 115JB which lays down, inter-alia, that amount of income to which any of the provisions of section 10 [other than the provisions c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not being satisfied with the order of the Ld. CIT(A), the assesseepreferred appeal before us and has taken the following grounds of appeal: 1. That on the facts and in the circumstances of the case, Ld. CIT (Appeals) is wrong and unjustified in confirming the action of Assessing Officer who considered interest payment of ₹ 68,57,787/- for the purpose of working disallowance under Rule 8D(ii) of IT Rules 1962. 2. That on the facts and in the circumstances of the case, Ld. CIT (Appeals) has erred in holding the judgement of Delhi High Court in the case of Joint Investments Pvt. Ltd. (Supra) does not lay any precedent as the matter was restored to lower authorities for fresh adjudication and thereby rejecting the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Rules. In addition to this, the Ld. AR also submitted that the disallowance should not exceed the exempted income. The Ld. AR relied on the decision of Coordinate bench of this Tribunal in assessee s own case (Tantia Financial Services Ltd. Vs. DCIT, IT(SS)A No.46/Kol/2014, AY 2009-10) dated 05.12.2016, wherein it has been held as under: 5.3. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the Ld. AR for the assessee are supported by the order of the ITAT Mumbai Bench in the case of M/s. Daga Chemicals Pvt. Ltd., (supra) and the facts relied on by him. Ld. AR has submitted that disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedence cited by the Ld. AR for the Assessee, we direct the AO to consider the net interest amount for the purpose of disallowance u/s. 14A read with Rule 8D(2)(ii) of the I.T. Rules and also should not disallow the amount beyond the exempt income. 5.4 In the result, the appeal filed by the assessee on ground nos. 1 and 2 are allowed for statistical purposes. 6. Ground No. 3 relates to addition of amount of disallowance u/s. 14A of the Act for the purpose of computation of book profit u/s. 115JB of the Act. 6.1. The Ld. AR for the assessee has submitted that the dividend income of ₹ 18,29,640/- which is exempted u/s. 10 should have been reduced while computing the book profit, it is in accordance with the plain language of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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