TMI Blog2020 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... TA HIGH COURT] . Hence, this part of the order of the ld. CIT(A), is hereby reversed and the ground of the revenue is allowed. Disallowance under Rule 8D(2)(iii) - This issue is no more res integra in view of the decision of this Bench of the Tribunal in the case of Kolkata Bench of the ITAT in the case of REI Agro Ltd. v. Dy. CIT [ 2013 (9) TMI 156 - ITAT KOLKATA] and ACIT vs. Vireet Investments (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] - Consistent with the view taken therein we dismiss this ground of the revenue. MAT Computation u/s 115JB - HELD THAT:- We find that the assessee has recorded to its profit and loss account, diminution in the value of investments. It was submitted that that net costs of investments was reflected in the profit and loss account and under those circumstances, this figure cannot be adjusted once again while computing book profits assessed u/s 115JB - See PHILIPS CARBON BLACK LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-10, KOLKATA, [ 2014 (1) TMI 1765 - ITAT KOLKATA] held that once assessee has reduced amount shown by it as a provision for diminution of investment from its total value of investment, it no longer remained a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e LT. Act made by the AO and directed to re-compute the disallowance depending on the judicial pronouncement of Hon'ble ITAT, Kolkata without appreciating the fact that interest bearing loan fund was utilised in dividend earning investment made in group companies. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact as stated in CBDT's Circular No. 05/2014 that those investments may be taken into consideration for computation of Rule 8D which have not earned any exempt income during the year. 3. That it is humbly requested to set aside the order of Ld. CIT(A) and restore back the assessment order passed by the AO. 4. That the appellant craves for leave to add, delete, amend or modify any ground before or at the time of appellate proceedings. 4.The assessee filed cross-objection on the following grounds:- 1. For that on the facts and in the circumstances of the case, the CIT (A) erred in directing the AO to re-compute the disallowance u/s 14A read with Rule 8D(2)(iii) @ 0.5% of the average cost of Investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or before. 5.We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 6.The assessee in this case has made a suo moto disallowance of expenditure of ₹ 3,46,20,191/-, in its computation u/s 14A of the Act. The Assessing Officer at page 2 of his order observed as follows:- However, on examination it was found that the calculation has not been done in accordance with Sec. 14A read with rule 8D. On being asked, the A/R furnished a written submission on 27/02/2015 .. , which is extracted by the Assessing Officer at page 2 of his order as under:- The assessee is a Non Banking Financial Company earned income from dividend of ₹ 8,46,40,354/- for the Financial Year 2011-12 and the same was credited to the Profit and Loss Account. The assessee earned dividend mainly from the group companies and their associates. The investments in these Companies were made long back with an intention to retain control over them. No brokerage or commission we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not satisfied and hence raised a query and thereafter considered the explanation and expressed his dissatisfaction for the same. Both the parties have relied on a number of case-law in support of the same. 6.4. On consideration of these submissions, we are of the considered opinion that the Assessing Officer has recorded that he is not satisfied with the explanation given by the assessee on the suo moto disallowance. The assessee has also not given any working to justify the suo moto disallowance. He made certain claims without supporting the same with figures. Under these circumstances, we are of the considered opinion that the Assessing Officer has recorded satisfaction, that he is unable to accept the suo moto disallowance made by the assessee u/s 14A of the Act, prior to invoking Rule 8D of the Rules. Hence this argument of the assessee is hereby dismissed. 6.5. Coming to the finding of the ld. CIT(A), relying on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Rajiv Lochan Kanoria (supra), we hold that this is no more good law, in view of the judgment of the Hon ble Supreme Court in the case of Maxopp Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments against the cost of investments and having disclosed the cost of investments in the audited Balance Sheet; net-off such provision the AO, was unjustified in making the addition of the said amount in arriving at the book profit assessed u/ s 115 JB of the Act. 3.For that on the facts and in the circumstances of the case, the AO be directed to exclude from the book profit assessed u/s 115JB; the sum of ₹ 13,97,75,000/-. 4.For that the appellant craves leave to file additional grounds and/or amend or alter the grounds already taken either before or at the time of hearing of the appeal. 16.After hearing rival contentions, we find that the assessee has recorded to its profit and loss account, diminution in the value of investments. It was submitted that that net costs of investments was reflected in the profit and loss account and under those circumstances, this figure cannot be adjusted once again while computing book profits assessed u/s 115JB of the Act. Reliance was placed on the decision of the Kolkata A Bench of the Tribunal in the case of Philips Carbon Black Ltd. vs. ACIT in ITA No. 741/Kol/2012; Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin item (c) of Explanation (i). It is in that context the appellate Commissioner as well as the Tribunal has granted relief to the assessee. Realising the fatality of the said argument, it is contended now that item (i) cannot amount to satisfaction as provision for diminishing in the value of assets is substituted, in case of the assessee falls under Item (c). In meeting the aforesaid case, the learned counsel for the assessee brought to our notice the judgment of the Apex Court in the case of Vijaya Bank ( supra) where the Apex Court had an occasion to consider his explanation. It accepted the argument on behalf of the Revenue to the effect that the explanation makes it very clear that there is a dichotomy between actual write off on the one hand and provision for bad and doubtful debt on the other. A mere debit to the profit and loss account would constitute a bad and doubtful debt, but it would not constitute actual write off and that was the very reason why the explanation stood inserted. Prior to the Finance Act, 2001 many assessees used to take the benefit of deduction under Section 36(1)(vii) of the 1961 Act by' merely debiting the impugned bad debt to the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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