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TMI Blog2015 (2) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... squarely covered by the decision of the co-ordinate Bench of the Tribunal in the assessee's own case for A.Y. 2006-07. The Tribunal, vide its order dated 17.09.2013 in ITA Nos. 6575 & 6266/Mum/2010, has restored the issue to the file of the Assessing Officer (hereinafter referred to as the AO) observing as under: "6. We have examined the issue. There is no dispute with reference to assessee earning interest income but adjusting the same towards cost of project. The issue of having direct nexus with the borrowings has not been examined by the AO at all. In case the assessee has utilised the borrowed funds for earning the income to that extent, the interest has to be given set off to the interest paid on the borrowed funds. It was the contentions of the assessee that there is a direct nexus and these funds are not surplus funds so as to consider as income from other sources. This aspect requires examination by the AO and in case there is direct nexus with the earning of interest income with that of the borrowals, then only net interest can be brought to tax or adjusted in the construction account. Therefore, without going into the various case law relied upon by the assessee, we r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , during the year under consideration, has directed the AO to recompute the disallowance on some reasonable basis as per the law laid down by the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT" (supra). 7. It may be observed that the Hon'ble Bombay High Court in the case of "Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT" (supra) has held that Rule 8D cannot be applied retrospectively but is applicable from assessment year 2008-09. For the assessment years prior to A.Y. 2008-09, the disallowance under section 14A can be made by the AO on some reasonable basis, if, the AO is not satisfied with the correctness of the working made by the assessee in this respect. We therefore direct that the AO will consider the working given by the assessee and if he will be satisfied in that respect, no further disallowance will be required to be made. However, if the AO will not be satisfied with the working given by the assessee, then the disallowance be made on some reasonable basis after giving the assessee due opportunity of representing its case in this respect. Subject to our above observations, the order of the Ld. CIT(A) on this issue is upheld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed for statistical purpose." On identical facts, respectfully following the above decision of the Tribunal, we direct accordingly and restore the issue to the file of the AO. 10. Grounds nos.14 to 15 relate to the disallowance of provision made for doubtful debts. These grounds are not pressed by the assessee and are accordingly dismissed being not pressed. 11. Ground No.16 relates to the computation of disallowance made u/s. 14A for computing book profit u/s. 115JB. It may be observed that co-ordinate bench of the Tribunal, in the case of "M/s. Godrej Consumer Products Limited" ITA No.4963/M/11 (A.Y. 2007-08), decided on 20.11.13 while dealing with the identical issue, has held that the amount of expenditure disallowable under section 14A is to be added back while computing book profit under clause (f) of the explanation (1) to section 115 JB observing as under: "24. Vide ground No.5 of its appeal, the assessee has agitated the action of the ld. CIT(A) in relying upon the provisions of section 14A of the Act while computing the amount of expenditure for earning exempt income which is liable for being added back to the book profits as per the provisions of section 115JB o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese two provisions that they are similar in nature. Clause (f) uses the words "expenditure relatable to any income", while section 14A uses the words "expenditure incurred by the assessee in relation to income". These words have the same meaning. We may also add here that section 14A contains two more sub-section, sub-section (2) and sub-section (3), which do not find a place in the clause (f). Therefore, insofar as computation of adjusted book profit is concerned, provisions of sub-section (2) and sub-section (3) of section 14A cannot be imported into clause (f)." 