TMI Blog2024 (3) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... Act to calculate MAT as per Section 115JB of the Act. Rather, both the provisions stand separately as no correlation exists between them for the purpose of determining the taxable income. The addition of the concerned disallowance made by the AO while computing MAT is dehors the provisions of the Act and hence, cannot be sustained. Decided against the Revenue. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashwini Kumar Mr. Rishabh, JSC. For the Respondent Through: Ms. Kavita Jha, Mr. Vaibhav Kulkarni Mr. Udit Naresh, Advocates. JUDGMENT PURUSHAINDRA KUMAR KAURAV, J. 1. The present appeal under Section 260A of the Income Tax Act, 1961 [ Act ], at the instance of the Revenue, impugns the order dated 31.10.2017 passed by the Income Tax Appellate Tribunal [ ITAT ] for the assessment year [ AY ] 2011-12. 2. Vide the instant appeal, the Revenue has proposed the following questions of law for our consideration:- A. Whether on facts and in the circumstances of the case the ITAT was correct in law in deleting disallowance of Rs. 12,65,71,862/- made by the Assessing Officer [ AO ] under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Del 7156], upheld the order of the ITAT to the extent of rejecting the disallowance under Section 14A of the Act in the absence of any satisfaction by the AO. It was further noted that only proposed Question (B), as already mentioned above, requires consideration. The order dated 11.04.2018 reads as under:- Two questions are urged by the Revenue in this appeal under Section 260-A of the Income Tax Act (hereafter the Act ). The first question is with respect to the disallowance directed by the Assessing Officer ( AO ) to the extent of over Rs. 12.5 Crores under Section 13-A of the Act by applying Rule 8-D of the Income Tax Rules, 1962. This issue is covered by the judgment of this Court in the case of Commissioner of Income Tax-VI vs. Taikisha Engineering India Ltd. , 370 ITR 338 (Delhi), where the Court held that unless the AO rejects the explanation that induces the necessity to offer a specific amount as expenditure by some reasons, the mere rejection per se is unacceptable. The ITAT followed that decision; therefore, no question of law arises on this aspect. The Court is, however, of the opinion that the second question urged by the Revenue does require consideration, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced reliance on the decisions in the cases of Sobha Developers Ltd. v. Dy. CIT [2021 SCC OnLine Kar 110], Indo Rama Synthetics (I) Ltd. v. CIT [2011 SCC OnLine SC 121], Ajanta Pharma Ltd. v. CIT [2010 SCC OnLine SC 993], JCIT v. Rolta India Ltd. [2011 SCC OnLine SC 131], PCIT v. JSW Energy Ltd. [2023 SCC OnLine Bom 2846] and PCIT v. Gujrat Flurochemicals Ltd. [2023 SCC OnLine Guj 4767]. 15. We have heard the learned counsels appearing for the parties and perused the record. 16. The limited controversy involved in the instant appeal which requires consideration pertains to whether the disallowance under Section 14A of the Act can be imported to Section 115JB of the Act, particularly in light of Clause (f) of Explanation 1 to Section 115JB of the Act, for computation of MAT. 17. For the sake of clarity, it is significant to primarily refer to Section 115JB of the Act, the relevant extract of which is reproduced as under:- 115-JB. Special provision for payment of tax by certain companies. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income tax, payable on the total income as computed under this Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation which have been adopted for preparing such accounts including [statement of profit and loss] for such financial year or part of such financial year falling within the relevant previous year. [Explanation-1]. For the purposes of this section, book profit means the [profit] as shown in the [statement of profit and loss] for the relevant previous year prepared under sub-section (2), as increased by (a) the amount of income tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called [, other than a reserve specified under Section 33-AC]; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities, or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed; or ( f) the amount or amounts of expenditure relatable to any income to which [Section 10 [other than the provisions contained in clause (38) thereof] or [* * *] Section 11 or Section 12 apply; or] *** 18. A bare perusal of the abovementioned provisions would signify that sub-Section (1) prescribes the mode and manner for computing the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue. 21. The Karnataka High Court in the case of Sobha Developers Ltd. (supra) while rejecting the permissibility of adding back the disallowance on exempt income as per Section 14A of the Act to book profit under Section 115JB of the Act, has held as under:- 7. Thus from a perusal of the relevant extract of section 115JB, it is evident that sub-section (1) of section 115JB provides the mode of computation of the total income of the assessee and tax payable on the assessee under section 115JB of the Act. Sub-section (5) of section 115JB provides that save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company mentioned in this section. Therefore, any expenditure relatable to earning of income exempt under section 10(2A) and section 10(35) of the Act is disallowed under section 14A of the Act and is added back to book profit under clause (f) of Explanation 1 to section 115JB of the Act, the same would amount to doing violence with the statutory provision, viz., subsections (1) and (5) of section 115JB of the Act. It is also pertinent to mention here that the amounts mentioned in clauses (a) to (i) of Explanation 1 to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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