TMI Blog2018 (5) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... considering 0.5% of the dividend bearing investments as reduced by ₹ 5,13,033/- subject to maximum of total indirect expenses of ₹ 52,91,969/- under the normal provisions of the Act. Accordingly grounds raised by the assessee are allowed for statistical purposes. Disallowance u/s 14A made while computing the book profits u/s 115JB - MAT - Held that:- This issue is now settled by the recent Special Bench decision of Delhi Tribunal in the case of ACIT vs Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein it was held that no disallowance u/s 14A of the Act could be made by resorting to computation mechanism provided under Rule 8D of the rules. The ld. AO should make disallowance u/s 14A having regard to the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 and the average investments was worked out at ₹ 113,90,02,815/-. The assessee made disallowance of ₹ 5,13,033/- on account of expenses linked to exempt income u/s 14A of the Act in the return of income. The ld. AO proceeded to compute the disallowance under first and third limb of Rule 8D(2) of the Rules as under :- Under Rule 8 (2) (i) : ₹ 1,05,692/- Under Rule 8D(2)(iii) : Rs.56,95,014/- Rs.58,00,706/- The ld.AO added the said disallowance amount of ₹ 58,00,706/- u/s 14A of the Act while computing the book profits u/s 115JB of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary directions may be given to AO. to compute disallowance u/s 14A as per Rule 8D by excluding investments in group companies which have been made for the purpose of acquiring controlling stake and for business expediency and not for the purpose of earning exempt income. 4.0 That on the facts and in the circumstances of the case and without prejudice to Ground No. 1.0 2.0 taken here-in-above, necessary directions may be given to AO. to compute disallowance u/s 14A read with Rule 8D(2)(iii) by excluding the investment made in bonds the income from which forms part of total income. 5.0 That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds stated here-in-above either before or at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly. We find that the total common indirect expenses of the assessee are as under :- a) Staff cost : Rs.22,94,975/- b) Administrative expenses : Rs.29,96,994/- - Rs.52,91,969/ The assessee had given the workings for disallowing ₹ 5,13,033/- u/s 14A of the Act by identifying the staff cost paid to Mr.S.K.Rathi and taking 25% of printing and stationery as common expenses. This, in our considered opinion, does not suit the purpose behind introduction of section 14A of the Act and computation mechanism provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the rival submissions. We find that the ld. AO had disallowed a sum of ₹ 58,00,706/- u/s 14A of the Act r.w.r. 8D of the rules by computing the book profit u/s 115JB of the Act. This issue is now settled by the recent Special Bench decision of Delhi Tribunal in the case of ACIT vs Vireet Investment Pvt. Ltd. 165 ITD 27 dated 16.06.2017 wherein it was held that no disallowance u/s 14A of the Act could be made by resorting to computation mechanism provided under Rule 8D of the rules. The ld. AO should make disallowance u/s 14A of the Act having regard to the books of account on some rational basis as expenditure incurred for earning exempt income in terms of clause (f) of section 115JB of the Act. In view of this, the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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