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TMI Blog2018 (8) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax & Income Tax Officer, Circle 10(2) & ward-10(2)(3), Mumbai (in short DCIT/ITO/ AO) for the AY 2008-09 & 2009-10 order dated 30.09.2010 & 29.12.2011 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only common issue in both the appeals of Revenue is as regards to the order CIT(A) deleting the disallowance made by AO in regard to expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter 'the Rules'). For this Revenue has raised identical worded grounds in both the appeals. Both the parties admitted before us that facts are exactly identical in both the years. Hence, we will take up the grounds raised and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that in view of specific provisions of section 115JB of the Act, starts that a non-obstante clause, "notwithstanding anything contained in any other provisions of this Act". Therefore, it has the effect of making the provisions relating to book profit tax, a self contained code so that one have not to look to any other section for determination of book profit. Hence, no disallowance under section 14A read with rules 8D of the Rules can be made. The AO computed the disallowance while working out book profit under section 115JB of the Act at Rs. 3,10,04,504/- and ignoring suo moto disallowance made by assessee at Rs. 1,08,11,971/-. Aggrieved, assessee preferred the appeal before CIT(A), who deleted the disallowance by observing that no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sec. 14A(2) where the A.O. is not satisfied with the correctness of claim of assessee in respect of such expenditure in relation to income which does not form part of total income, the A.O. shall determine amount of expenditure disallowable by applying the formula provided in Rule 8D(2). Thus the A.O. has to apply the provisions of Rule 8D only when he is not satisfied with the appellant's claim of disallowance u/s. 14A offered in the return of income. The Bombay High Court in the case of Godrej & Boycee Mfg. Co. Ltd. 234 CTR 1 has also held that sub-sec.(2) of sec. 14A makes it abundantly clear that the power to apply the prescribed method (Rule 8D) arises only where the A.Q. is not satisfied with the correctness of the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable. Therefore, the A.O. was not justified in making further disallowance by applying the provisions of Rule 8D(2). In the return of income, the appellant had offered the correct interest expenditure disallowable u/s.14A(1) of the Act. The appellant had also offered all other expenses (Admn. Expenses) for disallowance. Without prejudice to above finding, the appellant's argument is also correct that in the working of Rule 8D the A.O. has committed totaling mistake and has also erred in considering taxable investment and the net assets as against gross assets. In view of the above the appellant's offer of disallowance in the return of income u/s.14A at Rs. 1,08,11,971/- is accepted and the further disallowance made by A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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