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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
PER MAHAVIR PRASAD, JUDICIAL MEMBER
This appeal filed by the Assesseee is directed against the order of the Ld. CIT(A)-8, Ahmedabad dated 04.01.2018 pertaining to A.Y. 2013-14 and following grounds have been taken:
2 . A.Y. 2013-14 1. On the facts and in the circumstances of the case, the learned CIT(A) grossly erred in confirming the addition made by Assessing Officer of Rs. 15,16,860/- to the book profit computed as per the provisions of section 115JB of the Act considering 4he same as expenses directly related to investment activity which has resulted in exempt income.
2. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
Facts of the case are that the assessee company is engaged in the business of Manufactures & Export of Garments and Accessories.
3. On perusal of the computation it, is noted that the assessee has already disallowed the amount of Rs.20,11,668/-(i.e. Rs.15,16,860/- being paid to Jeetay Investments Pvt. Ltd. and Rs.4,94,808/- u/s.14A). Hence no further disallowance; is called for, while computing the income of the assessee under normal provisions of the IT. Act. However the above amount of Rs.20,11,668/- is not totally addled while computing the income chargeable to tax u/s. 115JB of the Act. The assessee has added only Rs.4,94,808/- in the computation but the amount of Rs.15,16,860/-(being paid to Jeetay investment) is mot added back. Since the amount of Rs.15,16,860/- is the expenses directly related to the dividend income earned, being exempt, it very falls within the ambit of rule 8D, part (i) of calculation for disallowance. The computation u/s. 115JB of the Act. Sr.No Particulars Amount 1. Book Profit u/s .115JB of the Act. Rs.1,09,13,688/- 2. Additions/ Disallowances 3. Disallowance u/s. 14A : Rs.15,16,860/- (restricted to the amount not added)
3 . A.Y. 2013-14 Book Profit U/S.115JB Rs.1,24,36348/-
4. Against the addition of Rs. 15,16,860/- to the book profit computed as per the provisions of section 115JB of the Act, assessee preferred first statutory appeal before the ld CIT(A) who confirmed the action of the ld. Assessing Officer.
Now assessee has come before us by way of second appeal.
At the outset, ld. A.R. cited and submitted a copy of our own bench in assessee’s own case for assessment year 2012-13 wherein in similar facts and circumstances, relief was granted to the assessee and copy of the said order is reproduced:
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-7, Ahmedabad ('CIT(A)' in short), dated 05.04.2016 arising in the assessment order dated 25.02.2015 passed by the Assessing Officer (AO) under S. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13.
2. The grounds of appeal raised by the assessee read as under:
"1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in holding that the first ground of the appellant's appeal challenging the validity of the assessment order impugned before him was general in nature and therefore, not required to be adjudicated upon by him.
2. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has erred in confirming adjustments/ disallowance of Rs.19,24,673/- while computing book profit under sec.115JB of the Act when no such addition ought to have been made. The same may be directed to be deleted."
Ground No.1 is dismissed as not pressed.
Ground No.2 concerns adjustments/disallowance of Rs.19,24,673/- while computing 'book profit' under s.115JB of the Act.
4 . A.Y. 2013-14
5. With the assistance of the learned AR for the assessee, we find that the AO had made disallowance of Rs.19,24,673/- by resorting to Section 14A of the Act. The disallowance computed with reference to Rule 8D for the purposes of Section 14A was imported to special provisions of Section 115JB of the Act for adjustment of book profits. We find that the issue is no longer res integra identical issue came up before the Special bench in ACIT vs. Vireet Investments Ltd. 165 ITD 27 (SB). In the light of the decision of Special bench, we find merit in the plea of the assessee. The AO is accordingly directed to delete adjustments made to the book profit on this score.
6. In parity, the issue requires to be decided in favour of the assessee. The adjustment made by the Revenue authorities in the book profit towards disallowance under s.14A of the Act is thus directed to be deleted.
In the result, Ground No.2 of the assessee's appeal is allowed.
In the result, appeal of the assessee is partly allowed.
7. Since relief has already been granted by our own bench in assessee’s own case for preceding years.
8. Thus, in parity with the ITAT order in we allow appeal of the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in Open Court on 21- 10- 2019