2019 (6) TMI 88

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..... ench Delhi, in Vireet Investment [ 2017 (6) TMI 1124 - ITAT DELHI] AO while computing the book profit u/s 115JB cannot make any disallowance by making reference to the provisions of section 14A r/w rule 8D . AO retains the power to make disallowance of expenditure incurred for earning exempt income as per Explanation 1(f) of section 115JB of the Act. Therefore, the disallowance made by AO while computing book profit u/s 115JB(2) is unsustainable. Thus, AO is directed to examine and quantify the expenditure incurred by the assessee for earning exempt income in terms of Explanation 1(f) of section 115JB of the Act without taking aid of rule 8D(2) r/w section 14A. Grounds no. (i) and (ii) are dismissed and ground no. (iii) is partly allowed f .....

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..... o takes care of the expenditure attributable to exempt income, however, the Assessing Officer rejecting the explanation of the assessee proceeded to compute the disallowance under rule 8D(2) for an amount of ₹ 3,20,28,845. He also made identical disallowance while computing book profit under section 115JB of the Act. Of course, ultimately the Assessing Officer computed the tax liability of the assessee under the normal provisions of the Act. 4. The assessee challenged the aforesaid disallowance before learned Commissioner (Appeals). While disposing of assessee s appeals, learned Commissioner (Appeals) restricted the disallowance to ₹ 7,10,347, the amount disallowed by the assessee itself. As regards the disallowan .....

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..... s Pvt. Ltd., 101 taxmann.com 167; and iv) DCIT v/s Mahindra CIE Automotive Ltd., ITA no.6659/Mum./ 2014, dated 11.04.2018. 7. Further, learned Authorised Representative submitted that while computing book profit under section 115JB(2) of the Act, the Assessing Officer has made disallowance under section 14A r/w rule 8D which is contrary to the ratio laid down in Vireet Investment (supra). 8. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. Undisputedly, the exempt income earned by the assessee during the assessment year was ₹ .2,53,140. Whereas, the Assessing Officer has made huge disallowance by invoking the .....

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