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TMI Blog2018 (2) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... artnership firm while computing the book profit under section 115JB of the Income Tax Act, 1961. 3. The assessee in the present case is a non-banking finance company which is engaged in the business of trading of investment in shares and securities as well as rendering financial consultancy services. The return of income for the year under consideration was originally filed by it on 27.09.2012 declaring a total income of Rs. 11,77,96,429/-. Thereafter a revised return was filed by the assessee on 28.03.2015 declaring its total income under the normal provisions of the Act at Rs. 12,27,63,780/- and book profit under section 115JB of the Act at Rs. 20,48,42,669/-. The assessee company during the year under consideration was a partner in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile computing the book profit of the assessee company in the assessment completed under section 143(3) vide an order dated 30.03.2015. 4. Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) and a detailed submission was made on behalf of the assessee before the Ld. CIT(A) in support of its case that the addition made by the A.O. on account of its share of loss in the partnership firm while computing the book profit under section 115JB was not sustainable. The Ld. CIT(A) however did not find merit in the said submission and proceeded to confirm the addition made by the A.O. on this issue for the following reasons given in paragraph no 6 of his impugned order: "I have car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's claim. The Supreme Court in the case of CIT Vs J.H. Gotla (156 ITR 323) has specifically held that the term "income" used in the Income-tax Act, 1961 includes "loss". Even the Calcutta High Court in the case of Eastern Aviation & Industries Limited (208 ITR 103) held that the loss is 'negative income'. Accordingly the contention of the assessee that the term 'income' as employed in clause (ii) of Explanation to Section 115JB cannot be said to include 'loss' is untenable. I therefore hold that the AO had rightly added back the share of loss of Rs. 189,112,786/- from the partnership firm under clause (ii) of Explanation (1) to Section 115JB of the Act. Ground Nos. 1 to 3 are therefore dismissed. 5. We have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has debited its share of loss from a registered firm to its profit and loss account and Assessing Officer has made the addition of the same to the net profit while computing the total income of the assessee as per provisions of section 115JA of the Act on the plea that share of profit of the assessee from a partnership firm is exempt from tax as per Chapter III under section 10(2)(a) of the Act. We find that the provisions of Chapter XII-B of the Act is a special provision relating to assessment of certain companies whereby the income of certain companies chargeable to tax for the relevant previous year shall be deemed to be an amount equal to 30 per cent of such book profit. These, being special provisions applicable to certain c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 115JA by virtue of sub-clause (ii) to Explanation to section 115JA of the Act. This being not a case of share of profit from a firm in the hands of the assessee credited to the profit and loss account, we hold that no addition for the purpose of computation of total income of the assessee under section 115JA of the Act can be made with regard to share of loss from a registered firm of the assessee and accordingly we uphold the order of the CIT(A) that even on merits the addition made is not in accordance with law and the ground of appeal No. 2 of the revenue is dismissed." 6. Although the decision of Metro Exporters Ltd. (supra) was rendered by the Tribunal in the context of the provisions of section 115JA, we find ourselves in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of section 14A of the Act. While computing the book profit under section 115JB of the Act, the said amount on account of expenditure disallowed under section 14A was not added back by the assessee company. By relying inter alia on the decision of Mumbai Bench of this Tribunal in the case of Esquire Pvt. Ltd. vs DCIT (ITA No. 5688/Mum/2011), the Assessing Officer held that an amount disallowed under section 14A on account of expenditure incurred in relation to the exempt income was liable to be added back while computing the book profit of the assessee company under section 115JB of the Act. He accordingly made the addition of Rs. 75,75,430/- on account of disallowance under section 14A while computing the book profit of the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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