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2019 (2) TMI 621 - AT - Income TaxDisallowance of expenditure in terms of Section 14A in relation to income which does not form part of the total income under the Income Tax Act - Held that:- No disallowance is warranted under s.14A of the Act towards proportionate disallowance in view of the long line of judicial precedents including Sintex Industries Ltd. (2017 (5) TMI 1160 - GUJARAT HIGH COURT). Adverting to the second limb of disallowance of administrative expenses, the learned AR initially submitted that in the absence of any specific ‘satisfaction’ recorded for application of Section 14A, no such disallowance is permissible. However, later in the course of hearing, the learned AR for the assessee did not press the aforesaid aspect for adjudication and consented for disallowance of administrative expenses subject to deduction of ₹ 25,000/- already disallowed suo moto by the assessee. Having regard to the concluded facts towards own capital in excess of corresponding investment, we are inclined to accept the plea of the assessee for deletion of proportionate disallowance of interest expenditure to the tune of ₹ 6,64,777/-. The assessee accordingly gets relief to this extent. As regards the disallowance under Section 8D(2)(iii) towards administrative expenditure, we find merit in the plea of the assessee for deduction of suo moto disallowance therefrom. Accordingly, disallowance of administrative expenditure under s.14A r.w.s. 8D(2)(iii) is sustained to the extent of ₹ 50,695/- - Decided partly in favour of assessee. MAT computation - book profit under s.115JB - whether for the purposes of the computation of ‘book profit’ u/s 115JB, the AO is entitled to increase ‘book profit’ by the equivalent amount of disallowances as found attributable to exempt income under normal provisions or not? - Held that:- With the assistance of the learned AR for the assessee, we find that the issue is squarely covered in favour of the assessee by the decision of Alembic Ltd. [2017 (1) TMI 513 - GUJARAT HIGH COURT] as well as the decision of the special Bench in Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI]. AO is directed to delete the adjustments made on account of disallowance under s.14A of the Act for the purposes of computation of book profit under s.115JB of the Act. Consequently, Ground No.2 of the assessee’s appeal is allowed.
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