TMI Blog2022 (4) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2009-10 the same has to be adopted even while computing the book profit under section 115JB of the Act. So we direct the AO to restrict the disallowance under section 14A while computing the book profit under section 115JB of the Act. Consequently, additional grounds No.1 2 raised by the assessee are decided in favour of the assessee. - ITA No.2509/M/2012 And ITA No.3423/M/2012 And ITA No.1500/M/2018 - - - Dated:- 22-3-2022 - Shri Kuldip Singh, Judicial Member And Shri Gagan Goyal, Accountant Member For the Assessee : Shri Nitesh Joshi, A.R. For the Revenue : Shri B.K. Bagchi, D.R. ORDER PER KULDIP SINGH, JUDICIAL MEMBER: Aforesaid cross appeals have been recalled by the Tribunal vide order dated 05.01.2022 passed in MA No.20/M/2021 arising out of ITA No.2509/M/2012 for A.Y. 2008-09, MA No.21/M/2021 arising out of ITA No.3423/M/2012 for A.Y. 2009-10 MA No.22/M/2021 arising out of ITA No.1500/M/2018 for A.Y. 2013-14 to decide the grounds which the Tribunal omitted to decide due to inadvertence. 2. For the sake of brevity aforesaid cross appeals bearing common question of law and facts are being disposed of by way of composite order. 3. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in confirming the disallowance of ₹ 163,225/- (i.e. l/5th of ₹ 816,129/-) incurred in AY 2008-09 towards issue of equity shares to promoters claimed u/s 35D of the Act. 6) The CIT(A) erred in confirming the disallowance of ₹ 71,000/- (i.e. l/5th of ₹ 355,000/-) incurred in AY 2008-09 towards issue of warrants to promoters claimed u/s 35D of the Act. 7) The CIT(A) erred in not deleting the disallowance made by AO in respect of commission paid u/s 36(l)(ii) to the extent of ₹ 9,359/- in case of Mr. K.N.Suntook, Director of the company on the ground that they hold equity shares of the company. 8) The CIT(A) erred in confirming the interest income of ₹ 8,63,99,000/- would be taxed under the head income from other sources and not as business income as offered by the appellant. The Appellant craves leave to add to, alter, amend, substitute and/or vary any of the above grounds of appeal before or during the course of hearing of the appeal. ITA No.1500/M/2008 (Assessee s appeal) for A.Y. 2013-14 The Appellant Company submits that each of the following grounds of appeal is independent of and without prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 150.49 2 Interest on loans advances 228.24 3 Interest on bank deposits with banks 39.67 6. The assessee was showcaused to explain as to why the aforesaid sum should not be treated as income under the head Income from other sources . 7. Declining the contentions raised by the assessee the AO proceeded to treat the interest of ₹ 2,28,24,000/- and ₹ 39,67,000/- on loans and advances and on bank deposits respectively as assessee s income from other sources. 8. Ld. CIT(A) decided this issue in favour of the assessee by returning the following findings: 9. Ground No.7 is regarding treating the interest income under the head income from other sources . This issue was examined in the appeal order for A.Y.2007-08 dated 15.07.2011 Para 9 to Para 9.3 Pages 5 to 8, following the same, the AO is directed to treat the interest on margin money at ₹ 13.44 Lacs, interest on loans to employee at ₹ 4.01 lacs, interest on day to day balance with bank in current account at ₹ 53.23 lacs and interest on blocked accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Rule 3D of the Rules does not represent actual expenditure incurred for earning exempt income,, the same should not be added back while computing 'book profit under section 115JB of the Act . 12. The Ld. CIT(A) made upward adjustment of disallowance made by the assessee computed under section 14A of the Act read with Rule 8D of the Income Tax Rules (for short the Rules) while computing the book profit under section 115JB of the Act which is under challenge before the Tribunal by way of raising additional grounds. 13. The Ld. A.R. for the assessee contended that when the computation made by the assessee for the purpose of disallowance under section 14A of the Act read with rule 8D of the Rules has been accepted by the Tribunal while deciding ground No.1 2 in the first round of litigation vide order dated 15.07.2020 passed in the present appeal upward adjustment of the disallowance computed under section 14A read with Rule 8D while computing the book profit under section 115JB of the Act is not sustainable as has already been held by the Tribunal in assessee s own case in the earlier years. 14. Undisputedly, the Tribunal while deciding ground No.1 2 has ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure made by the assessee. The Ld.CIT(A) while disposing off the appeal for the A.Y. 2007-08 has examined the issue elaborately and accepted that the computation of disallowance made by the assessee (suomoto disallowance) is on a scientific basis. While dealing with the appeal for the A.Y. 2007-08 we have accepted the computation of the assessee since it is more scientific than the adhoc disallowance made by the Assessing Officer. Even though the provisions of Rule 8D are applicable for the year under consideration i.e. A.Y.2008-09 in the absence of any satisfaction recorded by the Assessing Officer as to why the suomoto disallowance made by the assessee is not acceptable having regard to the Books of Accounts of the assessee and the correctness of the claim of expenditure made by the assessee, we accept the suomoto disallowance made by the assessee as the computation of disallowance made by the assessee is on a scientific basis and is in consistent with the same method as adopted consistently from the A.Y. 2006-07 onwards. In the circumstances, we sustain the order of the Ld.CIT(A) and direct the Assessing Officer to adopt the suomoto disallowance made by the assessee for compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai Tribunal) iv) Reliance Natural Resources Ltd. [2017] 85 taxmann.com 128 (Mumbai Tribunal) 59. Heard rival submissions. As the additional ground being purely a legal ground the same is admitted. We further observe that this issue has been decided by the Hon'ble Special Bench of Delhi in the case of Vireet Investment Pvt. Ltd., (supra) wherein it has been held that computation under clause (f) of explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s. 14A r.w. Rule 8D of the Act. Thus, in view of the decision of the Hon'ble Special Bench the claim of disallowance as computed under Rule 8D cannot be made while computing the book profits. We further find that the assessee himself disallowed an amount of ₹.37,07,020/- as expenditure incurred towards earning exempt income while computing its book profits u/s. 115JB(2) of the Act. Further, we observed that the assessee while computing the income under normal provisions of the Act had made suomoto disallowance u/s. 14A at ₹.37,66,085/-, as this computation of suomoto disallowance was made on a scientific basis we feel it appropriated to adopt the same even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) upheld the addition made by the AO. 21. At the very outset the Ld. A.R. for the assessee contended that this issue being academic in nature is not pressed as the same is tax neutral and further contended that this issue has already been decided in favour of the assessee in its own case for A.Y. 2007-08 (supra). 22. We have perused the order passed by the co-ordinate Bench of the Tribunal in ITA No.5775/M/2011 A.Y. 2007-08 vide order dated 15.07.2020 wherein the Tribunal dismissed the ground raised by the Revenue by returning the following findings: 73. Coming to Ground No. 11 of grounds of appeal relating to confirming the interest disallowance on the loans given to subsidiaries, interest on Income-tax refund and interest on warrants conversion, application money, taxed under the income from other sources instead of business income. Ld. Counsel for the assessee submitted that this ground is not pressed as there is no impact on the assessed income and hence academic. In view of the submissions of the Ld. Counsel for the assessee this ground is treated as not pressed. Further, we keep the issue open and the decision taken for this assessment year shall not be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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