TMI Blog2019 (11) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... with Rule 8D(2)(iii) - HELD THAT:- In the case of Nirma Credit Capital (P) Ltd [ 2017 (9) TMI 485 - GUJARAT HIGH COURT ] it is held that for the purpose of applying factors contained in clause (ii) of sub-rule (2) of rule 8D, prior to its amendment w.e.f 02.06.2016, amount of expenditure by way of interest would be interest paid by assessee on borrowings minus taxable interest earned during financial year. Addition made to Book Profit computed u/s 115JB on account of disallowance made u/s 14A - HELD THAT:- We have heard the rival submissions and perused the material available on record. In the case of Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI ] it is held that computation under clause (f) of Explanation 1 to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of trading, settlement and other activities of commodities exchanges for itself and its clients; trading in physical commodities including derivative instruments and also earned rental and interest income. During the year under consideration the assessee had made provision for mark to market loss on trading in derivative instruments of ₹ 3,69,12,973/-. During the assessment proceedings, the assessee filed details of statement showing provision for mark to market loss and also submitted a detailed note on mark to market loss on outstanding position. Assessee submitted that it had made provisions for loss following accepted accounting principles as per the Guidance Note on Accounting for Equity Index Equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mum/2011], Edelweiss Capital Limited v. ITO [ITA 5324/Mum/2007], deleted the addition of ₹ 3,69,12,973/- made by the AO. 5. Before us, the ld. Departmental Representative (DR) relies on the order of the AO, whereas the ld. counsel for the assessee supports the orders passed by the Ld. CIT(A). 6. We have heard the rival submissions and perused the material available on record. Similar issue arose before the ITAT D Bench, Mumbai in the case of M/s. Edel Commodities Limited v. DCIT [ITA No.3426/Mum/2016] for A.Y. 2011-12. The Tribunal vide order dated 06.04.2018, held as under: 32. When it is held that these derivatives held are stock-in-trade then there cannot be any reservation in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect till the Assessing Officer comes to the conclusion for reasons to be given that the system does not reflect true and correct profits. In the said case, the Hon ble Apex Court has held that the loss on account of fluctuation in the rate of exchange has to be allowed and the same has to be computed at each balance sheet date, pending actual payment of the liability. Hence, this decision also supports the proposition that even though the loss has not finally crystallized if as per prudent and regular system of accounting, the loss has to be accounted for, the same should be allowed. Hence, in the background of the aforesaid discussion and precedent from the Hon ble Apex Court decision, we find that the aforesaid CBDT Circular is in contrad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,41,069/-. 9. In appeal, the ld. CIT(A) followed the order of the ITAT in the case of the holding company of the assessee namely M/s. Edleweiss Financial Services Limited [ITA No. 4329/Mum/2014] wherein it has been held that for computing the disallowance under Rule 8D(2)(ii) of the Rules, net interest is to be considered. Similar, principle laid down by the Hon ble Gujarat High Court in the case of CIT v. Jubiliant Enterprises Limited [ITA No. 1512/2014] has been followed by the ITAT in the case of M/s. Aditya Birla Finance Limited v. ACIT [ITA No. 5732/Mum/2011]. Following the above decisions, the ld. CIT(A) held that the net interest is an income of ₹ 2,34,28,029/- [interest expenses of ₹ 294,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditya Birla Finance Limited (supra). Facts being identical, we follow the above decisions and confirm the order of the ld. CIT(A). Thus, the 2nd ground of appeal is dismissed. 12. The 3rd ground of appeal Whether on facts and in law, under the circumstances of the case the Ld. CIT(A)-16, Mumbai, was justified in deleting the addition made to Book Profit computed u/s 115JB of the Income Tax Act, 1961, on account of disallowance made u/s 14A of the Income Tax Act, 1961, disregarding the clear provisions under Explanation (1)(f) to Section 115JB of the Income Tax Act, 1961, which does not prescribe any parameters for computing expenditure attributable to exempted income. 13. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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