9911796707
TMI Blog2020 (4) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to Assessment Year (A.Y) 2012-13. First, we take up the appeal filed by the assessee bearing ITA 3075/AHD/2013. The assessee has raised the following grounds of appeal: 1. Ld. CIT (A) erred in law and on facts in confirming disallowance of Rs. 8, 04. 294/- u/s 14A of the Act by invoking rule 8D2(iii) ignoring fact that appellant has sufficient interest free ftinds and not incurred any expenditure for earning tax free income. Ld. CIT (A) ought to have considered submission of appellant and delete the disallowance. It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming action of AO to increase book profit u/s 115JB of the Act by disallowance of Rs, 8,04,294/- u/s 14A of the Act. Ld. CIT (A) ought to have deleted sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income of the assessee. 3. The aggrieved assessee preferred an appeal to the Ld.CIT (A) who confirmed the order of the AO. Being aggrieved by the order of the Ld.CIT (A) the assessee is in appeal before us. 4. The Ld. AR filed before us a paper book running from pages 1 to 75 and submitted that the investments which have yielded the exempted income should only be considered for the purpose of the disallowance under rule 8D (2)(iii) of the income tax rule. 5. On the other hand, the Ld.DR vehemently argued based on findings culled by AO and subsequently upheld by the CIT(A) in their respective orders. 6. We have heard the rival contentions of both the parties and perused the materials available on record. The question in the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be determined considering only those investments which yielded exempt income during the year. 6.2 In view of the above, we direct the Assessing Officer to compute the disallowance as per Rule 8D by taking into consideration only those shares/investments, which have yielded exempted income in the year under consideration. Hence the ground of appeal of the assessee is partly allowed. The second issue raised by the assessee in ground no. 2 is that the Ld. CIT(A) erred in making the addition of the disallowances made u/s 14A of the Act while computing book profit u/s 115JB of the Act. 7. The AO during the assessment proceedings was of the view that the expenditure incurred in relation to the exempted income needs to be disallowed as per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be the subject matter of disallowances while determining the book profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." 11.2 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the present facts of the case. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be applied while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 11.3 However, in our considered view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Sec. 14A r.w.r. 8D of the income tax Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction of the Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. (Supra). 11.5 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. In this regard, we also note that there is no mechanism given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/determine the disallowance. Therefore in the given facts &circumstances, we feel that adhoc disallowance will service the justice to the Revenue and assessee. We, therefore, are directing for the ad-hoc disallowance to avoid the multiple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght on record. 1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance made u/s.40(a)(i) of the Act of Rs. 23,28,587/-, without properly appreciating the facts of the case and the material brought on record. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 12. At the outset, after going through the grounds of appeal and the impugned orders of the Revenue authorities being AO and Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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