Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (9) TMI 1219 - AT - Income TaxDisallowance u/s 14A r.w. Rule 8D(2)(ii)/(iii) - Held that:- It is the finding of the Ld.CIT(A) that the own funds of the assessee are much more than the investments and in which case no disallowance is required to be made u/s 14A r.w. Rule 8D(2)(ii) in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT). This finding of the Ld.CIT(A) could not be rebutted with evidences by the Revenue to show that there were no surplus funds for making investments. In the circumstance we uphold the order of the Ld.CIT(A) in deleting disallowance u/s 14A r.w. Rule 8D(2)(ii). Coming to the disallowance under Rule 8D(2)(iii), we find that the Ld.CIT(A) in so far as Assessment Year 2008-09 is considered entire disallowance as made by the Assessing Officer is sustained and in respect of the Assessment Years 2009-10 and 2010-11 he restricted the disallowance to ₹.9,50,000/- and ₹.8,75,000/- respectively. He also noticed that the assessee earned dividend income of ₹.9,62,500/-, ₹.8,75,200/- and ₹.5,50,000/- during these Assessment Years. In the circumstances the restriction of disallowance under Rule 8D(2)(iii) made by the Ld.CIT(A) cannot be disturbed since it is more than the dividend income earned by the assessee. Thus we sustain the order of the Ld.CIT(A) on this issue. Adjustment made to book profit u/s 115JB on account of expenses relatable to exempt income u/s 14A r.w. Rule 8D - Held that:- This issue now stands squarely covered by the decision of the Special Bench Delhi in the case of ACIT v. Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] wherein the Special Bench held that the computation under clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules. Adjustment made to the book profits u/s 115JB on account of provision for warranty expenses - Held that:- In the case of CIT v. Jay Bee Industries [2007 (9) TMI 626 - PUNJAB & HARYANA HIGH COURT] held that provision of warranty for repairs/replacement is an existing liability at time of sale and is allowable as deduction. Mumbai Bench of the Tribunal in the case of Indian Oil Tanking Ltd. v. ITO [2008 (1) TMI 417 - ITAT BOMBAY-E] held that Assessing Officer cannot make addition of provision of performance warranties to net profit of assessee for arriving at its book profit u/s 115JB. Considering all these decisions and the facts of this case the Ld.CIT(A) allowed the claim of the assessee which in our view is right. Therefore, respectfully following the said decision of the Supreme Court in the case of M/S. Rotork Controla India (P) Ltd v. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA), we affirm the order of the Ld.CIT(A) in holding that the provision made for warranty is an ascertained liability and no adjustment is warranted while computing book profit. This ground is dismissed.
|