28. From the perusal of the above reproduced observations of the Delhi bench of the ITAT, it can be gathered that the Delhi bench of the Tribunal has categorically held that the provisions of sub-section (1) of section 14A and clause (f) of the explanation to section 115JA are similar in nature and have the same meaning. However, it has been observed that the other two sub sections of 14A i.e. sub section (2) and sub section (3) do not find a place in clause (f) of the explanation to section 115JA, hence it was held that so far the computation of adjusted book profit is concerned, provisions of sub section (2) and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 115JB. We do not find any confliction in the above said two provisions of the Act. The Mumbai bench of the Tribunal while dealing with the similar issue in RBK Share Broking (P) Ltd. has observed as under: "6. Be that as it may, we will proceed to decide this ground on merits as well because it involves a pure legal issue as to whether the amount disallowed u/s 14A can be added while computing the book profit u/s 115JB of the Act. The learned AR relied on certain decisions to bring home the point that the amount disallowed u/s 14A cannot be added to net profit for computing `book profit' u/s 115JB. On the other hand, the learned Departmental Representative took us through the language of clause (f) of Explanation (1) to section 115JB, as per which the amount of expenditure relatable to any exempt income is to be added back to the net profit shown in the profit and loss account. At this juncture, it would be relevant to note that `Book profit' u/s 115JB is computed as per Explanation (1) to sub-section (2) of section 115JB. This Explanation provides that "book profit" means net profit as shown in the profit and loss account for the relevant previous year pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, which provides in unequivocal terms that the amount of expenditure `relatable to' the exempt income shall be added back. Neither the language of clause (f) expressly refers to the amount specifically debited to the profit and loss account nor there can be an implication in this regard. What has been contemplated by the provision is the amount of the expenditure `relatable to' the exempt income. Further, the amount disallowable u/s 14A is always part of the expenses specifically debited to the profit and loss account. It is axiomatic that unless any expenditure is incurred and claimed as deduction, there can be no question of any hypothetical disallowance u/s 14A. It, therefore, follows that the amount disallowable u/s 14A is covered under clause(f) of Explanation (1) to section 115JB(2). Our view is fortified by another order dated 29 August, 2012 passed by the Mumbai Bench of the tribunal in the case of Esquire P. Ltd, Mumbai (ITA No.5688/Mum/2011). As the assessment year under consideration is assessment year 2008-2009 in which disallowance u/s 14A is required to be computed as per Rule 8D and further it is this amount which has been disallowed and also added to the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue has observed as under: "5. We have considered the rival submissions as well as relevant material on record. There is no dispute regarding the fact that during the assessment years under consideration the settled law on the point was the decision of the Hon'ble Supreme Court in case of CIT Vs Kwality Biscuits Ltd. 284 ITR 434 as well as a number of other decisions including decisions of Hon'ble Jurisdictional High Court in case of Snowcem India Ltd. Vs DCIT 313 ITR 170 and in case of CIT Vs Natural Gems Ltd. 327 ITR 269 wherein it has been held that no advance MAT was payable by the company. Therefore, the assessee had no reason to belief or foresee a subsequent decision fastening the liability of payment of advance tax. Even otherwise the decision in case of JCIT Vs Rolta India Ltd. (supra) is a subsequent decision and therefore, the impossibilities at the relevant point of time cannot be thrashed upon the assessee. In the facts and circumstances as discussed above no fault can be found with the assessee in not depositing the advance tax of MAT in view of the decision of the Hon'ble Supreme Court as well as various decisions of the Hon'ble High Court. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court and the matter is pending before the Hon'ble Supreme Court. It was submitted that the matter may be restored to the file of the AO for adjudication as per the decision of the Hon'ble Supreme Court in the case of Exide Industries Ltd. (supra). Keeping in view of the pendency of the matter before the Hon'ble Supreme Court, we restore the matter to the file of the AO for fresh adjudication as and when the decision of the Hon'ble Supreme Court is rendered on this issue. Ground is considered allowed for statistical purpose." 19. Respectfully following the above decision for the sake of consistency, we restore the matter on this issue to the file of the AO directing him to decide this issue for the year under consideration also in the light of the directions given by the Tribunal for earlier assessment year. 20. Ground No.20 relates to the claim of the assessee that the entire TUF subsidy received during the year amounting to Rs. 36,70,68,568/- is capital receipt and, hence, not liable to be taxed. This ground has also been raised for the first time before us only. However, considering that the issue being legal in nature, the same is admitted for adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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