TMI Blog2015 (2) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. Denial of deduction u/s. 80IB on the Technology Up-gradation Fund [TUF] subsidy received - HELD THAT:- As relying on own case [ 2013 (9) TMI 688 - ITAT MUMBAI] , we deem it proper to set aside this particular issue to the file of the AO with the direction to examine whether the reimbursement of interest cost is reimbursement of revenue expenditure debited to the P L Account of that eligible unit to that extent either in this year or in any earlier years. If it is so then due to reimbursement the expenditure incurred by the assessee is reduced, to the extent the profit of the industrial undertaking will increase. Therefore, to examine the interest claim out of the unit and its reimbursement by way of subsidy, the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evity. ITA No.8920/Mum/2010: Asst. Year 2007-08 (assessee s appeal) 2. Ground nos.1 to 7 of this appeal relate to the interest income of ₹ 14,73,35,367/- taxed under the head Income from other sources instead of adjusting it against the interest expenditure capitalized to Incidental Expenditure during Construction (EDCP) account as both have direct nexus. At the outset, the learned AR of the assessee stated that the present issue is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. The Ld. A.R. before us has agitated that in the earlier assessment year 2006-07 the disallowance under section 14A has been restricted by the Tribunal to 5% of the dividend income. He therefore has submitted that the disallowance be restricted to that extent. 6. We find that in the earlier assessment year 2006-07, the Ld. CIT(A) had upheld the finding of the AO for computation of disallowance under section 14A as per the provisions of Rule 8D. However, the Ld. CIT(A), 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. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the expenditure incurred by the assessee is reduced, to the extent the profit of the industrial undertaking will increase. Therefore, to examine the interest claim out of the unit and its reimbursement by way of subsidy, the matter is restored to the file of the AO. He is directed to keep in mind the decision of the Hon'ble Gauhati High Court in the case of Mehalaya Steels Ltd. (supra) and allow the deduction under section 80IB accordingly if the nexus is established. Grounds are allowed 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to section 115JA and sub-section (1) of section 14A of the Act. Under the aforesaid clause (f) the amount of expenditure relatable to any added to the book profit. Under the provisions contained in section 14A, no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. Since we are dealing with the issue of expenditure relating to dividend income, a matter falling under Chapter III, it becomes clear on perusal of these 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting tax under section 115JB. The contention of the Ld. A.R. that only the expenditure which finds mention in the profit and loss account is required to be added back and not the expenditure as assessed under section 14A does not have any force as no such provision is there under section 115JB. When we read the provisions of section 14A along with section 115JB, it becomes clear that the expenditure relatable to exempt income as provided under sub section (1) of section 14A is required to be added back while computing book profit 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 Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount is specifically debited to the Profit and loss account in respect of an exempt income, the same cannot be brought within the purview of clause (f) of the Explanation 1 to section 115JB(2). He stated that since the disallowance u/s 14A is computed as per rule 8D, the origin of the expenses disallowed cannot be traced to the profit and loss account and hence it cannot be covered within the mischief of clause (f) of the Explanation. We fail to find any logic in this submission because of the clear language of the Explanation 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s 234B and 234C cannot be charged. 14. The Ld. CIT(A), however, did not accept the contention of the assessee and held that levy of interest u/s 234B and 234C was mandatory and consequential and hence confirmed the same. 15. Before us, at the outset, the Ld. AR of the assessee has relied upon the decision of the Co-ordinate Bench of the Tribunal in the case of Charbhuja Industries Pvt. Ltd. vs. ACIT ITA Nos.6901 6902/M/2012 order dated 24.01.2014, wherein the Co-ordinate Bench of the Tribunal, while adjudicating the identical issue 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 reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of leave encashment of ₹ 1,03,25,488/-. During the year the assessee made a provision of leave encashment on actuarial basis which was disallowed by the AO as a provision. The learned CIT(A), relying on Section 43B(f) of the Act, confirmed the same. It was the submission that the claim was made on the basis of the decision of the Hon'ble Calcutta High Court in the case of Exide Industries Ltd. 292 ITR 470 wherein the provisions of 43B(f) was struck down. However, at present the said judgment of the Hon'ble High Court was stayed by the Hon'ble Supreme 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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