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2017 (11) TMI 1152 - ITAT MUMBAIDisallowance u/s. 14A r.w. Rule 8D - sufficiency of own funds - Held that:- Hon'ble Jurisdictional High Court in the case of HDFC v. CIT (2016 (3) TMI 755 - BOMBAY HIGH COURT ) has held that if assessee possessed sufficient own funds, the presumption was that the investment was made from own funds and not from borrowed funds. Further we also observe that the assessee itself disallowed 10% of the dividend income at ₹.4,013/- and ₹.1,15,144/- for the Assessment Years 2008-09 and 2009-10 respectively at its own being the expenditure attributable for earning the exempt income and the Assessing Officer had not given any reason for rejecting the stand taken by the assessee. In the circumstances we hold that there is no need to make any further disallowance more than what the assessee already disallowed suomoto. In the circumstances, we direct the Assessing Officer to delete the disallowance made u/s. 14A r.w. Rule 8D of the I.T. Rules for the Assessment Years 2008-09 and 2009-10. Investments in domestic companies inclusion for computing disallowance u/s.14A - whether dividend from domestic companies is not exempt from tax in view of section 115-O? - Held that:- This issue is decided against the assessee by the Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd [2017 (5) TMI 403 - SUPREME COURT OF INDIA] wherein held Section 14A of the Act would apply to dividend income on which tax is payable under Section 115-O of the Act and the question formulated in the appeal has to be answered against the appellant-assessee. Disallowance made u/s. 14A should be added while computing the total income as per the book profits u/s. 115JB - Held that:- We admit the additional grounds and we find that the Delhi Special Bench of the Tribunal in the case of ACIT v. Vireet Investments Private Limited (2017 (6) TMI 1124 - ITAT DELHI) held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s. 14A r.w. Rule 8D of the I.T Rules, 1962. Thus respectfully following the said decision, we restore the grounds raised by the assessee in respect of disallowance u/s. 14A while computing the book profits to the file of the Assessing Officer who shall decide in view of the decision of the Special Bench (supra). Ground No. 4 and the additional grounds are allowed for statistical purpose. Addition made u/s. 145A - previous year’s closing stock has not been taken as forming part of current year’s opening stock and made addition by the Assessing Officer - assessee before us submitted that the method of valuation of stocks as forming part of Tax Audit Report and referring to Point No. 5 submits that during the year the company has complied with the requirements of the Guidance Note issued by the Institute of Chartered Accountants of India [ICAI] with respect to the provisions of section 145A - Held that:- On hearing both the parties and perusing the orders of the authorities below. we are of the considered view that this matter has to be restored to the file of the Assessing Officer for fresh adjudication and the contentions of the assessee are left open.
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