TMI Blog2022 (1) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 115JB. Therefore, we set aside the order of CIT on this issue and allow the ground raised by the assessee. - ITA No. 600/H/2019 - - - Dated:- 4-1-2022 - Shri Satbeer Singh Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri Aliasgar Rampurwala For the Revenue : Shri Rajendra Kumar ORDER PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT - 4, Hyderabad s order dated 14/03/2019 for AY 2014-15 involving proceedings u/s 263 of the Income Tax Act, 1961 ; in short the Act on the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Learned Principal Commissioner of Income-tax - 4 (Ld. Pr. CIT) erred in revising the assessment order passed by the Assistant Commissioner of Income-tax, Circle 16(1) (Ld. AO) under Section 263 of the Income-tax Act, 1961 (Act'). The Appellant prays that the order passed under section 263 be held as bad in law and liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the Ld. Pro CIT erred in exercising his jurisdiction for initiating proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 determining the total income of ₹ 18,66,98,748/- and Book profit u/s. 115JB at ₹ 13,19,86,700/-. While passing the order an amount of ₹ 2,67,05,035/- pertaining to disallowance u/s.14A was made and the amount was set off against the declared loss from business of ₹ 1,10,08,215/- there by assessing the Income from business at ₹ 1,56,96,820/-. The entire business Income was allowed as deduction u/s.80IA. 3. By exercising the powers vested u/s 263 of the Act, the CIT 4, Hyd, called for the assessment record of the assessee and on examining the same, noticed the following: 1. The disallowance u/s.14A amounting to ₹ 2,67,05,035/- was made and normal income was re-computed, however, the AO omitted to add the same amount to the book profits assessed u/s.115JB. 2. Under the head income from other sources the assessee has declared the following incomes: a. Income u/s.56(2)(viia) ₹ 96,21,893/- The Interest receipts were arrived at after claiming the expenditure of (l)Interest on term loan from IDFC-Anthlyur unit ₹ 2,18,33,217 and (2)Interest expenses considered in other sources ₹ 1,44,38,116/- totaling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny proceedings, the Assessing Officer has made an addition of ₹ 2,67,05,035/- u/s. 14A and the income from business was computed at ₹ 1, 56,96,820/-. Further, the deduction claimed u/s. 80IA was restricted to the business income only i.e., Rs, 1,56,96,820/- and accordingly the income from business was computed at NIL. However, the income was assessed at Rs, 18,66,98,748/- (1363103 + 185335645) being the sum of income from house property and income from other sources. c. On verification of the statement of computation, it is seen that the income from other sources was shown at ₹ 18,53,35,645/- which included ₹ 96,21,893/- being Income admitted u/s. 56(2)(viia) and ₹ 17,57,13,752/- being the net Interest receipts. The net interest Income was arrived as under: Interest received on FDs, ICDs CCD ₹ 21,19,85,085 Less: Interest on term loan from IDFC - Anthiyur unit ₹ 2,18,33,217 Less: Interest expenses considered in other sources ₹ 1,44,38,116 Net Interest income &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sources' During the financial year 2013-14 relevant to the assessment year 2014-15, the assessee has earned total Interest Income of ₹ 21,19,85,085/- from Inter Corporate Deposits, Fixed Deposits and others. Further, the assessee has incurred ₹ 46,26,57,930/- towards interest expenses during the year which includes Interest expenditure of ₹ 3,62,71,333/- directly related to earn to above said interest Income. Accordingly, the interest income and interest expenditure directly related to earn said interest income has not been considered while computing the business profit. The Interest expenditure relates to interest paid on loans taken from IDFC and IREDA for different power units including Anthlyur and Jaglur units. During the year 2011-12, the Company had transferred assets of power unit at Anthlyur to M/s. Windage Power Company Pvt. Ltd and amount receivable has been considered as Inter Corporate Deposit. During the year, the company earned interest Income of ₹ 3,46,57,611/- on said inter corporate deposit and the Company has also paid interest expenses of ₹ 1,08,31,413 to IDFC and ₹ 1,11,01,804 to IREDA aggregating to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongly allowed against Income from other Sources and deduction u/s 80IA has been allowed is excess as detailed above. 6. As regards the Second relevant issue of Non-consideration of disallowance u/s. 14A in computation of book profits, the CIT observed that The assessee filed return admitting book profits at ₹ 13,19,86,700/- and paid taxes accordingly. In the assessment order u/s. 143(3), disallowance u/s. 14A amounting to ₹ 2,67,05,035/- was made and normal Income was recomputed. The disallowance u/s. 14A was also required to be added to the book profits and the book profits should have been recomputed at ₹ 15,86,91,735/-. Failure to do so has resulted in under assessment of book profits at ₹ 2,67,05,035/-. In this regard, the reply of the assessee was as under: Assessee in its reply dated 06-12-2018 has stated that the tax liability u/s.115JB to. be worked out only on the basis of adjusted book profit and not on the basis of income computed under the normal provisions of the Act. The A.D. cannot go beyond the audited Left space intentionally 7. Aggrieved by the order of the CIT, the assessee is in appeal before the ITAT. 8. As reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und No. 4 relating to the disallowance u/s 14A should also be added to the profits compute du/s 115JB, , the ITAT in the AY 2008-09 being ITA No. 196/Del/2013 vide order dated 25-4-2016, reported in 68 taxmann.com 322, held as under: 55. We have carefully considered the rival contentions. The ld. AO has imputed the addition u/s 115JB of the Act as disallowance computed u/s 14A, read with Rule 8D of the Income Tax Rule, 1962. As we have already deleted the disallowance as per ground No.10 of the appeal wherein we have held that the amount of disallowance cannot be worked out by ld. AO without recording satisfaction on examination of books about the correctness of disallowance made by the assessee which in this case has been made by assessee of ₹ 3311708/-.We have also held that disallowance cannot exceed the amount of exempt income. Hence, now no disallowance survives u/s 14A of the act so far as normal computation of total income of the appellant. The AO has added to the book profit amount of expense disallowed u/s.14A applying rule 8D of the Income tax act. As per our considered view, no addition u/s.115JB is warranted for amount of disallowance u/s.14A of the IT Act. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
