TMI Blog2020 (9) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... HIGH COURT] and ACIT vs. Vireet Investment (P.) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] . Accordingly, it has been specifically held that the ground of disallowance computed u/s 14A cannot be imported to the computation of books of profit u/s 115JB of the Act. The facts are not distinguishable at this stage and no law contrary to the law relied upon the CIT(A) has been produced before us. Taking into account all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we decide this issue in favour of the assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - I.T.A. No.518/Mum/2019 (Assessment Year: 2013-14) - - - Dated:- 6-7-2020 - SHRI PRAMOD KUMAR, VP AND SHRI AMARJIT SINGH, JM Revenue by: Shri Padma Ram Mirdha (DR) Assessee by: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,27,335/ u/s 14A r.w. Rule 8D. The assessee has also disallowed the Demat charges at ₹ 5,618/- which was directly related to the share investment. The assessee company has submitted that 1% of expenses were treated as income but the AO has applied the provisions of Section 14A r.w. Rule 8D(2)(iii) and assessed the expenditure to earn the exempt income in sum of ₹ 6,22,09,078/-. After deducting the expenses shown by the assessee in sum of ₹ 127335/-, the total expenditure to earn the exempt income was assessed in sum of ₹ 6,20,81,743/-. The AO also disallowed the said amount while computing of books of profit u/s 115JB of the Act. The income of the assessee was assessed in sum of ₹ 70211794/-. The book profit was assessed to the tune of ₹ 4,31,98,891/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who partly allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. ISSUE Nos. 1 2 4. Under these issues the revenue has challenged the partly allowance of the claim in view of the provisions of Section 14A r.w. Rule 8D(2) and Rule 8D(2)(iii). The Ld. Representative of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year under consideration. there has been no change in investment amount and it has stood at ₹ 151,70,22,619/- since 31.03.2010 hence no further disallowance should be made, it would be pertinent to refer to the decision of the Hon ble ITAT, Chennai 'C' Bench in the case of Southern Petro Chemical Industries Vs. Deputy Commissioner Of Income Tax (2005) 93 TTJ 0161 : (2005) 3 SOT 0157, in this context, wherein it has been held that -Whether to invest or not to invest and whether to retain the investments or to liquidate the same are very strategic decisions which the management is called upon to take. These are mind-boggling decisions and top management is involved in taking these decisions. This decision-making process is very complicated and requires very careful analysis. Moreover, the assessee has to keep track of various dividend incomes declared by the investee companies and also to keep track of the dividend income having been regularly received by the assessee. This activity itself calls for considerable management attention and cannot be left to a junior clerk. Thus. proportionate management expenses are required to be deducted while computing the div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is held that no disallowance can be made under Rule 8D(2)(ii) of the Act. 6.3.7 Further, with regards to the 8D(2)(iii) disallowance, at the rate of 0.5% of the Average investments, it is seen that the same has been reduced to 5% of the dividend income earned by the appellant, in the earlier years from AY 09-10 to AY 11-12 by Hon'ble ITAT. Further, this issue was the subject matter of appeal before the Hon'ble Bombay High Court for AY 2009-10 as well who confirmed the disallowance of expenditure to the extent of 5% of dividend income earned as reasonable. Therefore. Respectfully following the decisions of the Hon'ble ITAT for AY 09- 10Ia-11-12 and of the Hon'ble Bombay HC for AY 09-10 and in order to maintain judicial consistency, the disallowance made under Rule 8D(2)(iii) of the Act is restricted to 5% of the dividend income earned by the appellant. 5. On appraisal of the above mentioned finding, we find that the CIT(A) has allowed the claim of the assessee on the basis of the decision of Hon ble ITAT in the assessee s own case for the A.Y.2009-10 to 2011-12. The finding of the Hon ble ITAT has been confirmed by Hon ble Bombay High Court. Taking into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115JB and that the amount of disallowance computed u/s. 14A cannot be added to the book profit in the absence of specific mention to that effect in the Explanation to Section 115JB. As the ratio of the said decisions is squarely applicable to the facts of the appellant's case, adjustments made on account disallowance u/s 14A of the Act for the respective years. while computing book profits u/s 115J8 of the Act for the respective years, are hereby deleted. 7. On appraisal of the above mentioned finding, we find that the issue has been decided on the basis of decision of Hon ble Bombay High Court in the case of CIT Vs. Bengal Finance Investments Pvt. Ltd. in ITA. No.337 of 2013 and also in view of the decision of Special Bench of Delhi Tribunal in the case of ACIT vs. Vireet Investment (P.) Ltd. 82 taxmann.com 415. Accordingly, it has been specifically held that the ground of disallowance computed u/s 14A cannot be imported to the computation of books of profit u/s 115JB of the Act. The facts are not distinguishable at this stage and no law contrary to the law rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-opening of the offices. 6.3 Faced with similar facts and circumstances, the co-ordinate bench of this Tribunal comprising-off of Hon ble President and Hon ble Vice President, in its recent decision titled as DCIT V/s JSW Limited (ITA Nos. 6264 6103/Mum/2018) order dated 14/05/2020 held as under: - 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5)The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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