VEPAR PVT. LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-4(1)(4), AHMEDABAD

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ITA 1506/AHD/2016Status: DisposedITAT Ahmedabad26 April 2019AY 2012-133 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the disallowance under Section 14A, when imported to compute book profit under Section 115JB, was not permissible. It relied on a Special Bench decision to allow the assessee's plea.

What were the facts?

The assessee challenged an adjustment made to its book profit under Section 115JB of the Income Tax Act, 1961. This adjustment was based on a disallowance made under Section 14A, calculated as per Rule 8D.

What were the issues?

Whether disallowance made under Section 14A can be imported for computation of book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 14A

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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD

For Appellant: Shri P. M. Mehta, A.R, Shri Uma Shankar Prasad

आदेश/O R D E R

PER PRADIP KUMAR KEDIA - AM: 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.

ITA No.1506/Ahd/16 [Vepar Pvt. Ltd. vs. ITO] A.Y. 2012-13 - 2 -

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.”

3.

Ground No.1 is dismissed as not pressed.

4.

Ground No.2 concerns adjustments/disallowance of Rs.19,24,673/- while computing ‘book profit’ under s.115JB of the Act.

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

ITA No.1506/Ahd/16 [Vepar Pvt. Ltd. vs. ITO] A.Y. 2012-13 - 3 -

book profit towards disallowance under s.14A of the Act is thus directed to be deleted.

7.

In the result, Ground No.2 of the assessee’s appeal is allowed.

8.

In the result, appeal of the assessee is partly allowed.

This Order pronounced in Open Court on 26/04/2019

Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 26/04/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

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