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TMI Blog2018 (5) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... ecording of satisfaction by the ld AO are dismissed. The Grounds 3 and 4 raised by the assessee are allowed. Disallowance u/s 14A while computing the book profits u/s 115JB - Held that:- As relying on ACIT vs Vireet Investment (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] the computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. We find that the assessee had worked out the disallowance u/s 14A based on the actual figures from its profit and loss account. By respectfully following the special bench decision supra, we direct the ld AO to make disallowance of ₹ 1,37,25,202/- while computing the book profits u/s 115JB of the Act. Accordingly, the grounds raised by the revenue are partly allowed. Addition towards liabilities written back - scheme of amalgamation seeked - Held that:- Though the deduction was claimed by the amalgamating company in the earlier years, now pursuant to the merger, the entire assets and liabilities of amalgamating company got merged at book values with the amalgamated company. This issue of claiming deduction in earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 49,79,945/- Group Company 2. Mcnally Bharat Engg Ltd - ₹ 26,02,000/- Group Company 3. Eveready Industries I Ltd - ₹ 4,93,742/- Group Company 4. Mcnally Sayaji Engg Ltd - ₹ 8,00,000/- Subsidiary of a Group Co. Total Dividend Received ₹ 88,75,687/- 2.1. The assessee claimed that these shares and securities were held with these companies for a long time for the purpose of acquiring and retaining control over them and their business. The assessee suo moto disallowed a sum of ₹ 1,37,25,202/- as expenditure incurred in relation to earning of exempt income us 14A of the Act in the return of income under normal provisions of the Act. However, no such disallowance was offered by the assessee while computing the book profits u/s 115JB of the Act. This disallowance was made in the following manner:- Disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal 1. That whether on the facts and circumstances of the case the CIT(A) erred in law in deleting the addition of ₹ 6,76.71.844/- on2ccount of the expenses u/s 14A to ascertain book profit u/s 115JB disregarding Explanation - 1(f) below Section 115JB. 2. Whether on the facts and in the circumstances of the case, the CIT(A) erred in deleting even the amount of ₹ 1,37,25,202/- which the assessee company had itself added in its computation u/s 115JB. 3. Whether on the facts and in the circumstances of the case, the learned CIT(A) erred in relying on the decision of the Hon'ble ITAT in the case of JCIT(OSD), Circle-4, Kolkata Vs. Jayashree Tea Investments Ltd. against which the Revenue is in appeal before the Hon 'ble Kolkata High Court. 4. The appellant shall crave to add, alter or amend any ground before or on the date of hearing. Assessee s Grounds 1 to 4 1) For that on the facts and in the circumstances of the case, the CIT (A) was unjustified on facts in upholding the disallowance made by the AO u/s 14A read with Rule BD (2)(ii) (iii) of the I T Rules 1962 without recording satisfaction as to why the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake further disallowance beyond that amount under normal provisions of the Act. Accordingly, the grounds 1 to 2 raised by the assessee on nonrecording of satisfaction by the ld AO are dismissed. The Grounds 3 and 4 raised by the assessee are allowed. 2.5.1. With regard to disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act, the issue is settled by the recent special bench decision of Delhi Tribunal in the case of ACIT vs Vireet Investment (P) Ltd reported in 165 ITD 27 (Delhi)(Special Bench) dated 16.6.2017 , wherein in para 6.22 of the said judgement, it has been held that the computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. We find that the assessee had worked out the disallowance u/s 14A of the Act based on the actual figures from its profit and loss account. By respectfully following the special bench decision supra, we direct the ld AO to make disallowance of ₹ 1,37,25,202/- while computing the book profits u/s 115JB of the Act. Accordingly, the grounds raised by the revenue are partly allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an amount of ₹ 50,00,000 comprising 4,20,000 Equity Shares of ₹ 10 each and 8,000 Preference Shares of ₹ 100 each, on account of merger of amounts of the respective Authorised Share Capital of the Transferor Company with the Transferee Company. 3.1. The assessee in its Computation of income, reduced these liabilities no longer required written back of ₹ 11,64,086/- and did not offer the same for taxation. The reason behind the same was that these liabilities represents liabilities of the amalgamating company, International Development Engineering Associates Limited and therefore not liable to tax as the same was never incurred by the assessee in the course of its business and the same must have been offered for taxation in those respective years by the amalgamating company. So the same amount cannot be taxed twice. The ld AO observed that no evidence has been furnished by the assessee to the effect that the said liabilities were offered to tax in the hands of the amalgamating company prior to the merger. Accordingly, he brought the said amount of ₹ 11,64,086/- as income of the assessee as admittedly the same was written back to profit and loss a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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