TMI Blog2020 (3) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Varun K.Patel for the Appellant(s) No. 1 Mr Manish J Shah for the Opponent(s) No. 1 ORAL ORDER PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA 1 This Tax Appeal is filed under Section 260A of the Income Tax Act, 1961 [for short, 'the Act, 1961'] at the instance of the Revenue and is directed against the order dated 26th April 2019 passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench, Ahmedabad in ITA No.1988/Ahd/2015 for the assessment year 2010-11. 2 The Revenue has proposed the following questions of law as substantial questions of law: [a] Whether the Income Tax Appellate Tribunal was justified in remanding the proceedings to the Assessing Officer for fresh consideration of disallowance under Section 14A of the Act with a direction that if finally disallowance under Section 14A is to be made then the amount thereof in no case shall exceed the exempt income earned by the assessee during the year under consideration? [b] Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deleting the addition u/s. 14A of the Act while computing book profit u/s. 115JB of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile computing book profit under Section 115JB of the Act, 1961 is no more res integra. Accordingly, this Court in the case of Principal Commissioner of Income Tax vs. Gujarat Fluorochemicals Ltd [Tax Appeal No.28 of 2019 decided on 17th June 2019] has dismissed the appeal filed by the Revenue by holding as under: 22. The third question proposed by the revenue is in context with the adjustment made on account of the disallowance under section14A in computing the book profit. In this context, the findings recorded by the ITAT are as follows: 17. Next common issue involved in both years is, whether the amount disallowed under section 14A read with rule 8D deserves to be added back in the book profit for the purpose of section 115JB. In other words, whether the additions which have been confirmed by the Tribunal at ₹ 1.55 crores in the assessment year 201213 and ₹ 75 lakhs in the assessment year 201314, deserves to be added back in the book profit computed for the purpose of section 115JB. 17.1 The ld. Counsel for the assessee at the very outset contended that this issue is covered in favour of the assessee by the judgment of Hon ble Gujarat High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration for the purposes of calculating book profits u/s.115JB. The relevant paras of the judgment are reproduced below. 36. By order dated 16th May, 2012, the following substantial questions of law were framed in the present appeals: (i) Whether the Income Tax Appellate Tribunal was right in holding that while computing book profit under Section 115JA (sic. Section 115JB) of the Income Tax Act, 1961, no disallowance under Section 14A was required to be made? Learned counsel for the respondents-assessee, during the course of hearing, has fairly conceded that the first question has to be answered in favour of the Revenue and against the assessee in view of specific provisions in the Explanation 1 below Section 115JB(2) clause (f). The Assessing Officer it is stated had made an addition of ₹ 88,292/- to the book profits towards expenditure incurred having nexus with dividend income, which were exempt under Section 10(33). Recording the said statement, the first question is answered in favour of the appellant-Revenue and against the respondent-assessee. The assessee has relied upon the judgment of ITAT special bench in the case of Vireet Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati, Advocate Versus BHUSHAN STEEL LTD. ...Respondent Through: Ms. Kavita Jha, Advocate with Ms. Roopali Gupta, Advocate. ORDER 29.09.2015 ** ** ** ** ** ** 7. Question No.6 concerns deletion of addition of ₹ 89,00,000 made by the AO for computation of the income fore the purposes of Minimum Alternate Tax (MAT) under section 115JB of the Act. This pertained to the expenditure incurred for earning exempt income under section 14A read with Rule 8D. The ITAT has rightly held that this being in the nature of disallowance, and with Explanation 115JB not specifically mentioning Section 14A of the Act, the addition of ₹ 89,00,000 was not justified. The view taken by the ITAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. V. Commissioner of Income Tax 255 ITR 273 (SC) which held that the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J. The Court declines to frame a question on the above issue. 21.Apart from the above, we have a binding precedent before us one from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, we hold accordingly and confirm the addition of ₹ 5 lakh. This ground of Revenue s appeal is partly allowed. As rightly held by both, the CIT (Appeals) and the Tribunal, this issue has a direct correlation with the first question. It was argued by the Revenue that while computing the book profit under Section 115JB of the Act, the disallowance of interest expenditure on exempt income was wrongly negatived by both the authorities on the ground that it was not the liability for expenses, but a liability relating to assets. We find no fault in the approach adopted by both the authorities. The addition under section 115JB of the Act of a sum of ₹ 1,14,43,040/- when was made as an expenditure estimated on earning of dividend income under Section 14A of the Act, without reiterating the rationale of confirming deletion of such amount as has been elaborately done at the time of deciding question No.1, this deletion requires to be confirmed. 8. Taking into consideration the evidence on record and considering the decision of this court in the case of Commissioner of Income-tax-I vs. Gujarat State Fertilizers Chemicals Ltd. (supra), we are of the op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 8 In view of above, this Tax Appeal stands dismissed so far as question No.2[b] is concerned. 9 So far as question No.2[c] proposed by the Revenue is concerned, the Assessing Officer in the assessment order has stated that the assessee has not received any grant of subsidy during the year under consideration but the subsidy or grant which was received in the earlier years was to be considered as income or to be reduced from the cost of assets. Therefore, the Assessing Officer estimated 15% of grant of ₹ 2500 Lac which worked out at of ₹ 3750 Lac as income of the assessee. 10 The assessee, therefore, being dissatisfied, filed an appeal before the CIT(A). The CIT(A) deleted the addition holding that the assessee has not acquired any fixed assets on which depreciation has been claimed, and therefore, such grants cannot be reduced from cost of fixed asset of the assessee on the basis of estimate. 11 The Revenue, therefore, went in appeal before the Tribunal and the Tribunal confirmed the order passed by the CIT(A) by holding as under: 28. We have heard the rival contention and produced the material on record on this issue. During assessment, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal held that the interest income is required to be treated as business income instead of income from other sources. The Tribunal in its order observed as under: 10 We have heard the rival contentions and perused the material on record on this issue. The assessing Officer has treated the aforesaid income under the head income from other sources without controverting the submission of the assessee on the basis of which it was claimed that these income were of the nature of business income as elaborated in para seven of this order. The ld. CIT(A) has decided the issue in favour of the assessees taking that this issue was decided in favour of the assessee for assessment year 2009-10. During the course of appellate proceedings, the Revenue has failed to controvert the aforesaid contention and the findings of the ld.ClT(A),therefore after considering the material fact that interest earned on loan and advances from deposit placed with Mega Power Project toward sits sharing of power and interest of UL pool account received from M/s.Power Grid Corporation India Ltd were directly related to the business of the assessee ,therefore, this ground of appeal of the Revenue stands dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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