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TMI Blog2024 (4) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the income, thereby giving rise to loss and is allowed as such in computing income under the Income tax Act, whether that general principle be given a go-by while computing the expenditure incurred in connection with income which is exempt from tax and can it be said that the expenditure should not exceed the income? 2.2 Whether the Tribunal was correct in upholding the decision of the ld. CIT(A) with respect to deletion of addition of Rs. Rs. 4,49,72,528/- made u/r 8D(2)(ii), deleting net addition of Rs. 17,51,238/- u/r 8D(2)(iii) and holding that disallowance under section 14A of the Act cannot exceed the exempt income earned during the year despite the statute not laying down any such rule? 2.3 Whether computation of the expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in light of the judgment rendered by us in CIT v. Moon Star Securities Trading & Finance Co. (P) Ltd., [2024 SCC OnLine Del 1748]. 3. Dealing with the aforesaid aspect, we had in Moon Star Securities held as follows: "18. A bare perusal of the abovementioned provisions would signify that sub-Section (1) prescribes the mode and manner for computing the total income of the assessee under Section 115JB of the Act. However, Clause (f) of Explanation 1 only alludes to the amounts of expenditure relatable to any income to which Section 10 (excluding provisions contained in Clause 38 thereof) or Section 11 or Section 12 apply. Thus, the said explanation nowhere mentions or denotes any mandate to import the disallowance as per Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance, and with Explanation 115JB not specifically mentioning Section 14A of the Act, the addition of Rs. 89,00,000 was not justified. The view taken by the 1TAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. v. Commissioner of income Tax, (2002) 255 ITR 273 (SC) which held that ―the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account-except to the extent provided in the Explanation to Section 115J.‖ The Court declines to frame a question on the above issue." 21. The Karnataka High Court in the case of Sobha Developers Ltd. (supra) while rejecting the permissibility of adding back the disallowance on exempt income as per Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mages (P.) Ltd. (supra) was also taken by the High Court of Bombay in CIT v. Bengal Finance and Investments Pvt. Ltd. I.T.A. No. 337 of 2013, dated February 10, 2015]. It is pertinent to note that in Rolta India Ltd., the Supreme Court was dealing with the issue of chargeability of interest under sections 234B and 234C of the Act on failure to pay advance tax in respect of tax payable under section 115JA/115JB of the Act and therefore, the aforesaid decision has no impact on the issue involved in this appeal. Similarly, in Maxopp" 22. Further, in the case of Apollo Tyres Ltd. v. CIT [(2002) 9 SCC 1], the Hon'ble Supreme Court was of the opinion that the AO is not vested with an authority to travel beyond the net profit shown in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of depreciation on non-compete fee. We note that the issue of deprecation on non-compete fee is an issue which is no longer res integra and stands answered by our Court in Sharp Business System v. Income Tax-III, [2012 SCC OnLine Del 5639] in favour of the appellant. 5. However, insofar the present case is concerned, the ITAT has taken into consideration the following facts as would be evident from paragraph no.26, which is reproduced as under: "26. We have gone through the details of the noncompete fees incorporated at page No. 70 of the paper book which clearly reveals that for the earlier years, namely, 2005-06 to 2007-08 the Revenue accepted the depreciation claimed at Rs. 63,54,176/-, Rs. 47,65,632/-, and Rs.35,74,224/-, but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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