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TMI Blog2019 (11) TMI 1837X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be considered for computing average value of investment which yielded exempt income during the year. If an investment has yielded exempt income in a particular year then, it will enter the computation of average value of investments for the purposes of Rule 8D(2)(iii). Accordingly, by following the above decision, the ld. CIT(A) directed the Assessing Officer to recomputed the disallowance in line with the directions of the Special Bench of the Tribunal. Thus, we find no infirmity in the order passed by the ld. CIT(A) and therefore, the ground raised by the Revenue stands dismissed. Disallowance u/s 14A while computing book profit under section 115JB - In the case of ACIT v. Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of Rs. 29,60,79,638/- and the same has been claimed as exempt under section 10(34) of the Act. On the above receipt of exempted income, the assessee has attributed an expenditure to the tune of Rs. 1,43,324/- in the memo of income and disallowance under section 14A of the Act. Further, during the year under consideration, the assessee made fresh investments of Rs. 17,50,00,000/-, but no dividend income received. The Assessing Officer called for quantification of expenditure towards huge dividend yielding investment and earning huge income that were exempt from tax. After considering the submissions of the assessee, the Assessing Officer quantified the disallowance under section 14A r.w. Rule 8D and disallowed Rs. 8,29,14,403/-. On app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which yielded exempt income during the year under consideration are to be included for the purpose of average value of investments. We have perused the said case law, wherein, the Special Bench of the Delhi Tribunal has observed that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. If an investment has yielded exempt income in a particular year then, it will enter the computation of average value of investments for the purposes of Rule 8D(2)(iii). Accordingly, by following the above decision, the ld. CIT(A) directed the Assessing Officer to recomputed the disallowance in line with the directions of the Special Bench of the Tribunal. Thus, we find no infirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U/s. 14A of the Act read with Rules-8D of the Income Tax Rules. On appeal, the Ld. CIT (A) citing the provisions of clause (f) of Explanation-1 to Section-115JB, confirmed the order of the Ld. Assessing Officer. The relevant portion of the order of the Ld. CIT (A) is reproduced herein below for reference:- 10.2 I have gone through the facts and circumstances of the case. The Assessing Officer has taxed the income U/s. 115JB since the tax on book profits is more than the tax under normal computation. While doing so, she made disallowance of the amount relatable to exempt income on the basis of the amount worked out U/s.14A r.w. Rule 8D under normal computation. The provisions of clause (f) of Explanation-1 to s. 115JB makes it abundantly cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act does not refer to any disallowance made U/s. 14A of the Act while arriving at the Book Profit for the purpose of Section-115JB(2) of the Act. Further Section 14A of the Act is a provision with fiction disallowing the deemed expenditure attributable to exempt income viz., dividend income U/s. 10 of the Act and Section 115JB of the Act is also a provision with fiction for payment of tax in respect of deemed income. Therefore while computing the profit for the purpose of Section 115JB of the Act another provision with fiction cannot be superimposed. Hence the question of increasing the Book Profit due to the disallowance U/s. 14A of the Act will not arise. However, in the instant case of the assessee, since we have already deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtified by statutory auditors and approved by the company in general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company. From the above decision it is clear that while computing the Book Profit of the company under the provisions of section 115JB of the Act; any disallowance made under the normal provisions of the Act also cannot be given effect to for arriving at the Book Profit for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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