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TMI Blog2017 (2) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly it was submitted that the provisions of Rule 8D should not have been mechanically applied under the facts of the present case. We find merit in the above said submissions of the assessee. A.R also submitted that there is no estoppel against the law and hence the assessee could plead for rectification of disallowance wrongly made by the assessee. We agree with the said contentions of the assessee also. The purpose of assessment is to determine the correct total income of the assessee. Hence wrong application of provisions of the Act needs to be corrected in order to arrive at the correct total income. We have noticed that certain vital facts concerning the investments have not been properly dealt with both by the assessee as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 40,12,058/-. Subsequently the assessee filed a revised return of income, wherein the disallowance u/s 14A was made at ₹ 1,69,15,087/-. The AO noticed that the auditors have certified the direct expenses as ₹ 40,12,058/- in the Tax audit report, but the assessee has taken the direct expenses at ₹ 3,65,504/- in the revised computation while computing the disallowance at ₹ 1,69,15,087/-. Accordingly he increased the direct expenses to ₹ 40,12,058/- and enhanced the disallowance to ₹ 2,05,61,641/-. 4. The assessee had computed the disallowance u/s 14A to be made for computing book profit u/s 115JB of the Act at ₹ 1,48,55,299/-, since the tax is payable on the Long term capital gains under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by ₹ 25,02,327/-. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the disallowance of ₹ 2,05,61,641/- under normal provisions of the Act and corresponding increase in the disallowance while computing the book profit u/s 115JB of the Act. The assessee has also taken an additional ground that the disallowance of ₹ 1,69,15,087/- made by the assessee in the revised computation of income itself is against the law and hence the same should also be revised. 7. The Ld A.R submitted that the assessee as well as the revenue has taken the opening and closing value of investments at ₹ 33177/- lacs and ₹ 33020/- lakhs respectively. Adverting our attention to page 21 of the paper book, which cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of CIT Vs. Pruthvi Brokers and Shareholders P Ltd (2012)(349 ITR 336)(Bom). 9. The Ld A.R also submitted that the tax effect involved in the revenue s appeal is less than ₹ 10.00 lakhs and hence the same is liable to be dismissed. He submitted that the C.O filed by the assessee is required to be adjudicated separately, even if the revenue s appeal is dismissed. In this regard, he placed reliance on the decision rendered by Hon ble Kerala High Court in the case of City Centre Builders Developers (WP(c) No.7668 of 2016(G) dated02-06- 2016), wherein it was held that a Cross objection has to be treated as an independent appeal and has to be decided irrespective of the fact as to whether the appeal filed by the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hvi Brokers and Shareholders P Ltd (supra). The Ld A.R also submitted that there is no estoppel against the law and hence the assessee could plead for rectification of disallowance wrongly made by the assessee. We agree with the said contentions of the assessee also. The purpose of assessment is to determine the correct total income of the assessee. Hence wrong application of provisions of the Act needs to be corrected in order to arrive at the correct total income. 12. We have noticed that certain vital facts concerning the investments have not been properly dealt with both by the assessee as well as the tax authorities. Hence, we are of the view that the issue relating to disallowance u/s 14A of the Act requires fresh examination at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance attributable to Long term capital gains, to be added to the Net profit for computing book profit u/s 115JB of the Act, i.e., his action, in our view, is in accordance with the law. 14. However, since we have restored the matter of disallowance u/s 14A of the Act to the file of the AO, the amount of disallowance to be added to Net profit u/s 115JB of the Act may undergo a change. Accordingly, while approving the principle followed by the Ld CIT(A), we are of the view that the quantum of disallowance to be added to Net profit needs to be set aside to the file of the AO. Accordingly we restore this issue to the file of the AO. 15. In the result, the appeal filed by the revenue is treated as partly allowed and the cross objection o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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