TMI Blog2017 (12) TMI 1841X X X X Extracts X X X X X X X X Extracts X X X X ..... D of the I.T Rules has been made without complying the provisions of law. Thus the addition cannot be sustained in the instant case. Thus, we direct the Assessing Officer to delete the impugned addition. Thus, first issue in grounds of appeal filed by the assessee is allowed. Addition u/s 115JB for disallowance u/s 14A r.w.r 8D - HELD THAT:- As in recent judgment of Special Bench of Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB - Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 of section 115JB - However it is also clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so we draw our support from the judgment of Hon ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd [ 2014 (11) TMI 1169 - CALCUTTA HIGH COURT] We hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. However, the assessee did not make any disallowance of the expenses incurred in relation to such exempted income. Thus, the Assessing Officer invoked the provision of 14A r.w.r 8D and made the following disallowances: Sl. No. Rule Particulars Amounts(in Rs.) 1 8D(2)(i) Direct expenses 29,786/- 2 8D(2)(ii) Interest expenses NIL 3 8D(2)(iii) Disallowance 1923063/- Total 1952849/- The above expenses were disallowed as per Rule 8D and added to the total income of the assessee. 5. The assessee filed an appeal before the ld. CIT(A) where it submitted details of actual expenses claimed by the assessee in his profit loss a/c for Rs. 51,699/- as detailed under: Rent Rates Rs.5800/- Filing Fees Rs.3168/- Professional F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in the instant case relates to the disallowance made by the AO u/s 14A r.w.r 8D(2)(iii) of the I.T Rules which was subsequently confirmed by ld. CIT(A). 8. From the above discussion, we note that Assessing Officer can resort to make the disallowance u/s 14A of the Act r.w.r. 8D of the IT Rules, 1962 after having regard to the accounts of the assessee and feels dissatisfied with the correctness of the claim of the assessee. Thus, it is clear that the AO can make the disallowances of the expenses incurred in relation to exempt income in pursuance to the provisions as specified u/s 14A of the Act. On perusal of the facts of the present case, we note that the assessee has claimed indirect/administrative expenses during the year to the tune of Rs.51,669/- only. Thus, it is undoubtedly clear that actual expenses claimed by the assessee are much less then the expenses disallowed under Rule 8D(2)(iii) of the I.T. Rules by the AO. In the backdrop of the present case we are of the view that the expenses to be disallowed under Rule 8D(2)(iii) cannot exceed the actual expenses incurred by the assessee. However, the AO has made the disallowance of the expenses under rule 8D(iii) exceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that disallowances made under normal computation of income cannot be applied while determining the income u/s 115JB of the Act. The ld. AR alternatively submitted that if the disallowances u/s 115JB of the Act is required to be made then it should not exceed the actual expenses claimed by the assessee in its books of accounts i.e. Rs.51,669/-. On the other hand, ld. DR vehemently supported the order of lower authorities. 14. We have heard the rival submissions and perused the materials available on record. The issue in the instant case relates to the disallowances made by Assessing Officer u/s 14A r.w.r 8D of the Income Tax Rules while determining the income under normal computation of income. The disallowance of the same was also made while determining the profit u/s 115JB of the Act. However, we note that in recent judgment of Special Bench of Hon ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Act. Relevant portion of the said order is reproduced below: In view of above disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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