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TMI Blog2010 (11) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2003-04. The revenue in this appeal had raised disputes on two different grounds. 2.1 The first dispute is regarding disallowance of interest expenditure amounting to ₹ 68,55,615/- under section 14A of the Income-tax Act. AO noted that the assessee had made investment in shares to the tune of ₹ 13.08 crores income from which was not taxable. It was also noted by him that the assessee had taken interest bearing loans amounting to ₹ 290.01 crores on which interest of ₹ 18.99 crores had been claimed as deduction. AO therefore asked the assessee to explain as to why the interest should not be disallowed under section 14A of the Income-tax Act and as per AO the assessee gave no explanation. The AO therefore estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2003-04 was taxable and the provisions of section 14A were therefore not applicable. It was accordingly urged that the addition should be deleted. The Learned DR on the other hand submitted that the various details submitted by the assessee before CIT(A) were not available before the AO. It was also submitted that the plea of dividend income be taxable had not been taken before the AO or CIT(A). 2.1.4 We have perused the records and considered the rival contentions carefully. The dispute is regarding disallowance of interest proportionate to the investment in shares. The AO had disallowed the interest on the ground that the dividend income was tax free. In appeal CIT(A) after considering the various details and evidence sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of AO. 2.2.2 We have perused the records and considered the matter carefully. The dispute is regarding addition of ₹ 4,40,526/- being the provision for leave encashment while computing the book profit under section 115JB. It is a settled legal position that while computing the book profit only the specified adjustments as mentioned in Explanation 1 to section 115JB (2) can be made. Clause (c) of the Explanation 1 provides for adjustment of amount set aside as provision for meeting liability other than ascertained liabilities. The provision for leave encashment calculated as per the scheme is an ascertained liability actually incurred by the assessee in view of the judgment of Hon ble Supreme Court in case of Bharat Earthm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed but to the said income returned, AO again added a sum of ₹ 35,68,280/- on account of interest disallowance under section 14A. It is thus clear that there had been double disallowance under section 14A. Since the assessee had already disallowed interest under section 14A more than the amount disallowed by AO, the addition made by the AO on account of disallowance of interest has to be deleted. We therefore see no infirmity in the order of CIT(A) deleting the addition and the same is therefore upheld. 4. In the result appeal of the revenue for assessment year 2003-04 is partly allowed for statistical purpose whereas the appeal for assessment year 2004-05 is dismissed. The decision was pronounced in the open court on 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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