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2016 (11) TMI 595 - AT - Income TaxAddition being disallowance made u/s 14A while computing book profit u/s 115JB - Held that:- Perusal of the assessment order reveals that the AO has blindly added disallowance made u/s 14A r.w.r. 8D while computing book profits u/s 115JB without testing it independently under the provisions of clause (f) to explanation 1 of section 115JB (2). The approach of the AO and resultant addition made by him are not valid as per law. Thus, in view of the aforesaid discussion and circumstances, accepting the request of the assessee, we send this issue back to the AO with the following directions:- (1) The AO shall first recompute disallowance u/s 14A so as to bring it in line with the judgement of Hon’ble jurisdictional High Court in the case of HDFC Bank Ltd (2016 (3) TMI 755 - BOMBAY HIGH COURT ). (2) The assessee shall furnish requisite details and working of the amount of expenditure relatable to any income exempt u/s 10 [excluding income exempt u/s 10(38)], as envisaged in clause (f) of Explanation 1 to section 115JB (2). The AO shall examine the same and determine the amount to be added under clause (f) keeping in view the provisions of law and facts of the case; (3) In case, the assessee does not furnish requisite information to enable the AO to compute amount disallowable under clause (f) as directed above in point no (2), then the AO shall be free to treat the amount determined as disallowable u/s 14A in terms of our first direction above, as the amount to be added under clause (f) of explanation 1 to section 115JB. (4) In any case, amount to be added under clause (f) of explanation 1 to section 115JB (2) cannot exceed amount of disallowance that can be made u/s 14A, the latter being wider in its scope.
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