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2019 (7) TMI 1494 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - HELD THAT:- AO cannot mechanically apply the formula under Rule 8D(2)(iii) without examining the merits of the assessee’s stand. We, however, agree with the plea on behalf of the Revenue that conditions of regarding satisfaction under s. 14A(2) was satisfied for invoking the provision. We are of the considered view that under the circumstances the disallowance of 50% of the expenditure incurred on professional that is 50% of 6,61,800/- would be sufficient to cover appropriate disallowance towards administrative expenses. The assessee has already disallowed 10% thereof. Therefore, another disallowance of 40% on the aforesaid amount which works out to ₹ 2,64,720/- would thus meet the object in this regard. The assessee accordingly, gets partial relief. Adjustments made on account of disallowance computed u/s 14A while computing book profit u/s 115JB - HELD THAT:- We find merit in the plea of the assessee on this score. The Special Bench of Tribunal in the case of CIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has observed that disallowance computed u/s 14A cannot be imported to the provisions of sec. 115JB. However, at the same time, the claim of the assessee that no adjustment is called for while computing book profit is voilative of Explanation 1 (f) referred to in sec. 115JB of the Act and thus cannot be entertained. No blanket exemption can be read in the Special Bench decision in Vireet’s case in this regard. Thus, the adjustment to the tune of ₹ 3,30,900 shall be taken into account by the AO for the purposes of Clause (f) to sec. 115JB in tune with disallowance sustained under normal provision. The second issue is accordingly allowed in partly.
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