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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 ..... on account of disallowance of Rs. 47,29,403/- u/s. 14A, when he himself had deleted disallowance of Rs. 39,29,249/- on account of interest expenditure made by the AO u/s. 14A. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in not entertaining the ground raised before him regarding levy of interest u/s. 234B, 234C and 234D on the ground that interest under these sections is mandatory but without appreciating that the assessee had challenged the very levy of interest u/s. 234B, 234C and 234D of the I.T. Act." Ground No. 1:- 2. The assessee company maintaining the mercantile method of accounting filed its return of income 30.09.2011 declaring total loss of Rs. - 15,42,67,093/- and book profit of Rs. 1,47,70,577/- which was processed under Section 143(1) of the Act. Upon scrutiny notice under Section 143(2) of the Act was issued on 27.09.2012. Upon perusal of the details filed by the assessee it was found that the assessee company has made investment in Shares/Mutual Funds and the assessee has also earned exempt income to the tune of Rs. 13,12,976/- from dividend. Thereafter, on 15.10.2013 a notice was issued upon the assessee asking for explanation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 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 ad-hoc disallowance will service the justice to the Revenue and assessee. We, therefore, are directing for the ad-hoc disallowance to avoid the multiple proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance at 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also find to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore, our action for rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415. The relevant observation made by the Co-ordinate Bench on the identical issue is reproduced hereinbelow:- "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 clause ''f'' of explanation 1 to section 115JB of the Act. Therefore, the AO has made additions of the expenses which were disallowed under section 14A read with Rule 8D for Rs. 8,04,294.00 while computing book profits under MAT provisions. 8. The aggrieved assessee preferred an appeal to Ld. CIT(A) who has confirmed the order of the AO. Being aggrieved by the order of the Ld. CIT(A) assessee is in appeal before us. 9. The Ld. AR, submitted before us that the amount disallowed under normal computation of income in relation to exempted income cannot be imported while determining the book profit u/s 115JB of the Act. 10. On the other hand Ld. DR submitted that the disallowance needs to be made as per clause ''f'' of explanation 1 to section 115JB of the Act in relation to exempted income. Accordingly, the Ld. DR vehemently supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act." Givenabove, we hold that the disallowances made under the provisions 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 feelthat ad-hocdisallowance will service the justice to the Revenue and assessee. We, therefore, ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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