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TMI Blog2017 (9) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 2009-10 and 2010-11 respectively. 4. Briefly stated the facts are that the Assessing Officer while completing the assessments noticed that assessee received dividend income of Rs..273,77,89,993/- and Rs..212,01,88,646/- during the Assessment Years 2009-10 and 2010-11 respectively and claimed such dividend income as exempt from tax u/s 10(34)/(35) of the Act. He also noticed that for the Assessment Years 2009-10 and 2010-11 the assessee suo moto made disallowance of Rs..42,48,568/- and Rs..42,48,093/- respectively as expenses attributable for earning the dividend income. The Assessing Officer was of the view that prima-facie disallowance computed u/s 14A by the assessee is not in accordance with the provisions of Rule 8D and required the assessee to furnish complete details of exempt income and also asked to explain as to why expenses incurred and claimed in respect of the exempt income should not be disallowed as per Section 14A r.w. Rule 8D. The assessee furnished its reply stating that except the expenses of Rs..42,48,568/- and Rs..42,48,093/- all other expenses are normal administrative expenses incurred for the day to day management and business affairs and they are incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer for invoking the provisions of Rule 8D. He placed reliance on the decision of the Supreme Court in the case of Godrej & Boyce manufacturing Company Ltd. v. DCIT [81 taxmann.com 111] 7. The Ld. DR vehemently supported the orders of the Ld.CIT(A)/AO. 8. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. The Assessing Officer while completing the assessment noticed that the assessee received dividend income and claimed as exempt and assessee made suo moto disallowance of Rs..42,48,568/- and Rs..42,48,093/- treating such expenses as expenditure attributable for earning the dividend income received by the assessee for the Assessment Years 2009-10 and 2010-11 respectively. The Assessing Officer on a prima facie view that assessee's computation of disallowance u/s 14A is not in accordance with the provisions of Rule 8D, required the assessee to furnish various details of dividend income and expenses attributable for earning such dividend income and why Rule 8D should not be applied. Assessee furnished reply. Not convinced with the reply Assessing Officer by giving reasoning as to why the working of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the said decision we hold that there should not be any disallowance u/s 14A read with Rule 8D while computing the book profits u/s 115JB of the Act. Thus, we direct the Assessing Officer to compute the book profits u/s 115JB keeping in view the decision of the Hon'ble Special Bench (supra). This ground of appeal is allowed for statistical purpose. 13. Coming to the Revenue's appeals for the Assessment Years 2009-10 and 2010-11 the grievance of the revenue is in respect of the disallowance u/s 14A r.w. Rule 8D. Revenue is agitating the order of the Ld.CIT(A) in restricting the disallowance u/s 14A r.w. Rule 8D while computing the income under normal provisions of the Act as well as the book profits u/s 115JB. In view of our findings and decision given in above paras while deciding the ground raised by the assessee in respect of the disallowance u/s 14A r.w. Rule 8D while computing the normal provisions as well as book profits u/s 115JB of the Act, the grounds raised by the revenue are disposed off accordingly. 14. Now we take up the appeals of the assessee in the case of Reliance Capital limited for the Assessment Years 2009-10 and 2010-11. 15. The first common ground in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Years 2009-10 and 2010-11 respectively. The Assessing Officer also rejected the without prejudice contention of the assessee that only dividend yielded investments should be considered for computing the disallowance. 19. The Ld.CIT(A) following the decision of the Special Bench in the chase of Cheminvest Limited [121 ITD 318] affirmed the order of the Assessing Officer. The decision relied on by the Ld.CIT(A) has been reversed by the Delhi High Court in the case of Cheminvest Limited Vs. CIT [378 ITR 33 Delhi]. Recently the Special Bench of the Delhi Tribunal in the case of ACIT v. Vireet Investments Private Limited(supra) held that only those investments are to be considered for computing average value of investments which yielded exempt income during the year while computing the disallowance Rule 8D(2)(iii). Therefore, respectfully following the said decision we hold that the disallowance computed u/s 14A r.w. Rule 8D by the Assessing Officer is not correct. Thus we restore this issue to the file of the Assessing Officer with a direction to re-compute the disallowance under Rule 8D(2)(iii) in view the decision of the Delhi Bench in the case of ACIT v. Vireet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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