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2022 (6) TMI 257 - ITAT KOLKATADisallowance u/s 14A - interest disallowance - HELD THAT:- We find that in the audited balance-sheet placed at page 10 of the paper book dated 22.08.2014, shareholders funds comprising of share capital and Reserves & Surplus as on 31.03.2013 is Rs.386.60 crores (approx.) and as on 31.03.2014 is Rs.441.78 crores. The shareholders fund is interest-free fund. Now looking towards the investment fetching exempt income, the same are shown in Schedule 14 under the head “Non-Current Assets”. As on 31.03.2013 it is Rs.161.76 crores and as on 31.03.2014 it is Rs.193.42 crores It is further brought to our notice that out of the non-current assets of Rs.193.42 crores as on 31.03.2014, a sum of Rs.168.62 crores is investment in unquoted shares of subsidiary companies. So the investment in other/ listed equity shares are to the tune of Rs.24.8 crores. As against this figure of Rs.24.8 crores of the investment, the assessee has interest-free fund of Rs.441.78 crores, which is more than sufficient to cover up the investments giving rise to exempt income. Therefore, the ratio laid down by the Hon’ble Bombay High Court in the case of Reliance Utilities & Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] is squarely applicable on the facts and circumstances of the case. We are, therefore, inclined to hold that no interest disallowance is called for as per Rule 8D(2)(ii) of the Act for computing the disallowance under section 14A of the Act. To this extent, the relevant grounds raised in Grounds No. 2.1 to 2.4 are allowed. Disallowance u/s 14A determining the book profit under section 115JB - HELD THAT:- We find merit in the assessee’s contention. Special Bench of Delhi Tribunal in the case of ACIT –vs.- Vireet Investment Pvt. Limited. [2017 (6) TMI 1124 - ITAT DELHI] as well as the judgment of Sobha Developers Ltd. –vs.- DCIT [2021 (1) TMI 378 - KARNATAKA HIGH COURT], wherein it has been held that adjustment of disallowance under section 14A could not be made while computing book profit under section 115JB of the Act. Therefore, under the given facts and settled judicial precedence as referred above, we direct the Assessing Officer to compute the book profit without considering disallowance under section 14A of the Act. Thus Ground No. 3 raised by the assessee is allowed.
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