TMI Blog2020 (2) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... rmative i.e. in favour of the assessee, and against the Revenue. Addition u/s 14A read with rule 8D - HELD THAT:- Computation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully following the above decision of the Special Bench, we allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules. No justification in reversing the order passed by the CIT(A) in deleting the enhancement of book profit made by the Learned AO to the extent of exempt, hence the Revenue s appeal is found to be devoid of any merit, and therefore ground no.3 is dismissed. - I.T.A. No.1608/Ahd/2018 And CO No. 93/Ahd/2019 (in I.T.A. No. 1608/Ahd/2018) - - - Dated:- 31-1-2020 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Satish Solanki, Sr. D.R. For the Respondent : Shri Varthik Chokshi Biren V. Shah, A.R. ORDER PER Ms. MADHUMITA ROY JUDICIAL MEMBER: Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition was deleted by the Ld. CIT(A), hence, Revenue is before the Tribunal. 4. At the time of the hearing of the instant appeal the Ld. Advocate appearing for the assessee while supporting the order of the Ld.CIT(A) submitted before us that the Ld. AO preceded on wrong premise that the feasibility and advisory services are set up for new logistic business and the appellant since is already in the business of logistic, the said expenditure has been incurred for extension of the said business and thus allowed ₹ 1,20,00,000/- under section 35D of the Act for the current year and the balance amount to be allowed in subsequent years. But the case of the assessee is this that such expenditure was for improvement of Coal logistic business and since the appellant is already in such business, professional fees paid cannot be considered as expenditure for extension of existing business and hence Provision of Sec. 35D is not applicable. He further relied upon the judgment passed by the Hon ble Apex Court in the case of Taparia Tools Ltd. reported in 55 taxmann.com 361. 5. On the other hand, the Ld. DR relied upon the order passed by the Ld. AO. 6. Heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a food chain, therefore, expenditure is incurred by the assessee in the existing line of its business. The expenditure incurred on consultancy has been held by the Delhi High Court in the case of CIT v. Shell Bitumen India (P) Ltd. [IT Appeal No. 815 of 2010, dated 11-8-2010] to be on account of revenue expenditure. Therefore, there is no infirmity in the order of the Commissioner (Appeals) vide which it has been held that the expenditure were in the nature of revenue and could not be disallowed as capital expenditure. [Para 6]. Considering the facts discussed herein above and in view of decisions referred to above, the entire disallowance of ₹ 4,80,00,000/- is deleted. This ground of appeal is allowed. 7. Question before us is, whether the impugned expenditure is allowable under section 35D or under section 37 of the Income Tax Act. We find that the appellant has incurred the expenditure for improving its coal logistic and the genuineness whereof has not been doubted by the AO when the said expenditure is allowable as revenue expenditure in one year without differing the same for a further period of 5 years or so on. The nature of expenditure was for the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter he relies upon the order passed by the Learned CIT(A) in deleting such disallowance. He also relied upon the judgment passed by the jurisdictional High Court in the case of CIT vs. Corrtech Energy Private Ltd. reported in [45 Taxmann.com 116] (2014). Apart from that in support of his case, it was also contended by the Learned Advocate appearing for the assessee that even otherwise no disallowance under 14A of the Act can be made, if the assessee has sufficient interest free funds to cover the investment out of which exempt income is generated. The ld.CIT(A) has noticed break up of interest free funds available with the assessee in his impugned order. It is demonstrated in the following table: S. No. Particulars Amount (Rs. Lakhs) AS ON 31.03.2014 AS ON 31.03.2013 1 Share Capital Reserves and Surplus 34809.20 29,859.54 TOTAL INTEREST FREE FUNDS 34809.20 29,859.54 2 Investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned with the assessment year 2009-2010, such formula was correctly applied by the Revenue. We however, notice that sub-section(1) of section 14A provides that for the purpose of computing total income under chapter IV of the Act, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the present case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the tribunal held that disallowance under section 14A of the Act could not be made. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under: 7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd (2006) 286 ITR 1 was on the issue of allowably of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14A r.w.r 8D could not be invoked and no expenses could be considered for disallowance. In the present case, the ld.CIT(A) has held that the assessee has no exempt income in this year. In view of the above situation, we find that no merit in this ground raised by the Revenue. It is rejected. 14. This ground of appeal relates to deletion of addition of ₹ 2,00,390/- made under section 14A of the Income Tax Act, 1961 read with Rule 8D of the I.T rules while computing book profit under section 115JB of the Income Tax Act. The Learned Assessing Officer has in addition to the disallowance has enhanced the book profit under section 115 JB of the Act by the amount of disallowance under section 14A read with Rule 8D of the act the case of the assessee is this that merely because disallowance has been made under section 14A of the Act it cannot suo motto result in an addition while computing the book profit. However, such plea of the assessee was not found acceptable to the Learned AO and he, therefore, enhanced the book profit under section 115 JB of the Act of ₹ 2,00,390/- which was in turn deleted by the Ld. CIT(A). Against this deletion, Revenue is before the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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