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TMI Blog2024 (12) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (3) TMI 856 - GUJARAT HIGH COURT ] MAT Computation - As there is no relation of disallowance u/s 14A while computing the book profit under section 115JB. The reason is that explanation (1) of Section 115JB adjustment is to be worked out as clause (f) where the amount of expenditure in relation to any exempt income other than specified income is required to be added to the book profit. Therefore, there is a separate mechanism provided for adjustment to the book profit of this kind of expenditure. Accordingly, lower authorities were not correct in adding notional expenditure as computed under section 14A and increasing the book profit by that sum under Section 115JB. This issue is also covered by case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] Disallowance made u/s 41 (1) - As noted that, these creditors are reflected under the trade payables. Further in the subsequent assessment years 2013-14 at Page 75 and assessment year 2014-15 these parties stand under the head trade payables. It is noted that, these parties remain to be outstanding creditors up to assessment year 2016-17 the details of which are place. In the subsequent assessment year being 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant craves liberty to add, alter, amend any of the grounds of appeal. Brief facts of the case are as under: 2. The assessee is a private limited company and filed its return of income for the year under consideration on 28/09/2012 declaring total income of Rs. Nil after claiming brought forward loss of Rs. 43,454/-. The return was processed under section 143 (1) of the act, and the case was selected for scrutiny. Statutory notices under section 143 (2) along with notice under section 142 (1) was issued to the assessee, calling upon to furnish various details. 2.1. In response to the statutory notices, representative of the assessee appeared before the Ld. AO and filed requisite details as called for. 2.2. The Ld. AO from the details filed noted that assessee is engaed in the business of trading in commodities, chemicals, capital feed etc., and has declared business income there from. 2.2.1. The Ld.AR noted that, the assessee made investment in shares/mutual funds, and earned dividend of Rs. 1,81,244/- claimed to be exempt. The Ld.AR noted that, the assessee claimed interest expenses in the P L account of Rs. 22, 62, 510/-. 2.3. The Ld. AO called upon assessee to justify why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , LC discounting charges and interest expenditure of Rs. 13,821/- pertain to the business activity carried on by the assessee. It is submitted that the interest expenditures are incurred for the meeting the working capital requirements of assessee s business and not for making any investments. 5.2. The Ld.AR submitted that assessing officer considered total Finance cost for disallowance under Rule 8D (ii) which is not in accordance with the provisions of the act. He placed reliance on following decision of Hon ble Chennai Tribunal and Calcutta Tribunal in support of the contention:- i. Decision of Chennai I.T.A.T in case of ACIT v/s Best Crompton Engineering Limited (ITA no 1603/Mds/2012) dated 16th July 2012 36 taxman.com 555. ii. Decision of Kolkata I.T.A.T in case of REI Agro Limited Vs DCIT 35 Taxman.com 404. 5.3. Without prejudice to the above submissions, the Ld.AR submitted that, the assessing officer failed to appreciate that the assessee has offered to tax the interest earned amounting to Rs. 32,252/-and hence this amount is required to be reduced from the interest expenses claimed in the P L account. He placed reliance on the decision of coordinate bench of this tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cheminvest Ltd vs CIT reported (2015) 378 ITR 33 and decision of Hon ble Gujrat High Court in case of CIT vs Corrtech Eergy Ltd., reported in (2015) 372 ITR 97. 6.3. Further we note that there is no relation of disallowance under Section 14A while computing the book profit under section 115JB. The reason is that explanation (1) of Section 115JB adjustment is to be worked out as clause (f) where the amount of expenditure in relation to any exempt income other than specified income is required to be added to the book profit. 6.3.1. Therefore, there is a separate mechanism provided for adjustment to the book profit of this kind of expenditure. Accordingly, lower authorities were not correct in adding notional expenditure as computed under section 14A and increasing the book profit by that sum under Section 115JB. This issue is also covered by Hon ble Special Bench of this Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd., reported in (2017) 58 ITR 313. 6.4. In respect of the disallowance made under section 41 (1) of the act, the Ld.AR submitted that, the creditors remain outstanding in the books of the assessee during the year under consideration. He submitted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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