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TMI Blog2021 (12) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by sustaining the addition of Rs. 6,27,24,263.00 while determining the book profit under the provisions of section 115JB of the Act. 3. The facts in brief are that the assessee in the present case is a limited company and filed its return of income dated 28-11-2011 for the year under consideration after making Suo-Moto disallowance of Rs. 6,27,24,263.00 under the provisions of section 14-A read with rule 8D of Income Tax Rule. However, the AO in the assessment framed under section 143(3) r.w.s. 144C(3) of the Act, inter-alia, has made the disallowance of Rs. 10,25,89,555.00 under the provisions of section 14A read with rule 8D unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,27,24,263 while working out the book profit under the provisions of section 115JB of the Act. 4. Aggrieved assessee preferred an appeal to the learned CIT(A) who confirmed the order of the AO by observing as under: 4.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The appellant has made suo-moto disallowance of Rs. 6,27,24,263/- u/s. 14A of the Act in the normal computation of income but has not made any adjustment to this effect in computation u/s. 115JB of the Act. The AO in order passed u/s. 143(3) has made disallowances of Rs. 10,25,89,555/- u/s 14A of the Act in normal computation of income and made adjustment of only Rs. 3,98,65,292/- to this effect in computation of book p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This ground of Revenue's appeal is partly allowed. 4.5 The Hon'ble Gujarat High Court in the recent decision in the case of PCIT V/s. Nirma Chemicals Works Limited Tax appeal no. 128 of 2019 decided on 24/06/2019 has also confirmed the addition in book profit of ad-hoc disallowances as under: 25.7 Now the question arises to determine the disallowance as per the clause (f) to Explanation-1 C/TAXAP/128/2019 ORDER of Sec. 11SJB of the Act in dependently on account of dividend income. However, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under clause (f) of section 115JB of the Act taking the amount disallowed under the provisions of section 14A read with rule 8D of Income Tax Rule is a debatable issue which cannot be rectified under the provisions of section 154 the Act. 7. On the contrary, the learned DR before us vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates whether the AO can rectify the assessment order, framed under section 143(3) r.w.s 144C(3) of the Act for the mistakes committed by him, in the proceedings under section 154 of the Act. The scope of the provisions of section 154 of the Act is limited to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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." 8.2. Likewise, the Hon'ble Gujarat High Court in the case of CIT Vs. Alembic Limited in tax appeal No. 1249 of 2014 has not confirmed the disallowance in the manner as provided under section 14A r.w.r. 8D of Income Tax Rules. The relevant extract reads as under: "94. We have considered the rival submission and we find that similar issue was raised by Revenue as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 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." 8.5. Given above, we hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the I.T. Rules, cannot be applied to the provisions of Sec. 115JB of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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