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TMI Blog2020 (7) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... T Vs. Vireet Investment P. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] It is specifically held that the provisions u/s 14A r.w.r 8D is not applicable while computing the book profit u/s 115JB. No law contrary to the law relied by the CIT(A) in his order has been produced before us. CIT(A) has correctly applied the decision in the case of ACIT Vs. Vireet Investment P. Ltd.(supra). The facts are not distinguishable. - Shri Pramod Kumar, VP And Shri Amarjit Singh, JM For the Assessee : Shri Madhur Agarwal For the Revenue : Shri V. Sreekar (DR) ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 28.11.2018 passed by the Commissioner of Income Tax (Appeals) -04, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2014-15. 2. The revenue has raised the following grounds: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance u/s 14A made by the AO thereby overlooking the fact that it was correctly worked out as per the method of calculation prescribed in Rule 8D of Income Tax Rules, 1962. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see filed an appeal before the CIT(A) who remanded the issue before the AO in view of the decision of the ITAT in the assessee s own case for the A.Y. 2008-09, 2009-10, 2010-11, 2011-12 2012-13. However, the disallowance u/s 14A r.w. Rule 8D while computing the books profit u/s 115JB of the Act has been deleted in view of the decision of the Hon ble ITAT Delhi Special Bench in case of ACIT Vs Vireet Investment P. Ltd. ITA. No.502/Del/2012 and C.O. No. 68/Del/2014 The revenue was not satisfied, therefore, the revenue has filed the present appeal before us. ISSUE Nos. 1 to 3 4. The Ld. Representative of the revenue has argued that the AO has correctly applied the provisions u/s 14A r.w.r. 8D but the CIT(A) has wrongly applied the method of calculation placed upon the different authorities, therefore, the finding of the CIT(A) is not justifiable, hence, liable to be set aside. It is specifically argued that the CIT(A) has wrongly applied the authority in the case of Vireet Investment (P) Ltd. which is not justifiable, hence, the finding of the CIT(A) is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the AO to apply the said ratio to the facts of the present case and other decisions, if any, in force and decide the issue in accordance with law. (Appeal effect given by AO accepting assessee's disallowance vide order dt. 30/06/2017) In A.Y. 2010-11, in ITA No. 7135/MUM/2013 dated 22.04.2016 8 - As could be seen, in this case also, the assesse has made disallowance under section 14A which is more than reasonable considering the exempt income earned by the assesse in comparison to the taxable income. Moreover in this case also, the Tribunal has decided the issue in the AY 2008- 09 vide ITA No.7623/Mum/2011 dt.22/01/2014. 9 - That being the case, respectfully following the order of the coordinate bench of the Tribunal, we restrict the disallowance u/s 14A of the Act As. 23,08,853/-, as offered by the assessee. Accordingly, ground raised by the assesse is allowed and ground raised by the department is dismissed. In A.Y. 2011-12, in ITA No. 5484/M/2014 dated 17.03.2016 On perusal of the above decision of the Tribunal, we agree with the Id. Counsel's argument and remand the matter to the file of the AO. We direct the AO to apply the said ratio to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Profit and Loss Account, are to be added back to the net profits for the purpose of computing book profits. Disallowance u/s 14A, if any, ought to be made under clause 1' of explanation I to Section 115JB. Section 115JB is a distinct code in itself and Section 14A, as inserted after Section 14 which provides for income classified under the five heads of income, should be applied only for computing income under those five heads only. In the absence of any specific mechanism being prescribed u/s 115JB for the purposes of determining the amount of expenditure relatable to income exempt u/s 10, 11 or 12, the principle of apportionment of expenditure as was laid down by Apex Court prior to introduction of Section 14A may be applied Furthermore. LTCG subjected to STT which is exempt u/s 10(38) forms part of the book profits. Accordingly, the expenditure relatable thereto even though disallowed u/s 144, should not be added back in computing the book profits. Accordingly, the expenditure relatable thereto even though disallowed u/s 14A, should not be added back in computing the book profits. In support of its contention, appellant placed reliance on the judgement of Hon ble ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where it is not practicable to do so on the ground of exceptional and extraordinary circumstances, the bench could fix a future date of pronouncement of the order which shall not ordinarily be a day beyond a further period of 30 days. Thus, a period of 60 days has been provided under the extant rule for pronouncement of the order. This period could be extended by the bench on the ground of exceptional and extraordinary circumstances. However, the extended period shall not ordinarily exceed a period of 30 days. 6.2 Although the order was well drafted as well as approved before the expiry of 90 days, however, unfortunately, on 24/03/2020, a nationwide lockdown was imposed by the Government of India in view of adverse circumstances created by pandemic covid-19 in the country. The lockdown was extended from time to time which crippled the functioning of most of the government departments including Income Tax Appellate Tribunal (ITAT). The situation led to unprecedented disruption of judicial work all over the country and the order could not be pronounced despite lapse of considerable period of time. The situation created by pandemic covid-19 could be termed as unprecedented and beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excludingat least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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