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2023 (4) TMI 144 - AT - Income TaxDisallowance u/s 14A for the purpose of Section 115JB - HELD THAT:- Argument of the Ld.AR with regard to interpretation, that u/s 115JB of the Act only in case of reporting profit variation to arrive at Book profits can be made, the Bench is not impressesd. As a matter of law, "income" or "profits and gains" should be understood as including ‘loss’ also so that 'profits and gains' represents ‘positive’ income, whereas 'loss' represents ‘negative’ income. As decided in in P.R. Basavappa & Sons v. CIT [1999 (9) TMI 41 - KARNATAKA HIGH COURT] pointed out that it has always been understood that income includes loss, as held in CIT v. Harprasad & Co. (P) Ltd. [1975 (2) TMI 2 - SUPREME COURT]. So that reduction in loss by way of positive adjustments, i.e amount to be added back if debited to Profit and Loss Account, like in case in hand, disallowance u/s14A of the Act is made, then word ‘net profit’ as shown in the profit & loss account for the relevant previous year would include the ‘loss’ shown in the return. Thus, there is no substance in this argument or grounds raised in that regard and ground no 3 to 6 are decided against the assessee. Nature of investments to arrive at exempt income - Disallowance u/s 14A cannot exceed the exempt income earned during the relevant assessment year irrespective whether larger amount was disallowed by the assessee u/s 14A of the Act while filing the return of income which has been followed by GMR Enterprises Pvt. Ltd. [2021 (11) TMI 565 - ITAT BANGALORE].So there is no substance in the grounds raised by revenue in it’s appeal.
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