TMI Blog2020 (1) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disallowance in any case cannot exceed the exempt income. Ld. DR does not dispute this proportion of law as laid down by the Hon ble High Court and in a number of decisions by the coordinate benches of this Tribunal. We, therefore, while respectfully following the same answer the issue in favour of the assessee Disallowance under section 14A of the Act read with Rule 8D of the Rules under section 115JB - In Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] the Special Bench dealt with this aspect at length and held that the computation under clause (f) of explanation 1 to section 115 JB (2) is to be made without resorting to the computation as contemplated under section 14A of the Act read with Rule 8D of the Rules. There is no dispute on this proposition. We therefore, while respectfully following the said decision answer the issue in favour of the assessee Disallowance on account of provision for leave encashment and provision for gratuity while computing the profits under section 115 JB - HELD THAT:- This issue is covered by the view taken by the Tribunal in the earlier assessment years like 2002-03, 2003-04 and 2005-06. We, therefore, while respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Tropicana Beverages Company under normal computation - HELD THAT:- CIT(A) considered the original tax audit report and the revised tax audit report and directed the Assessing Officer to verify from the records and allow depreciation as per the tax audit report that was filed pursuant to the merger of Tropicana Beverages Company with the assessee. We do not find any reason for grievance of the Revenue on this aspect, because the Ld. CIT(A) did not delete addition and on the other hand she rectified the apparent mistake committed by the learned Assessing Officer. We therefore decline to interfere with the findings of the Ld. CIT(A) and dismiss ground No. 7. - ITA No. 4077/Del/2015 And ITA No. 4102/Del/2015 - - - Dated:- 14-1-2020 - Shri G.S. Pannu, Vice President And Shri K. Narasimha Chary, Judicial Member For the Appellant : Shri K.N. Mehta, advocate For the Respondent : Smt. Sulekha Verma, CIT/DR ORDER PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 20/3/2015 in appeal No. 439/11-12 passed by the learned Commissioner of Income Tax (Appeals)-7, Delhi ( Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Rule 8D of the Rules under normal provisions of the Act; whereas ground No. 3 is the challenge to such a disallowance under section 14A of the Act read with Rule 8D of the Rules under section 115JB of the Act. 5. Insofar as the addition under section 14A of the Act read with Rule 8D of the Rules under normal provisions of the Act is concerned, the submission on behalf of the assessee is that the assessee had not incurred any expenditure in relation to dividend income, but sue moto the assessee had disallowed a sum of ₹ 1,01,36,427/-under rule 8D(2)(iii) of the Rules, whereas the learned Assessing Officer made an addition under rule 8D(2)(ii) of the Rules also to the tune of ₹ 4,49,72,528/-and under rule 8D(2)(iii) of the Rules to the tune of ₹ 1,18,87,665/-which came to ₹ 5,68,60,193/-. By reducing such an amount by the sue moto disallowance of the assessee, learned Assessing Officer assessed the total disallowance to the tune of ₹ 4,67,23,766/-. It is further submitted that the Ld. CIT(A) in the impugned order deleted the disallowance under rule 8D(2)(ii) of the Rules but sustained the disallowance under rule 8D(2)(iii) of the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR that the disallowance under section 14A of the Act read with Rule 8D of the Rules cannot be added while computing profit as per section 115JB as Explanation 2to that section does not specifically mentions section 14A of the Act, and therefore, no disallowance can be made under section 14A of the Act while computing book profits under MAT provisions. 10. InVireet Investment (P) Ltd (supra), the Special Bench dealt with this aspect at length and held that the computation under clause (f) of explanation 1 to section 115 JB (2) is to be made without resorting to the computation as contemplated under section 14A of the Act read with Rule 8D of the Rules. There is no dispute on this proposition. We therefore, while respectfully following the said decision answer the issue in favour of the assessee. ITA No. 4102 /Del/ 2015 (Revenue s appeal) 11. In Revenue s appeal, grounds No. 1 and 8 are general in nature. Ground No. 2 relates to the deletion of the disallowance on account of provision for leave encashment and provision for gratuity while computing the profits under section 115 JB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA No. 822/del/2004 also the Tribunal dealt with this issue in the light of the view taken for the earlier years to remand issue to the file of the learned Assessing Officer for verification of the actuarial valuation. Relevant observations of the Tribunal read thus,- We find that in Assessment Year 2000-01, the Hon'ble Tribunal vide its order dated 16.07.2009 vide para 17 had held that provisions for leave encashment was ascertained liability and, therefore, it had allowed the same for not including the same for calculation of book profits. However it upheld the inclusion of gratuity provisions for purpose of calculation of minimum profits. ..in view of above facts and circumstances, we following the order of Tribunal in Assessment Year 2000-01 and 2001-02, partly allow the appeal of Revenue by holding that the provisions for leave encashment is ascertained liability. As regards provisions for gratuity, the argument of Ld. A.R. that in subsequent years Ld. CIT(A) has allowed the relief and Revenue has not filed appeals, therefore, order of Ld. CIT(A) should be upheld, do not hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the profits of the assessee and true disclosure thereof was made in scheduled 16 of the financials. He further submitted that the expense disallowed by the Assessing Officer represent the expense incurred by the assessee on behalf of Tropicana Beverages and was so disclosed in the P L Account, but the learned Assessing Officer wrongly concluded that these expenses are in the nature of amalgamation expenses. 19. On this aspect, Ld. CIT(A) while dealing section 35DD of the Act gave a finding that unless and until the expenditure was incurred wholly and exclusively for the purpose of amalgamation, such a section has no application. He further recorded that without giving any finding as to the nature of expenditure to say that it was pertaining to the amalgamation/merger and was not a regular business expenditure, invocation of the provisions of section 35DD of the Act is bad. 20. Before usalso, the assessee argued that the expenditure was for day-to-day business activities as could be seen from the financials of the assessee. Our attention is drawn to schedule 16: notes to the accounts at page No. 57 of the paper book where it is stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, namely, UPS, printer and projector are certainly computer peripherals and admissible for 60% depreciation in view of the decisions of the Hon ble Apex Court in the case of CIT vs. M/s Birlasoft Ltd in appeal No. 2645/2012 and the decision of the Hon ble jurisdictional High Court in the case of CIT vs. BSES Rajdhani powers Ltd (Delhi High Court) in ITA No. 266/2010. 24. In the circumstances we uphold the contention of the assessee that UPS, printer and projector form part of the computer peripherals and direct the Assessing Officer to recomputed the depreciation in respect of these 3 items at 60%. Ground number 5 is answered accordingly. 25 Ground No. 6 of Revenue s appeal relate to the disallowance of depreciation on the noncompete fees paid by the assessee. Ld. CIT(A), as a matter of fact, observed that depreciation on the capitalized noncompete fee was allowed in the earlier years and therefore the same cannot be disallowed in this year. 26. We have gone through the details of the noncompete fees incorporated at page No. 70 of the paper book which clearly reveals that for the earlier years, namely, 2005-06 to 2007-08 the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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