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TMI Blog2024 (6) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... fit u/s 115JB of the Act - In the case of Vireet Investments P Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowance made u/s 14A of the Act cannot be imported in sec.115JB of the Act. Hence the addition of Rs.15,38,295/- to the net profit for the purpose of computing book profit u/s 115JB of the Act should be deleted. Then the question that arises is whether any addition is called for under clause (f) of Explanation to sec.115JB of the Act, when the assessee has not earned any exempt income. A perusal of the Explanation 1 to sec.115JB would show that the addition under clause (f) is required to be made only if any expenditure relatable to exempt income is debited to the Profit and Loss account. When the assessee has not earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 14A read with rule 8D of the I.T. Rules at Rs.15,38,295/- and added the same to the total income. The Assessing Officer also added the very same amount to the net profit for the purpose of computing book profit under section 115JB of the Act. The learned CIT(A) confirmed both the additions and hence the assessee has filed this appeal before the Tribunal. 3. The Learned AR placed reliance on the decision rendered by Hon'ble Madras High Court in the case of CIT Vs. Chettinad Logistic Pvt. Ltd. (2017) (80 taxman.com 221) and contended that no disallowance under section 14A is warranted when the assessee has not earned any exempt income. On the very same reasoning, the learned AR submitted that the addition under clause (f) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance by taking recourse to Rule 8D. 10.3. According to us, Rule 8D, only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of the total income of the Assessee. 10.4. Rule 8 D, in our view, cannot go beyond what is provided in Section 14 A of the Act. 11. Furthermore, we may note that a similar argument was sought to be advanced by the Revenue in the matter concerning, M/s. Redington (India) Limited Vs. The Additional Commissioner of Income Tax, which was, subject matter of T.C.A.No.520 of 2016. 11.1. A Co-ordinate Bench of this Court, vide judgment dated 23.12.2016, rejected the plea of the Revenue advanced in that behalf. 11.2. As a matter of fact, a perusal of the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of fact to that effect. The issue to be decided thus lies within the short compass of whether a disallowance in terms of s.14A of the Act read with Rule 8D of the Rules can be contemplated even in a situation where no exempt income has admittedly been earned by the assessee in the relevant financial year. 7. Per contra, Sri.T.Ravikumar appearing on behalf of the revenue drew our attention to the marginal notes of s.14 A pointing out that the provision would apply not only where exempted income is 'included' in the total income, but also where exempt income is 'includable' in total income. 8. He relied upon a Circular issued by the Central Board of Direct taxes in Circular No.5 of 2014 dated 11.2.2014 to the effect t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1 '.... The mandate of s.14A is clear. It desires to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of an exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income.' 10. The provision this is clearly relatable to the earning of actual income and not notional or anticipated income. The submission of the Department to the effect that s.14A would be attracted even to exempt income 'includable' in total income would entail the assessment of notional income, assumed to be exempt in the future, in the present assessment year. The computation of total income in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, Rule 8D, cannot come to the rescue of the Revenue. 15.2. In any event, the Tribunal, via, the impugned judgment has remitted the matter to the Assessing Officer. 15.3. Therefore, for the foregoing reasons, we are of the view, that no interference is called for qua the impugned judgment. 16. To our minds, questions of law, which could have arisen are already covered by the judgment of a Co-ordinate Bench of this Court rendered in M/s. Redington (India) Limited case. Following the above said decision, we agree with the contentions of the assessee that no disallowance is called for u/s 14A of the Act during the year under consideration, since the assessee has not earned exempt income during this year. Accordingly, we set aside the order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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