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Dy. Commissioner of Income Tax, Central Circle-8 (3) , Mumbai Versus M/s JSW Energy Limited

2016 (10) TMI 393 - ITAT MUMBAI

Disallowance of expenses u/s 14A - Held that:- We find that the ld. CIT(A) has passed the order after taking into account the complete matter and reduced the disallowance to ₹ 759,39,128/-. We are in agreement with the ld.CIT(A) that the rule 8D is not applicable in the current assessment year as the same is effective from the assessment year 2008-09 and reasonable basis has to be followed in order to work out the disallowance u/s 14A of the Act. Thus, finding no infirmity in the order of .....

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of section 115JB - I.T.A. No.796/Mum/2015 - Dated:- 25-8-2016 - SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) For The Appellant : Shri Ramchandran For The Respondent : Shri Hirva Shah ORDER Per RAJESH KUMAR, Accountant Member: This is an appeal filed by the revenue and is directed against the order dated 18.11.2014 passed by the Ld.CIT(A)-47,Mumbai for the assessment year 2006-07. 2. The issue raised in ground No.1 of appeal is against the restricting the disallowance u/s 14A of the Income Ta .....

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of the Act. 3. Brief facts of the case are that the assessee filed its return of income on 21.11.2006 declaring total income at ₹ 7,76,71,388/- after claiming deduction under section 80IA to the tune of ₹ 1,00,84,71,662/-. The original assessment was completed under section 143(3) of the Act on 31.12.2008 determining total income at ₹ 16,70,97,520/- and income under section 115JB was determined at ₹ 1,43,52,30,425/-. A search action u/s 132(1) of the Act was carried out i .....

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ee. During the course of assessment proceedings, the AO found that the assessee has received tax free dividend income which is exempt u/s 10(34) of the Act and the assessee has not disallowed the expenses attributable to earning the said income and accordingly made disallowance of ₹ 8,94,26,131/- u/s 14A r.w.r 8D of the Rules. The similar disallowance was made while completing the book profit u/s 115JB of the Act and thus, the assessment was completed u/s 143(3) read with section 153A of t .....

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ion to the tune of ₹ 7,59,39,128/- as made u/s 14A by observing and holding as under : 7.2 The facts of case and submission made by appellant have been considered. There is no dispute in view of decision of Hon'ble Bombay High Court and ITAT, that disallowance u/s 14A cannot be computed following Rule 8D for current assessment year. However, both High Court and ITAT have directed, that disallowance should be made on some reasonable basis. It is the argument of appellant that disallowan .....

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,734/- being 0.5% of average investment as per Rule 8D(iii), the appellant has made adhoc disallowance of ₹ 6,16,731/ -. The computation made by AO following Rule 8D(iii) for disallowance of administrative expense is not sustainable. However, the ad hoc disallowance made by appellant is also too meagre in comparison to AO's working. The appellant has offered a lump sum disallowance of ₹ 3,00,000/- out of other administrative expenses. I find that CIT(A)-38, Mumbai in appellants o .....

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Director finance 29,735 Administrative expenses (Rs.3 Lakh per month) 36,00,000 Total disallowance 7,59,39,128 7.4 The disallowance u/ s 14A for the year is therefore confirmed to the extent of ₹ 7,59,39,128/ -. The ground of appeal is decided accordingly as partly allowed. 4. We have carefully considered the submissions of the parties, perused the material placed before us including the orders of authorities below. We find that the ld. CIT(A) has passed the order after taking into accoun .....

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sue cannot be allowed and accordingly this ground of appeal is dismissed. 5. The issue raised in the 2nd grounds of appeal is against the deletion of addition made by the AO u/s 14A of the purpose of computing the book profit u/s 115JB of the Act. The ld. CIT(A) allowed the appeal of the assessee on this ground by holding that the issue is covered by the order of the co-ordinate bench of the Tribunal by observing and holding as under : 8.1 This ground of appeal pertains to addition of ₹ 8, .....

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the assessee is required to prepare its profit and loss account in accordance with the provisions of Part -II and Schedule VI of the companies Act 1956. Hence these accounts are in accordance with the provisions of Companies Act ,1956 and has been approved by the registrar of companies, the assessing officer does not have much scope to tinker with the accounts. Since the assessee has not debited any actual expenditure relating to the earning of exempt income, therefore, the provisions section 14 .....

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cision of Delhi tribunal in the case of Goetze India Ltd vs CIT 32 SOT 101 has been followed. Thus respectfully following the same, we allow the additional ground raised by the assessee" 8.2 In the assessment order appealed against, the AO has repeated the addition made in original assessment order. Respectfully following the order of Honourable Mumbai ITAT, AO is directed to delete the adjustment made to book profit on account of disallowance made u/s 14A for the purposes of section 115JB. .....

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hat the issue has been decided in favour of the assessee and the ld. CIT(A) has rightly followed the same while passing the order. Moreover, the clause (f) to explanation (1) to section 115JB has been inserted with effect from assessment year 2007-08 and current year is not covered by the said explanation. Accordingly, the order passed by the ld. CIT(A) is as per the law and therefore the same is upheld by dismissing the ground raised by the revenue. 7. The next issue raised in the ground no.3 i .....

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ibunal in assessees own case by observing as under : 11.1 The ground of appeal is directed against charging of interest u/s 234B in respect of additions u/s 115JB due to retrospective amendment in provisions of the Act. The AR has submitted as follows: During the course of the Original Assessment proceedings, in the assessment order passed u/s.143(3) of the Income Tax Act' 1961 the AO has computed the Interest u/s.234B of the Income Tax Act' 1961 since inception without appreciating the .....

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een fastened retrospectively by Finance Act, 2008. In appeal, the Hon'ble ITAT, Mumbai in ITA No 244/Bang/2010 deleted the aforesaid addition vide order dated 22-02-2013. The operating part of the order (Para 14, Page 12) read as under : "We, thus, respectfully following the aforesaid proposition laid down by the Hon'ble Calcutta High Court that no interest u/s.234B Cm be levied on account of inclusion of various items in the Explanation brought on the statute by the Finance Act 200 .....

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