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2017 (12) TMI 1799 - AT - Income TaxDisallowance u/s 14A r.w. Rule 8D - HELD THAT:- The legislative intent is more discernible in the judicial decisions. In Chettinad Logistics (P) Ltd.[2017 (4) TMI 298 - MADRAS HIGH COURT] has held that section 14A cannot be invoked where no exempt income was earned by the assessee in the relevant assessment year. In the case of CIT v. Shivam Motors (P) Ltd. [2014 (5) TMI 592 - ALLAHABAD HIGH COURT] it has been held that in absence of any tax free income earned by the assessee, disallowance u/s 14A could not be made. In a similar vein, it has been held in Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. We delete the disallowance made by the AO. Thus the 1st ground of appeal is allowed. Addition of provision for doubtful debts/advances made to the book profit u/s 115JB - HELD THAT:- In Yokogawa India Ltd. [2011 (8) TMI 766 - KARNATAKA HIGH COURT] as held that while computing book profits, provisions made for bad and doubtful debts cannot be added back in accordance with Explanation (c) to section 115JB (1) as same is not an ascertain liability. On the other hand, in the case of Ilpea Paramount Pvt. Ltd. [2010 (2) TMI 45 - DELHI HIGH COURT] as held that provision for doubtful debts and provision for doubtful advances are nothing but the provisions for diminution in the value of assets, hence the same are to be added back in computing book profit in view of the retrospective amendment introduced in section 115JA by inserting clause (g) in Explanation to section 115JA (2) which specifically mentions the amount set aside as provision for diminution in the value of any asset. Also in the case of CIT vs. Steriplate (P) Ltd. (2011) [2011 (5) TMI 645 - PUNJAB AND HARYANA HIGH COURT] has held that by virtue of clause (i) of Explanation 1 to sub-section (2) of section 115JB, as inserted by the Finance (2) Act, 2009, retrospectively from 1st April 2001, any amount set aside as provision for diminution in the value of any asset would not reduce the book profits of an assessee for the assessment year 2002-03. We follow the above judgment of the Hon’ble Delhi High Court and Punjab and Haryana High Court and uphold the order of the Ld. CIT(A) confirming the addition made by the AO. Thus this ground of appeal is dismissed. Disallowance made u/s 14A r.w. Rule 8D while computing book profit u/s 115JB - HELD THAT:- In a recent decision the ITAT Delhi Bench ‘H’ (Special Bench) in the case of ACIT vs. Vireet Investment (P.) Ltd.[2017 (6) TMI 1124 - ITAT DELHI] has held that computation under clause (f) of Explanation 1 to section 115JB (2) is to be made without resorting to computation as contemplated u/s 14A r.w. Rule 8D. We follow the above decision of the Special Bench of the Tribunal and delete the addition made by the AO u/s 14A r.w. Rule 8D while computing book profit u/s 115JB. - Decided in favour of assessee.
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