TMI Blog2021 (9) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration as per Rule 8D(2)(iii) in view of case of ACIT v. Vireet Investment (P) Ltd..[ 2017 (6) TMI 1124 - ITAT DELHI] and to pass detailed order on both counts. Thus, the ground raised by the assessee is allowed for statistical purposes for the assessment year 2013-14. Disallowance u/s 14A of the Act vis- -vis computation of book profits u/s 115JB - As decided in Vireet Investment (P) Ltd..[ 2017 (6) TMI 1124 - ITAT DELHI] computation under clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the 1962 Rules. It further held that the disallowance of actual expenditure incurred for earning exempt income is required to be made under clause (f) of section 115JB(2) of the Act. Accordingly, the matter is remitted back to the file of the Assessing Officer to compute the books profits under section 115JB of the Act on the direct expenditure incurred for earning exempt income under clause (f) of Explanation to section 115JB(2). Disallowance u/s 14A r.w. Rule 8D for the assessment year 2014-15 - HELD THAT:- AO cannot make disallowance under section 14A r.w. Rule 8D in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its under section 115JB of the Act for the assessment year 2013-14. Similarly, for the assessment year 2014-15 also, the Assessing Officer determined the disallowance of ₹ 67,89,631/- under section 14A r.w. Rule 8D and brought to tax. On appeal, the ld. CIT(A) confirmed the disallowance for both the assessment years. 3. On being aggrieved, the assessee is in appeal before the Tribunal. By referring to the balance sheet filed in the form of paper book, the ld. Counsel for the assessee has submitted that the assessee has sufficient own funds for making investments and no part of the borrowed funds were used by the assessee for making investments and prayed for deleting the disallowance of expenditure for the assessment year 2013-14. Further, by relying on the decision in the case of ACIT v. Vireet Investment Pvt. Ltd. 82 taxmann.com 415 Delhi ITAT (SB), it was further submission that if at all any disallowance has to be made, only those investments are to be considered for computing the average value of investment which yielded exempt income during the year. 4. On the other hand, the ld. DR strongly supported the orders of authorities below. 5. We have heard both the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2013-14. 6. As far as issue of disallowance under section 14A of the Act vis- -vis computation of book profits under section 115JB of the Act is concerned, the issue is now settled by the decision of Special Bench of Delhi Tribunal in the case of ACIT v. Vireet Investment Private Limited reported in (2017) 165 ITD 27(Delh-trib.)(SB) is relevant, wherein, it is held at para 6.22 that computation under clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the 1962 Rules. It further held that the disallowance of actual expenditure incurred for earning exempt income is required to be made under clause (f) of section 115JB(2) of the Act. Accordingly, the matter is remitted back to the file of the Assessing Officer to compute the books profits under section 115JB of the Act on the direct expenditure incurred for earning exempt income under clause (f) of Explanation to section 115JB(2) of the Act. 7. With regard to the disallowance under section 14A r.w. Rule 8D for the assessment year 2014-15 is concerned, the Assessing Officer has observed that the investment balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous assessment years and the entire interest expenditure on borrowing fund was incurred in connection with the operating revenue which had been offered to tax, no disallowance is required to be made under section 14A of the Act [CIT v. Bharti Televenture Ltd. (2011) 331 ITR 502 (Del), CIT v. Reliance Utilities Power Ltd. (2009) 313 ITR 340 (Bom), PCIT v. Sintex Industries Ltd. (2018) 403 ITR 418 (Guj), etc.]. 7.3. In view of the above facts and circumstances, we are of the considered opinion that the Assessing Officer cannot make disallowance under section 14A r.w. Rule 8D in any count. Accordingly, we direct the Assessing Officer to delete the addition made towards the disallowance under section 14A of the Act. 8. The next ground raised in the appeal of the assessee for the assessment year 2014-15 relates to confirmation of addition of ₹ 15,64,589/- being the corporate sponsorship/fee paid to Tennis Academy. On perusal of the books of accounts of the assessee, the Assessing Officer has observed that the assessee has claimed a sum of ₹ 15,64,589/- towards membership and subscription charges. From the details produced by the AR of the assessee, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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