TMI Blog2018 (7) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... diture - Held that:- We find that the assessee had given proper explanation that the bills payable to Deloitte together with its quantum got settled and crystallized only during the year under appeal and accordingly the same becomes the expenditure of the year for the purpose of income tax. It is not the case of the revenue that the assessee had also made a claim of this expenditure in the earlier year. It is not in dispute that the said payment of ₹ 94.26 lakhs is wholly and exclusively incurred by the assessee for the purpose of its business. In these circumstances, the subject mentioned expenditure though categorized as prior period expenditure to be in consonance with Accounting Standard – 5 issued by ICAI, cannot be deprived of the deduction from its total income - CITA had rightly deleted the disallowance Disallowance u/s 14A of the Act read with Rule 8D of the Rules - Held that:- Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs CIT (2018 (3) TMI 805 - SUPREME COURT OF INDIA) had held that provisions of section 14A of the Act are applicable even for investments held as stock in trade. Hence this issue is now settled and provisions of section 14A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeals by the revenue for the Asst Years 2010-11 and 2011-12. We have gone through the reasons given in the condonation petition and in view of the concession given by the ld AR to condone the delay, we are inclined to condone the delay and admit the appeals of the revenue for the Asst Years 2010-11 and 2011-12 for adjudication. 3. Addition towards Bad and Doubtful Debts written back Ground Nos. 1 2 for Asst Year 2012-13 Ground No. 2 for Asst Year 2011-12 Ground No. 2 for Asst Year 2010-11 We find that the ld CITA had passed the order for the Asst Year 2012-13 on 9.2.2017 and the appeals for Asst Year 2010-11 and 2011-12 were disposed off by him thereafter. Hence the facts of Asst Year 2012-13 are taken up for adjudication and the decision rendered thereon would apply with equal force for Asst Years 2010-11 and 2011-12 also except with variance in figures. 3.1. The brief facts of this issue are that the assessee is engaged in the business of project financing and investment in capital market In response to notices issued u/s 143(2) and 142(1) of the Act, the assessee bank filed the audited accounts, tax audit report u/s 44AB, copy of retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation under the normal provisions of the Act as well as in the computation of book profits u/s 115JB of the Act. 3.3. The assessee reiterated its submissions before the ld CITA. The ld CITA sought for a remand report from the ld AO. The first remand report was submitted by the ld AO vide letter dated 30.8.2016 which was very general in nature and did not address the specific points raised by the ld CITA. The second remand report was submitted by the ld AO vide letter dated 17.1.2017 , the ld AO stated that the assessee had filed certain details vide its letter dated 18.9.2014 before the ld AO, but had not bothered to present himself before him to explain the same. Accordingly he concluded that the claims made by the assessee were not supported by documentary evidences and hence supported the order of the ld AO. However, no submissions were given by the ld AO with regard to addition made in the computation of book profits u/s 115JB of the Act. The assessee stated that it had duly represented before the predecessor AO and explained the entire contents of its submissions to prove its contentions. However, that AO after hearing the assessee did not proceed to issue any remand rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete the addition and this ground of appeal is allowed. I agree with the argument of the AR as mentioned above. The AO in his remand report dated 17.01.2017 has replied the issue with ground nos. 4 and 5 stating that prima facie nothing clear from the details filed by the appellant during the remand proceeding that when such provision were disallowed. By stating this the AO has not dispute the allowability of the claim of the appellant but the only dispute was non-submission of the relevant documents. In that case, he should have asked more details to understand the issue from the appellant. The AO has further used the word prima facie , it appears that he has not applied his mind, reason best known to him. As regards to submission of the relevant document and whether such provision were disallowed in earlier years, the AR has submitted the relevant document twice before the AO during remand proceeding. As regards to allowability of claim of the appellant, I find that the claim of reduction of ₹ 151,82,11,000/- had been made as per the provisions of Explanation 1(i) to section 115JB(2), accordingly the Assessing Officer is directed to reduce the said written back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 94.26 lakhs Trust Investment - ₹ 9.00 lakhs B.K.Ramesh, Arrear Salary - ₹ 1.25 lakhs ₹ 104.51 lakhs Less: Rectification entry on account of bank charges ₹ 0.11 lakhs ₹ 104.40 lakhs From the above, the ld AO observed that exceptional items includes items related to prior period adjustment i.e expenditures relating to earlier financial year and hence the said items are not deductible from the profit of the assessee bank for the year under consideration. The ld AO observed that in the earlier assessment year, similar item was added back voluntarily by the assessee in the computation of income, but in the instant year, the same was not done. Accordingly, the ld AO disallowed the prior period expenditure of ₹ 104.40 lakhs in the assessment. 4.1. The assessee submitted that expenses aggregating to ₹ 94.26 lakhs related to charges made by M/s D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,04,51,798/- which included prior period expenses of ₹ 94,26,049/- and other outstanding fees of ₹ 10,25,749/- after deducting taxes of ₹ 10,45,180/- at source therefrom. We find that the assessee had given proper explanation that the bills payable to Deloitte together with its quantum got settled and crystallized only during the year under appeal and accordingly the same becomes the expenditure of the year for the purpose of income tax. It is not the case of the revenue that the assessee had also made a claim of this expenditure in the earlier year. It is not in dispute that the said payment of ₹ 94.26 lakhs is wholly and exclusively incurred by the assessee for the purpose of its business. In these circumstances, the subject mentioned expenditure though categorized as prior period expenditure to be in consonance with Accounting Standard 5 issued by ICAI, cannot be deprived of the deduction from its total income. Our views also draw support from the following decisions :- a) Hon ble Delhi High Court in the case of CIT vs Jagatjit Industries Ltd reported in (2011) 339 ITR 382 (Del) b) Co-ordinate Bench of Delhi Tribunal in the case of Sony India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s now settled and provisions of section 14A of the Act are to be applied in the instant case. We find that this tribunal in the case of REI Agro Ltd reported in 144 ITD 141 (Kol Trib) had held that only those investments which had yielded dividend income need to be considered while working out the disallowance under third limb of Rule 8D(2) of the Rules. Hence we direct the ld AO to rework the disallowance accordingly for Asst Years 2010-11 and 2011-12 under normal provisions of the Act. 5.4. With regard to disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act , we find that the same is squarely covered by the decision of Hon ble Calcutta High Court in the case of CIT vs Jayshree Tea Industries Ltd vide GA No. 1501 of 2014 , ITAT 47 of 2014 dated 19.11.2014 wherein the similar question arose which reads as under:- 2. Whether on the facts and in the circumstances of the case the Ld.Tribunal has erred in law in upholding the order of CIT(Appeals) that disallowances under Section 14A of the I.T.Act, 1961, amounting to ₹ 2,20,15,787/- is not to be considered for book profit for calculation of book profit under section 115JB of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
