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TMI Blog2019 (2) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ater in the course of hearing, the learned AR for the assessee did not press the aforesaid aspect for adjudication and consented for disallowance of administrative expenses subject to deduction of ₹ 25,000/- already disallowed suo moto by the assessee. Having regard to the concluded facts towards own capital in excess of corresponding investment, we are inclined to accept the plea of the assessee for deletion of proportionate disallowance of interest expenditure to the tune of ₹ 6,64,777/-. The assessee accordingly gets relief to this extent. As regards the disallowance under Section 8D(2)(iii) towards administrative expenditure, we find merit in the plea of the assessee for deduction of suo moto disallowance therefrom. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 18.02.2015 passed under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13. 2. The grounds of appeal raised by the assessee read as under:- 1. The order passed by the learned CIT(A) is erroneous and contrary to the provisions of law facts of the case and therefore needs to be suitably modified. It is submitted that it be so held now. 2. The learned CIT(A) erred in confirming the disallowance made by AO u/s 14A read with Rule 8D of ₹ 7,40,472/- net of disallowance made by appellant of ₹ 25,000/-. It be so held now. 2.1 The CIT(A) erred in not appreciating that Section 14A is not applicable to the appellant as the investments in securities yielding tax free income were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so held now. 3. The learned CIT(A) erred in confirming the workings of AO in setting off the losses as per assessment order without appreciating that the disputed issues have not reached finality. 3. Ground No.1 concerns disallowance of expenditure in terms of Section 14A of the Act in relation to income which does not form part of the total income under the Income Tax Act. 3.1 At the time of hearing, the learned AR in support of its grievance for non-applicability of Section 14A of the Act contended that the total disallowance of ₹ 7,40,472/- comprises of (i) proportionate interest disallowance of ₹ 6,64,777/- [as per Rule 8D(2)(ii)] and (ii) administrative expenditure of ₹ 75,695/- as per Rule 8D(2)(iii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(2)(iii) is sustained to the extent of ₹ 50,695/-. 3.3 Ground No.1 of the assessee s appeal is accordingly allowed in part. 4. Ground No.2 concerns book profit under s.115JB of the Act. The controversy is whether, for the purposes of the computation of book profit under s.115JB, the AO is entitled to increase book profit by the equivalent amount of disallowances as found attributable to exempt income under normal provisions or not. With the assistance of the learned AR for the assessee, we find that the issue is squarely covered in favour of the assessee by the decision of Hon ble Gujarat High Court in Alembic Ltd. Tax Appeal No. 1249 of 2014 (Guj) as well as the decision of the special Bench in Vireet Investments 165 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. We also take note of decision of the Special Bench rendered in ACIT vs. Vireet Investment Pvt. Ltd. Anr. 165 ITD 27 (Delhi)[SB] where it was held that the AO was not entitled to tinker with book profits contemplated under s.115JB towards disallowance made under s.14A of the Act. We similarly find that judgement of Hon ble Bombay High Court in CIT vs. Bengal Finance and Investments Pvt. Ltd. in ITA No.337 of 2013 order dated 10/02/2015 also complements the issue. Thus, seen on the anvil of the judicial fiat available squarely on the issue, we are disposed to assign merits to the contentions on behalf of the assessee. At this juncture, we pause to note the concern of revenue seeking to plead possible redundancy of clause(f) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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