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2016 (4) TMI 915 - ITAT CHENNAI

2016 (4) TMI 915 - ITAT CHENNAI - TMI - Disallowance u/s 14A r.w.s 8D - CIT(A) confirmed the order of the Assessing Officer - Held that:- Sec. 14A of the Act provides for disallowance of expenditure for earning the exempted income when the Assessing Officer is not satisfied that the expenditure was not claimed by the assessee. In the case before us, the assessee claims that surplus funds were used for making investments. The assessee also claims that no borrowed funds were used for making the in .....

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omputed the disallowance at ₹ 24,61,662/-. There is no dispute about the computation of expenditure as made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. - Decided against assessee

Reopening of assessment - no adjustment of bad and doubtful debts to the book profit u/s 115 JB - Held that:- The Assessing Officer found that a sum of ₹ 3.5 crores was not added to the boo .....

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hall be increased by the provision made for meeting the liabilities. In this case, admittedly, the assessee has made a provision to the extent of ₹ 3,50,72,000/-. Though the assessee added the same in the normal computation, no adjustment was made as provided in Explanation 1 to sec. 115JB(2) of the Act. The only contention of the assessee before this Tribunal is that Explanation 1 to sec. 115JB(2) is not applicable during the year under consideration. No doubt, Explanation 1 to sec. 115JB .....

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that since Explanation 1 to sec. 115JB(2) of the Act is applicable retrospectively with effect from 1.4.2001, the provision for bad and doubtful debt has to be increased as provided therein. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. - Decided against assessee

Rectification proceedings u/s 154 - excess loss was set off against the book profit - Held that:- It is not in dispute that the total book loss available to the assessee-c .....

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an, Adv For the Respondent : Shri A B Koli, JCIT ORDER Per N R S Ganesan, Judicial Member All the three appeals of the assessee are directed against the respective orders of the Commissioner of Income-tax (Appeals) for assessment years 2008-09 and 2004-05. Therefore, we heard them together and disposing of the same by this common order. 2. Let us first take up I.T.A.No. 1388/Mds/2014 for assessment year 2008-09. 3. Shri R.Vijayaraghavan, ld. Counsel for the assessee submitted that the assessee h .....

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g the dividend income. However, the Assessing Officer disallowed a sum of ₹ 24,61,662/- by applying the provisions of Rule 8D of the Income-tax Rules. According to the ld. Counsel, when the assessee has not incurred any expenditure, there is no reason for making the disallowance. 4. On the contrary, Shri A.B Koli, ld. Departmental Representative submitted that though the assessee claims that no expenditure was incurred and the surplus funds were used for making investments, Rule 8D provide .....

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siness purpose, according to the ld. DR, the CIT(A) has rightly confirmed the order of the Assessing Officer. 5. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the provisions of sec. 14A of the Act and Rule 8D of the Income-tax Rules. Sec. 14A of the Act provides for disallowance of expenditure for earning the exempted income when the Assessing Officer is not satisfied that the expenditure was not cla .....

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Even in case no expenditure was incurred, third limb of Rule 8D provides for computation of expenditure. In the case before us, the Assessing Officer has applied the provisions of Rule 8D and computed the disallowance at ₹ 24,61,662/-. There is no dispute about the computation of expenditure as made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 6. Now, coming to I.T.A.No.1389/Mds/2014 .....

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sessment is not justified. 8. On the contrary, Shri A.B Koli, ld. Departmental Representative submitted that the return was originally filed on 24.10.2004. The same was processed u/s 143(1) of the Act. The return was not taken up for scrutiny and no assessment order was passed u/s 143(3) of the Act. Subsequently, the Assessing Officer found that the provision made for bad debt to the extent of ₹ 3.5 crores was not added for the purpose of computation of book profit u/s 115JB of the Act. Th .....

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roviso to sec. 147 is not applicable at all. The Assessing Officer found that a sum of ₹ 3.5 crores was not added to the book profit u/s 115 JB of the Act. In those circumstances, this Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment by issuing notice u/s 148 of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed. 10. Now coming to the merit of the .....

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d that Explanation 1 to sec. 115JB of the Act was inserted by Finance Act, 2008, therefore, the same is not applicable for the assessment year under consideration. 11. We have considered the rival submissions on either side and also perused the material available on record. Explanation 1 to sec. 115JB of the Act was introduced by Finance Act 2008 with retrospective effect from 1.4.2001. Therefore, the book profit computed shall be increased by the provision made for meeting the liabilities. In t .....

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t from 1.4.2001. Therefore, it is very much applicable for the year under consideration. There may be a reasonable cause on the part of the assessee for not making adjustment on the date of filing the return of income. It does not mean that the provision made for bad and doubtful debt cannot be added back to the book profit as provided in Explanation 1 to sec. 115JB(2) of the Act. This Tribunal is of the considered opinion that since Explanation 1 to sec. 115JB(2) of the Act is applicable retros .....

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submitted that in the assessment made after reopening of assessment on 19.12.2011, an amount of ₹ 4,31,68,928/- was shown as brought forward book loss and the same was reduced from the profit as per the Profit & Loss Account to arrive at the taxable profit of ₹ 1,04,79,974/- u/s 115JB of the Act. Subsequently, the Assessing Officer found that the unabsorbed depreciation of SPIC Organics Ltd u/s 32(2) of the Act for the assessment year 2000-01 was only ₹ 3,57,07,000/-. There .....

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