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TMI Blog2024 (5) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the AO. Thus, respectfully following the order of the Tribunal, we allow the grounds raised by the assessee. Disallowance under 14A of the Act while computing the provisions u/s 115JB - The issue is covered by the decision of Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI] as held that there cannot be any disallowance under Rule 8D read with 14A of the Act in terms of clause (f) of Explanation 1 to section 115JB of the Act. Thus, respectfully following the said decision, we hold that the disallowance made under Rule 8D read with section 14A of the Act while computing book profits cannot be sustained. In any case since the assessee itself made suo moto disallowance there cannot be any further disallowance u/s 14A read with Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , CIT(A) has erred in not considering the basis adopted by the Appellant for computing suo-moto disallowance of INR 8,60,000 under section 14A of the Act and enhancing the addition to the extent of exempt income earned by the Appellant." 2. The Ld. Counsel for the assessee, at the outset, submits that the Assessing Officer did not record proper satisfaction for invoking the provisions of section 14A of the Act before making disallowance under Rule 8D. Ld. Counsel submits that the assessee made suo moto disallowance of Rs. 8,60,000/- and has given explanation as to how the assessee has arrived at the suo moto disallowance but the AO did not give proper explanation for rejecting the suo moto disallowance. The Ld. Counsel submits that on iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n held in the case of ACIT vs. Vireet Investment Pvt. Ltd. (ITAT Delhi) (Special Bench), supra. So far claim with respect to borrowing of the fund and its investment is concerned the appellant has not controverted the finding of fact of the Ld. AO that it had a systematic investment over the period of time and therefore, the appellant contention that it has surplus find in the form of share capital and reserve and surplus being used for investment does not hold conclusive. It is also not the case of the appellant that investments made over the period of time has been through an exclusively independent investment account maintained separately for the purpose. 5.1.6. Since, the computation of disallowance u/s 14A made by Ld. AO has not fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case......" 10. The contention of the assessee is that had the AO excluded the non-dividend bearing investments and investment made out of non-interest bearing fund, no disallowance would have been called for. The Ld.CIT(A) has sustained the additions to the extent of exempt income without adverting to the contentions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for rejecting the suomoto disallowance made by the AO. Thus, respectfully following the order of the Tribunal, we allow the grounds raised by the assessee. 6. Coming to the Revenue's appeal, ground no.1 is in respect of disallowance made under section 14A read with Rule 8D. Since we have held that there is no proper satisfaction recorded by the AO and hence no disallowance under Rule 8D read with section 14A of the Act is warranted while dealing with the issue in the appeal of the assessee this ground of Revenue is dismissed. 7. Coming to ground no.2 of grounds of appeal of the Revenue i.e. in respect of disallowance under 14A of the Act while computing the provisions u/s 115JB of the Act. The issue is covered by the decision of the Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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