TMI Blog2020 (4) TMI 251X 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 rule 8D of Income Tax Rules for the administrative expenses will be determined considering only those investments which yielded exempt income during the year. We direct the Assessing Officer to compute the disallowance as per Rule 8D by taking into consideration only those shares/investments, which have yielded exempted income in the year under consideration. Hence the ground of appeal of the assessee is partly allowed. Addition of the disallowance made u/s 14A of the Act while computing book profit u/s 115JB - HELD THAT:- It is settled law that the amount of disallowance made by the AO u/s 14A of the Act cannot be imported while determining the profit u/s 115JB of the Act. In this regard, we rely on the judgment cited by the Ld. AR for the assessee in the case of Alembic Ltd. [ 2017 (1) TMI 513 - GUJARAT HIGH COURT] Also note that in the recent judgment of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that the disallowances made u/s 14A of the Act r.w.r. 8D cannot be the subject matter of disallowances while determining the book profit u/s 115JB. Disallowance needs to be made in terms of the provisions of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -13. First, we take up the appeal filed by the assessee bearing ITA 3075/AHD/2013. The assessee has raised the following grounds of appeal: 1. Ld. CIT (A) erred in law and on facts in confirming disallowance of ₹ 8, 04. 294/- u/s 14A of the Act by invoking rule 8D2(iii) ignoring fact that appellant has sufficient interest free ftinds and not incurred any expenditure for earning tax free income. Ld. CIT (A) ought to have considered submission of appellant and delete the disallowance. It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming action of AO to increase book profit u/s 115JB of the Act by disallowance of Rs, 8,04,294/- u/s 14A of the Act. Ld. CIT (A) ought to have deleted same considering various judicial pronouncement. It be so held now. 3. Levy of interest u/s 234A, 234B 234D of the Act is unjustified. 4. Initiation of penalty proceedings u/s 271(1 )(c) of the Act is unjustified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. The 1st issue raised by the assessee is that the Ld.CIT (A) erred in ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, the computation of the disallowance under section 14A read with rule 8D(2)(iii), which is issue in the assessee's appeal, is restored to the file of the AO for recomputation in line with the direction given above. No disallowance under section 14A read with rule 8D(2)(i) and (ii) can be made in this case. 6.1 We have also considered a similar judgment of Special Bench of Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415; passed recently wherein it was held that the disallowances u/s 14A of the Act read with rule 8D of Income Tax Rules for the administrative expenses will be determined considering only those investments which yielded exempt income during the year. 6.2 In view of the above, we direct the Assessing Officer to compute the disallowance as per Rule 8D by taking into consideration only those shares/investments, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1962. 11.2 The ratio laid down by the Hon ble Tribunal is squarely applicable to the present facts of the case. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be applied while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 11.3 However, in our considered view the disallowance needs to be made as per Clause (f) to Section 115JB of the Act independently. The judgment of Hon ble Gujarat High Court relied on by the Ld AR in the case of Alembic Ltd. (supra) , does not restrict the disallowance provided under clause (f) u/s 115JB of the Act. 11.4 Thus it is clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so, we draw our support from the judgment of Hon ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO No.1501 of 2014 (ITAT No.47 of 2014) dated 19.11.14 wherein it was held that the disallowance about exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 is consequential and the issue raised in ground No. 4 is premature to decide. Therefore we dismiss both the grounds of appeal raised by the assessee. In the result the appeal filed by the assessee is partly allowed. Now Coming to ITA 3338/AHD/2015 for A.Y. 2012-13. The Revenue has raised the following grounds of appeal: The Ld.CIT(A) has erred in law and on facts in deleting the additions made by the AO on account of liquidated damages amounting to ₹ 10,21,707/-, without properly appreciating the facts of the case and the material brought on record. 1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance made u/s.40(a)(i) of the Act of ₹ 23,28,587/-, without properly appreciating the facts of the case and the material brought on record. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 12. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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