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TMI Blog2019 (5) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition u/s 14A while calculating book profit under section 115JB of the Act - HELD THAT:- Any disallowance made under section 14A read with rule 8D is not to be considered in the computation of book profit under clause (f) of explanation 1 of section 115JB of the Act as section 115JB is a separate code in itself. The case of the assessee is squarely covered by the decision of ACIT vs. Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] and Everest Kanto Cylinder Ltd. vs. ACIT [ 2015 (12) TMI 683 - ITAT MUMBAI] . We would like to point out that this is the position of law that even if there is a disallowance under section 14A read with rule 8D the same is not to be considered for the purpose of computing book profit but in the present case since we have deleted the disallowance under section 14A read with rule 8D, therefore, this ground of the assessee is automatically allowed. Interest assessment - Ultimate cost of borrowing would be the gross interest expenses as neted off by interest income earned from deployment of such borrowed funds - CIT(A) held that the ultimate cost of borrowing would be the gross interest expense as netted off by the interest income earned f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year A.Y. 2011-12 from liquid schemes of mutual fund. The said income was not claimed an exempt as the same was netted against the gross finance charges of ₹ 283.53 crores debited to the P L account and net finance charges after reducing the dividend income was claimed deduction under section 36(1)(iii) of the Act. It was also stated in note No.7 to computation of income that the assessee has not made any disallowance under section 14A of the Act as the entire dividend income was deducted against the interest expenditure and only net expenditure was claimed under section 36(1)(iii) of the Act. Thus no exempt income under section 10(35) of the Act was claimed. However, the AO while passing the assessment order under section 143(3) of the Act dated 14.03.2014 disallowed a sum of ₹ 31,60,57,358/- under section 36(1)(iii) of the Act and also disallowed ₹ 24,34,50,491/-under section 14A of the Act read with rule 8D. 6. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by observing and holding as under: 7.6 The matter has been considered. For the same reasons discussed at para 7.3 above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. A.R. also relied on the decision in the case of CIT vs. Mahendra Mills 243 ITR 56 SC wherein it has been held by the Hon ble Supreme Court that a privilege granted by the Act can not become a disadvantage as in that case the assessee was permitted to disclaim depreciation since that was more beneficial to the assessee. The Ld. A.R. also drew the attention of the bench to the assessment orders passed by the AO in assessee s own case in A.Y. 2009-10 and 2010-11 wherein the AO has accepted the similar claim made by the assessee in not claiming exemption in respect of dividend income. The Ld. A.R. submitted that the Revenue has to follow a consistent treatment as it has accepted the claim in the earlier years and the said claim can not be rejected in the subsequent years when there is no change in the facts and circumstances. The Ld. A.R. relied on the decision of Radhasoami Satsang vs. CIT (1991) 193 ITR 321 (SC). In alternative submissions, the Ld. A.R. submitted that the investments which have not fetched any exempt income during the year can not be considered for the purpose of making disallowance under rule 8D by relying on a series of decisions namely; 1. Pr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any disallowance made under section 14A read with rule 8D is not to be considered in the computation of book profit under clause (f) of explanation 1 of section 115JB of the Act as section 115JB is a separate code in itself. The case of the assessee is squarely covered by the decision of ACIT vs. Vireet Investment (P) Ltd. (supra) and Everest Kanto Cylinder Ltd. vs. ACIT (LTU) 395 (Mum-Trib.). We would like to point out that this is the position of law that even if there is a disallowance under section 14A read with rule 8D the same is not to be considered for the purpose of computing book profit but in the present case since we have deleted the disallowance under section 14A read with rule 8D, therefore, this ground of the assessee is automatically allowed. 11. In the result, the appeal of the assessee is partly allowed. ITA No.3491/M/2016 (Revenue s appeal ) 12. The only issue raised by the Revenue in its appeal is against the order of Ld. CIT(A) wherein it has been held that ultimate cost of borrowing would be the gross interest expenses as neted off by interest income earned from deployment of such borrowed funds. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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