TMI Blog2017 (7) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... te satisfaction. In this case, the AO has applied the provisions provided u/r 8D and worked out the disallowance as against adhoc disallowance made by the assessee, which is supported by the decision of jurisdictional High Court in the case of Godrej Boyce Mfg Co Ltd [ 2010 (8) TMI 77 - BOMBAY HIGH COURT ] wherein it has been held that disallowance u/s 14A has to be computed as per the provisions provided u/r8D with effect from AY 2008-09 onwards. Therefore, we are of the view that the AO has rightly computed disallowance towards expenditure u/s 14A Validity of adjustments made under clause (f) to section 115JB towards disallowance made u/s 14A r.w.r. 8D - additional ground raised by the assessee - HELD THAT:- We find merits in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, ultra vires and contrary to the provisions of law and facts of the case and without appreciating the facts of the case in their proper perspective 2. On the facts and circumstances of the case, the learned CIT(A) erred in conf irming the disal lowance of ₹ 2,80240/- made by the Assessing Officer under section 14A read with Rule 8D 3. It is therefore prayed that the order of the learned CIT(A) be cancelled and direction be issued to allow the appeal on the grounds raised before him 4. Each one of the above grounds of appeal is without prejudice to the other. 2. The assessee filed a petition for admission of additional ground , vide application filed on 20-08-2015 raising additional ground on the issue of adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of investment in shares and securities, filed its return of income for the assessment year 2010-11 on 17-09-2010 declaring total income of ₹ 57,00,600 and book profit of ₹ 1,80,90,729. The case was selected for scrutiny and notices u/s 143(2) an 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the details, as called for. During the course of assessment proceedings, the AO noticed that the assessee has earned dividend income from its investment and claimed the same as exempt u/s 10(34), however, made adhoc disallowance of a sum of ₹ 25,000 towards expenditure incurred to earn exempt income u/s 14A of the Act without res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14A of the Act. A similar adjustment has been made to the book profit declared by the assessee u/s 115JB of the Income-tax Act, 1961. Aggrieved by the assessment order, the assessee filed appeal before CIT(A). 6. Before CIT(A) the assessee reiterated its submissions made before the AO. The assessee further submitted that it has not incurred any specific expenditure to earn exempt income. However, disallowed on its own a sum of ₹ 25,000 out of administrative and other expenses. Therefore, the AO was incorrect in invoking the provisions of section 14A r.w.r.8D without specifying how the disallowance made by the assessee was incorrect. In support of his arguments, the assessee relied upon the decision of Bombay High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JB and as per the provisions of section 115JB only certain items can be added back to the book profit as listed in the Explanation 1 to section 115JB of the Act. Since disallowance u/s 14A r.w.r. 8D is not covered in the said Explanation 1, the Ld.CIT(A) grossly erred in confirming the disallowance made by the AO u/s 14A r.w.r. 8D under MAT provisions of section 115JB of the Act. 8. On the other hand, the Ld.DR strongly supported the order of Ld.CIT(A). 9. We have heard both the parties and considered the material available on record. The factual matrix which leads to the impugned addition are that the assessee had earned exempt income; however, made adhoc disallowance of a sum of ₹ 25,000 towards expenditure incurred to earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, has rightly upheld the additions made by the AO. We do not find any error in the order of CIT(A). Hence, we are inclined to uphold the order of CIT(A) and reject the ground raised by the assessee. 10. Coming to the additional ground raised by the assessee challenging the adjustment made towards book profit computed u/s 115JB of the Income-tax Act, 1961. The assessee contends that no adjustment can be made towards book profit computed u/s 115JB for any disallowance made under section 14A r.w.r.8D. The assessee further contended that the book profit under the provisions of section 115JB has to be computed as per Explanation 1 which permits add back of only certain items to the book profit as listed out in the Explanation 1. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
