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2017 (7) TMI 1365 - AT - Income TaxAddition u/s 14A - Contention of the assessee that it has not incurred any specific expenditure to earn exempt income, but made adhoc disallowance towards administrative and other expenses - assessee further contended that the AO cannot invoke the provisions of section 14A unless specifically pointed out how the disallowance computed by the assessee is incorrect - HELD THAT:- No merit in the argument of the assessee for the reason that once the AO invoked the provisions of section 14A to compute disallowance of expenditure incurred to earn exempt income, it is a justifiable compliance of said provision, and he need not to record separate satisfaction. In this case, the AO has applied the provisions provided u/r 8D and worked out the disallowance as against adhoc disallowance made by the assessee, which is supported by the decision of jurisdictional High Court in the case of Godrej Boyce Mfg Co Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein it has been held that disallowance u/s 14A has to be computed as per the provisions provided u/r8D with effect from AY 2008-09 onwards. Therefore, we are of the view that the AO has rightly computed disallowance towards expenditure u/s 14A Validity of adjustments made under clause (f) to section 115JB towards disallowance made u/s 14A r.w.r. 8D - additional ground raised by the assessee - HELD THAT:- We find merits in the arguments of the assessee for the reason that in the case of ACIT vs Vireet Investments Pvt Ltd [2017 (6) TMI 1124 - ITAT DELHI] has considered similar issue and after considering the provisions of section 115JB(2) observed that computation of book profit in terms of clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s 14A r.w.r.8D. Therefore, considering the facts of the case and also following the decision of ITAT, Delhi Special Bench, we are of the view that no adjustments can be made towards book profit computed u/s 115JB on account of disallowance made u/s 14A for the purpose of computation of book profit u/s 115JB of Income-tax Act, 1961. Appeal filed by the assessee is partly allowed.
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