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TMI Blog2021 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act cannot be imported for the purpose of addition to be made under clause (f) to Explanation 1 to sec.115JB for computing book profit, i.e., the amount to be added under above said clause has to be computed from the Profit and Loss account independently. A.R raised the contentions on applicability of provisions of sec.14A, yet we are of the view that the issue agitated here relates to the computation of book profit u/s 115JB of the Act and further the AO did not examine applicability of clause (f) to Explanation 1 to sec. 115JB while framing the assessment order. The same renders the assessment order erroneous and prejudicial to the interests of the revenue. PCIT has expressed the view, which is contrary to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The Ld Pr. CIT noticed that the AO has accepted the book profit computed by the assessee, wherein the assessee has not made any addition for expenses relating to exempt income as required under clause (f) of Explanation 1 to sec.115JB of the Act. Hence, the Ld PCIT took the view that the assessment order is erroneous in so far as it is prejudicial to the interests of revenue. Accordingly he initiated revision proceedings u/s 263 of the Act. After hearing the assessee, Ld PCIT set aside the assessment order for the purpose of recomputing book profit u/s 115JB of the Act. Assessee is aggrieved by the said order passed by Ld PCIT. 3. The Ld A.R submitted that the question whether the provisions of sec.14A are applicable to a bankin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT) had issued the Circular no. 18 of 2015 dated 02.11.2015, which had analyzed and then explained that all shares and securities held by a bank which are not bought to maintain Statutory Liquidity Ratio (SLR) are its stock-in-trade and not investments and income arising out of those is attributable, to business of banking. This Circular came to be issued in the aftermath of Page 18 of 22 CIT Vs. Nawanshahar Central Cooperative Bank Ltd.12 wherein this Court had held that investments made by a banking concern is part of their banking business. Hence the income earned through such investments would fall under the head Profits Gains of business. The Punjab and Haryana High Court, in the case of Pr. CIT, vs. State Bank of Patiala13 while ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision rendered by the Special bench. 4. On the contrary, the Ld D.R supported the order passed by Ld Pr. CIT and submitted that the assessing officer has failed to apply law properly and hence the assessment order was rendered erroneous and prejudicial to the interests of revenue. 5. We heard the parties and perused the record. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Hon'ble Supreme Court held that the provision of 263 of the Act cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous that the section will be attracted. The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure relatable to any income to which sec. 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, should be added to Net profit while computing the book profit. Even though the assessing officer has worked disallowance u/s 14A of the Act while computing total income under normal provisions of the Act, yet he has omitted to examine the applicability of clause (f) of Explanation 1 to sec.115JB. Hence omission to apply provisions of the Act would make the assessment order erroneous and in view of the corresponding tax effect, it is prejudicial to the interests of revenue also. 7. We notice that the Ld Pr CIT has taken the view that the amount disallowed u/s 14A of the Act while computing total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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