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TMI Blog2017 (2) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... record before us whether the investment in the earlier years was made out of the own funds of the assessee. In our considered view it is the duty of the assessee to justify on the basis of evidences that the investment was made out of own funds. - Matter refereed back for reconsideration. Whether the disallowance to be made u/s 14A r.w.s rule 8D shall also be added in the computation of book profit in terms of clause (f) of explanation 1 to section 115JB - Held that:- From the provision of section it is clear that the expenses incurred on the earning of exempted income are liable to be added in the working of the book profit. Therefore we hold that the expenses to be disallowed by the AO in terms of rule 8D(ii) and (iii) of Income Tax Rules 1962 would be added to the book profit as specified under section 115JB of the Act. As the issue of disallowance in terms of rule 8D(ii) and (iii) of Income Tax Rules 1962 has been restored to the AO for fresh adjudication, therefore we are inclined to restore this issue as well to the AO for fresh adjudication. Addition on account of excess book depreciation - Held that:- As from the perusal of assessment order we find that the AO has add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Representative appeared on behalf of Revenue. 2. Briefly, the facts are that the assessee in the present case is a Limited Company and engaged in the business of manufacturing of caustic soda, stale bleaching power, lindane, aluminium chloride, poly aluminium chloride, salt, pentaerythritol, acetaldehyde, formaldehyde, hexamie, industrial alcohol, acetic acid, power CPW etc., The assessee for the year under consideration has filed its return of income dated 30.09.208 declaring total income of ₹ 18,36,02,250/-. Thereafter case was selected under scrutiny and accordingly notice u/s 143(2) / 142(1) were issued upon the assessee. The assessment was completed u/s 143(3) of the Act at a total income of ₹ 18,64,20,660/- under the Income Tax Act. 3. First issue raised by assessee in this appeal is that learned CIT(A) erred in disallowing the amount of bad debts written off in the year under consideration under the normal provisions of Income Tax Act for ₹ 49,21,899.00. 4. At the outset we find that the AO has disallowed the provisions for bad doubtful debts for ₹ 49,21,899.00 while working out the book profit for the computation of Tax under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave considered the submission of the AR and the AO's calculation. I find that after the amendment in Sec. 14A the IT Act, 1961 the word used is the AO shall determine the amount of expenditure incurred in relation to .. . Thus, here it is mandatory for the AO to calculate expenses under Rule 8D for earning the exempted income w.e.f. 01-04-2007. Accordingly, assessee s appeal on ground no. 3 is dismissed. Aggrieved by this, assessee has come up an appeal before us. 8. Before us Ld. AR for the assessee filed paper book which is running pages from 1 to 133 and reiterated same submissions as made before Ld. CIT(A). He prayed that the issue may be decided on merit. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant case relates to the disallowance of expenses in terms of rule 8D(ii) and (iii) of Income Tax Rules 1962 by the AO which was subsequently confirmed by the ld. CIT(A). From the perusal of the records, admittedly, the investment was made by the assessee in the earlier years but the learned AR has not brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our opinion, the question formulated by the CIT(A) whether Sec. 14A of the Act read with Rule 8D of the rules can be imported into the ITA No. 1410/Bang/2013 Page 23 of 25 provisions of clause (f) to Explanation (1) to section 115JB of the Act, is itself erroneous. The question to be asked is as to how to give effect to the provisions of clause (f) to Explanation (1) to section 115JB of the Act. We do not think that there is any prohibition to adopt the disallowance made by the AO u/s.14A of the Act read with Rule 8D of the rules, while computing total income under the normal provisions of the Act. The argument of the learned counsel for the Assessee that section 14A of the Act is very specific and is applicable only for the purpose of computing total income under Chapter IV of the Act and that section 115JB appears in Chapter XIIB of the Act dealing with specific provisions relating to certain companies and therefore the provisions of Sec.14A read with Rule 8D of the Rules cannot be applied while making addition to net profit as per profit and loss account u/s.115JB Expln.1 clause (f) of the Act, because the expression expenditure relatable is used in sub-clause (f) of Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication as per law after verification of the depreciation amount. Thus in the interest of justice and fair play we are inclined to restore this issue to the file of ld. CIT(A) for fresh adjudication as per law with the direction to ascertain the actual amount of depreciation. Hence this ground of appeal of the assessee is allowed for statistical purposes. 12. Fourth issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the addition of ₹ 49,21,899/- on account of bad debt which were actually written off in the books of account while working out the book profit u/s. 115JB of the Act. 13. At the outset we find that the learned AR has not brought anything on record to demonstrate that the provisions for the bad and doubtful debts have actually been written off in the books of accounts and in the ledgers of respective parties. As per the provisions of section 115 JB of the Act the amount of book profit will not be increased by the amount of bad debts actually written off in the books of accounts. Accordingly we in the interest of justice fair play we are inclined to restore this issue to the file of learned CIT(A) for fresh adjudication as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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