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TMI Blog2019 (9) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is that the ld. CIT(A) has erred in restricting the disallowance made under section 14A of the Income Tax Act, 1961 ["Act" in short] r.w. Rule 8D to the extent of exempt income earned and the ld. CIT(A) has erred in deleting the addition made to book profits computed under section 115JB of the Act being expenditure incurred to earn exempt income even though clause (f) Explanation 1 to section 115JB of the Act specifically provides for it. 2. Brief facts relating to the first common ground raised by the Revenue are that on verification of the financials, the Assessing Officer noticed that the assessee has shown investments in shares of associate and other companies. The assessee has disallowed Rs..17,38,25,076/- for the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in both the assessment years. However, the Assessing Officer worked out the disallowance under section 14A r.w. Rule 8D. In the case of Redington (India) Ltd. v. Addl. CIT (supra), the Hon'ble Jurisdictional High Court has held that where there is no exempt income in the relevant year, there cannot be any disallowance of expenditure under section 14A of the Act. Since, the assessee has not earned any dividend income in the assessment years under consideration, we are of the considered opinion that the ld. CIT(A) has rightly followed the decision of the Hon'ble Jurisdictional High Court in the case of Redington (India) Ltd. v. Addl. CIT (supra) and directed the Assessing Officer to delete the addition. The ld. DR could not controvert the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th reference to 14A disallowance. Similar issue was subject matter in appeal before the Tribunal in the case of Beach Minerals Company Pvt. Ltd. v. ACIT in I.T.A. No. 2110/Mds/2014 & dated 06.08.2015 and the Tribunal has adjudicated the case as under: "8.1. Ground No.5.(a) - Computation of book profit U/s.115JB of the Act by giving effect to the disallowance of expenditure made invoking the provisions of the Section-14A of the Act for Rs. 3,11,34,630/- and also the disallowance of expenditure under the normal provisions of the Act. 8.1.1 The Ld. Assessing Officer while computing the tax as per provisions of section 115JB of the Act made additions to the book profit with respect to the disallowance made U/s.14A of the Act read with Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not find merit in the contention of the Ld. CIT (A). The relevant provision of the Act is extracted herein below for reference:- Section.115JB Explanation-[1] - For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section(2), as increased by - (a) To (e) ---------------------------------------------------- (f) the amount or amounts of expenditure relatable to any income to which [Section-10 (other than the provisions contained in clause (38) thereof] or section 11 or section 12 apply; (g) To (j) ----------------------------------------------------- From the above it is apparent that the aforesaid provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to section 115J . The Assessing Officer does not have the jurisdiction to go behind the net profits shown in the profit and loss account except to the extent provided in the Explanation. The use of the words "in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act" in section 115J was made for the limited purpose of empowering the Assessing Officer to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the company, the Assessing Officer has to accept the authenticity of the accounts with reference to the provisions of the Companies Act, which obligate the company to maintain its accounts in a manner provided by that Act and the same to be scrutinised and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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