TMI Blog2018 (4) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... rgy Ltd.[2015 (5) TMI 823 - BOMBAY HIGH COURT]. Respectfully following the same, we direct the AO that no addition while computing book profit u/s.115JB is to be made with regard to amount in excess of what has been debited in the P & L account with respect to such exempt income. Meaning thereby, any disallowance made by the AO in excess of what has been claimed by the assessee should not be added while working book profit u/s.115JB. We direct accordingly. - ITA No.62/Mum/2016 And ITA No.5814/Mum/2015 - - - Dated:- 6-4-2018 - SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM For The Revenue : Shri T.A. Khan For The Assessee : Shri Sunil Nahta ORDER PER R.C.SHARMA (A.M): These are the cross appeals filed by Revenue and assessee against the order of CIT(A)-22, Mumbai dated 04/09/2015 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the IT Act. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is engaged in the business of commodity and derivatives exchange. During the course of assessment, AO made disallowance u/s.14A and also did not give credit for TDS of ₹ 18,57,273/- The AO also he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of penalty from the members for onward transfer of same to the fund. Thus, there is force in appellant's argument that the income so collected diverted at source itself. The appellant's other argument is also correct that even if this penalty amount is required t be treated as income u/s. 28 of the Act, the amount so transferred to Investors Protection Fund will constitute an expenditure u/s. 37 of the Act. 8. We noticed that the learned CIT(A) has taken conscious view of the matter after considering legal position and factual aspects. We also find merit in the contentions of the assessee that the penalty amount cannot be considered as income of the assessee as it has been diverted to the investors protection fund by overriding title. The case of the AO was that the assessee did not keep the collections in separate account. However it is stated by the assessee that they were kept in a separate account in the books of account and was shown as liability. The Ld A.R also stated that the said collections have been invested in mutual funds. These submissions of Ld A.R could not be disproved by the revenue. The Ld A.R also submitted that the Trust has ultimately been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been indirectly incurred, the assessee has suo-moto disallowed proportionate administrative expense of ₹ 11,70,591/- u/s. 14A having regard to proportionate employee cost and other administrative cost being amount of expenditure incurred for earning the said dividend income. Our attention was also invited to Pg. 69 to 71 of the Paper book whereby the assessee has given explanation with regard to computation of the said proportionate employee cost and other administrative cost that might have been indirectly incurred for earning the said dividend income. 10. It was further argued by learned AR that assessee has made investments mostly in mutual funds only. Out of total investments of ₹ 125.78 Crs assessee has made tax-free investments of ₹ 51.78 Crs. Which comes to 41.17% of total investments. Considering the nature of transactions carried out by the assessee the Hon ble coordinate bench in the assessment year 2008-09 has restricted the disallowance at ₹ 20 Lakhs u/s. 14A which comes to 0.87% of the dividend income earned during that year. The details of investments and dividend income for the AY's 2007-08 to 2011-12 were furnished, as Annexure 1. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stments. Hence the Ld CIT(A) directed the AO to compute the disallowance under Rule 8D(2)(iii) on the value of non-taxable investments only. Still aggrieved, the assessee has filed this appeal before us. 20. The Ld A.R submitted that the assessee has worked out the disallowance u/s 14A in a scientific manner and the AO did not consider the same and he has also failed to record his dissatisfaction. However, we notice that the AO has discussed at length about the disallowance in the assessment order, which makes it clear that he was not satisfied with the workings of the assessee. Hence we are unable to agree with the assessee in this regard. We notice that the assessee has mainly purchased and sold the units of mutual funds. Further, during the year relevant to AY 2008-09, the assessee has sold most of the units of mutual funds from out of opening balance. We have observed in the preceding paragraph while dealing an identical issue in AY 2007-08 that the investments in mutual funds do not require much analysis. In this set of facts, we are of the view that there is no requirement of applying the rule 8D. We have also gone through the disallowance worked out by the assessee. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made mainly in mutual funds. The facts, being similar in this year also, we restore this issue to the file of the AO with the direction to examine this issue afresh by following the directions given by us. 13. It is clear from the order of the Tribunal that in the A.Y.2008-09, Tribunal after considering the facts of the case directed the AO to restrict the disallowance u/s.14A to the extent of ₹ 20 Lakhs whereas during the year under consideration, assessee has merely offered for disallowance a sum of Rs. ₹ 11,70,591/-, wherein exempt income was to the tune of ₹ 8,17,18,038/-. However, we found that in the A.Y.2010-11 and 2009-10, matter was restored back to the file of the AO for deciding afresh after applying the decision of Bombay High Court in case of HDFC Bank Ltd., and also the decision of the Tribunal in the preceding years. In view of the above discussion, we restore the matter back to the file of the AO for deciding afresh after considering the nature of investment having been made by the assessee in the mutual funds etc., where no much efforts are required to be undertaken. We direct accordingly. 14. Assessee is also aggrieved for not granting c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
