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2011 (11) TMI 370 - AT - Income TaxDis-allowance of expenses u/s 14A incurred in earning exempt income - dividend income exempt u/s 10(34) received during the year shipping business asseesse contending since income is assessed under tonnage tax scheme, no addition could be made on account of disallowance u/s 14A - addition made on account of impairment loss and provisions for exchange rate variation to the book profit of the company u/s 115JB - assessee contending that as per the provisions of section 115VO, the book profit derived from the activities of a tonnage tax company is liable to be excluded from the book profit of the company for the purposes of section 115JB Held that:- If at all the assessee has claimed any such expenditure in computation of profit of business of shipping, the same are to be taken as disallowed when the income of the said business is finally computed in accordance with the provisions of Chapter XIIG and no separate disallowance on account of such expenditure u/s 14A can be made. We, therefore, delete the disallowance made by the AO u/s 14A and confirmed by the CIT(Appeals). It is observed that both the amounts in question which were added back by the AO for the purpose of computing book profit of the assessee in accordance with the provisions of section 115JB admittedly related to the activities of a tonnage tax company and the same were already deducted by the assessee for the purpose of computing book profit derived from the said activity. In these circumstances, we are of the view that the same should have been added back even for the purpose of computing book profit derived from the activities of a tonnage tax company which is eligible for exclusion from the book profit for the purpose of section 115JB Decided in favor of assessee.
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