TMI Blog2022 (10) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid order dated 09.05.2006. Since the PSF(SC) is held by the assessee in a fiduciary capacity on behalf of Government of India, the assessee had maintained separate books of account. Admittedly, the accounts of the assessee are prepared in accordance with the provisions of Schedule III to Companies Act, 2013 (18 of 2013). There is no qualification from the Statutory Auditor, Director or the Registrar of Companies in regard to the non-inclusion of the amount of surplus in PSF(SC). Hence, the inclusion of surplus in PSF(SC) does not fall in any of the clauses (a) to (k) of Explanation to section 115JB of the I.T.Act. Hence, the adjustment so made by the A.O. in section 154 proceedings is contrary to the provisions and the settled legal position. In this context, we rely on the judicial pronouncements cited by the assessee in support of his case. - ITA No.524/Bang/2022 - - - Dated:- 18-10-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sri.Sunil Jain, CA For the Respondent : Sri.K.R.Narayana, Addl.CIT-DR ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the assessee is directed against CIT(A) s order dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the computation of income as per section 115-JB in the computation sheet. 2.The Learned CIT(A) has further erred in not considering that the amount of disallowance worked out at Rs.3, 15,41,178/- based on formula prescribed as per Rule 8D cannot be considered as the amount incurred to earn exempt income for the purpose of computation of Book Profit as per section 115JB. 3.The Learned CIT(A) failed to appreciate and ought to have held that for the purpose of computation of total income u/s 115JB the actual amount incurred for earning exempted income having regard to the books of account is to be considered and not the amount worked out based on formula prescribed in Rule 8D. 4.The Appellant therefore prays that the AO be directed to consider the amount for add back to the amount of net profit as is being incurred to earn exempted income having regard to books of account while arriving at the amount of Book Profit as per section 115JB. Ground III: Inclusion of surplus amount of Rs.19,14,43,451/- pertaining to Passenger Service Fees (Security Component) in the Computation of Book profit u/s 115JB of the IT Act. 1961 III. 1. On the facts and in the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computing the book profits u/s 115JB of the I.T.Act. In support of his contention the learned AR relied on the judgment of the Hon ble jurisdictional High Court in the case of PCIT v. J.J.Glastronics (P.) Ltd. reported in (2022) 139 taxmann.com 375. 7. The learned Departmental Representative supported the orders of the A.O. and the CIT(A). 8. We have heard rival submissions and perused the material on record. The Hon ble jurisdictional High Court in the case of PCIT v. J.J.Glastronics (P.) Ltd. (supra) had held that in a proceeding u/s 154 of the I.T.Act, no disallowance u/s 14A can be made while computing book profit u/s 115JB of the I.T.Act. The Hon ble High Court followed the judgment of the Hon ble jurisdictional High Court in the case of Sobha Developrs Ltd. v. DCIT reported in (2021) 125 taxmann.com 72 (Karnataka) and CIT v. Gokaldas Images (P.) Ltd. reported in 122 taxmann.com 166 (Karnataka). The relevant finding of the Hon ble High Court in the case of PCIT v. J.J.Glastronics (P.) Ltd. (supra), reads as follows:- 9. Having regard to this decision, the decision cited by the revenue in the case of Sobha Developers (supra) has been considered. At this juncture, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound fault with. We are of the considered view that the Miscellaneous Petition filed by the revenue under section 254(2) of the Act was wholly misconstrued. The Tribunal has distinguished the case of Sobha Developers (supra) relied upon by the revenue with Vireet Investment (P.) Ltd. (supra) and has rightly come to the conclusion that the judgment of the Vireet Investment (P.) Ltd. (supra) rendered by the Special Bench consisting of three Hon'ble Members prevail over the Regular Bench consisting of two Hon'ble Members. Moreover, this view considered in the Vireet Investment (P.) Ltd. (supra) was the subject matter before this Court in the judgments referred to supra. Hence, no exception can be found with the orders impugned. 9. In view of the above judgment of the Hon ble jurisdictional High Court, we hold that the A.O. is not justified in making disallowance u/s 14A of the I.T.Act r.w.Rule 8D in computing book profit u/s 115JB of the I.T.Act in a proceeding u/s 154 of the I.T.Act. It is ordered accordingly. 10. In the result ground II is allowed. Ground III 11. The assessee had collected Passenger Service Fees (Security Component) [PSF(SC)]. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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