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TMI Blog2020 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-2020 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Vidhyut Trivedi, Sr. DR For the Respondent : Shri Vartik Chokshi, AR ORDER PER MS. MADHUMITA ROY - JM: The instant Cross Objection filed by the assessee is directed against the order dated 09.12.2014 passed by the Commissioner of Income Tax (Appeals) 8, Ahmedabad arising out of the order dated 31.01.2014 passed by the DCIT(OSD), Circle-8, Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for Assessment Year 2011-12 with the following grounds:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in confirming the disallowance of ₹ 8,00,154/- made by the AO u/s. 14A on account of administrative expenses. 2. On the facts and in the circumstances of the case, the CIT(A0 has erred in upholding addition of ₹ 47,29,403/- to the book profit i/s. 115JB of the Act on account of disallowance of ₹ 47,29,403/- u/s. 14A, when he himself had deleted disallowance of ₹ 39,29,249/- on account of interest expenditure made by the AO u/s. 14A. 3. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and time of management etc, the contention of the appellant that no administrative expenditure is incurred was not accepted by the Ld. CIT(A) and disallowance of ₹ 8,00,154/- of towards administrative expenses was confirmed by the Ld. CIT(A) which has been challenged before us by the assessee. 4. At the time of hearing of the instant appeal the Ld. Advocate appearing for the assessee submitted before us that administrative expenditure may be disallowed at 1% of the exempt income under Clause (f) to Explanation 1 of Sec. 115JB of the Act. Such submission has been made in view of the judgment passed by this Ld. Tribunal in the case of M/s. Mazda Limited vs. DCIT in ITA Nos. 3075 3338/Ahd/2015 for A.Y. 2012-13 a copy whereof has also been submitted before us. The Ld. DR, however, has not raised any serious objection in this respect with all his fairness. 5. We have heard the respective parties, we have also perused the relevant materials available on record including the order passed by the Ld. Tribunal in ITA No. 3075/Ahd/2015 on the identical issue, the relevant portion whereof is as follows:- 11.5 Now the question arises to determine the disallowance as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent to mention that no mechanism, whatsoever, given under the Clause (f) to Explanation 1 of Section 115JB of the Act to work out/determine the disallowance. The aforesaid views is also reflecting in the number of judgments passed by the different bench of the Tribunal and the High Courts as well. The Ld. Advocate appearing for the assessee relied upon a judgment passed by the Co-ordinate Bench in ITA No. 3075-3338/Ahd/2015 for A.Y. 2012-13 in the matter of M/s. Mazda Limited vs. DCIT; a copy whereof as also been submitted before us. Upon perusal of the same we find that the identical issue has elaborately discussed by the Hon ble Co-ordinate Bench in favour of the assessee relying upon the judgment passed by the Hon ble Jurisdictional High Court in the case of Alembic Ltd. in Tax Appeal No. 1249/2014. Apart from that we have considered the judgment passed by the Hon ble High Court at Calcutta in the case of CIT vs. Jayshree Tea Industries Ltd. GO No. 1501 of 2014 (ITAT No. 47 of 2014) and the judgment passed by the Special Bench of the Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415. The relevant observation mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 11.3 However, in our considered view the disallowance needs to be made as per Clause (f) to Section 115JB of the Act independently. The judgment of Hon ble Gujarat High Court relied on by the Ld AR in the case of Alembic Ltd. (supra), does not restrict the disallowanceprovided under clause (f) u/s 115JB of the Act. 11.4 Thus it is clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw our support from the judgment of Hon ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance about exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- We find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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