DCIT CORPORATE CIRCLE 1(1), CHENNAI vs. ACSYS INVESTMENTS PRIVATE LIMITED, CHENNAI

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ITA 2512/CHNY/2018Status: DisposedITAT Chennai18 October 2022AY 2014-152 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that disallowance under Section 14A is a notional disallowance and cannot be added back while computing book profits under Section 115JB, relying on a Special Bench decision and a Karnataka High Court ruling.

What were the facts?

The Assessing Officer disallowed Rs. 18.01 Lacs under Section 14A and added it to the normal income. Subsequently, in a rectification order, the disallowance was also added while computing book profits under Section 115JB.

What were the issues?

Whether disallowance made under Section 14A can be added back while computing book profits under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. The sole grievance of the revenue in the aforesaid appeal for Assessment Year (AY) 2014-15 is adjustment of disallowance u/s 14A while computing Book Profits u/s 115JB. The assessee has been assessed u/s 143(3) on 25.11.2016 wherein Ld. AO computed disallowance u/s 14A for Rs.18.01 Lacs in terms of Rule 8D(2) and added the same while computing income under normal provisions. However, in rectification order u/s 154, Ld. AO added the disallowance 2 - while computing Book Profits u/s 115JB also. The assessee assailed this adjustment wherein Ld. CIT(A), relying on the decision of Special bench of Tribunal in Vireet Investment Pvt. Ltd. (82 Taxmann.com 415), deleted this adjustment. Aggrieved the revenue is in further appeal before us.

2.

As rightly noted by Ld. CIT(A), this issue stood covered in assessee’s favor by the cited decision of special bench of this Tribunal. Subsequently, Hon’ble Karnataka High Court in Sobha Developers Ltd. vs. DCIT (125 Taxmann.com 72) held that disallowance u/s 14A is a notional disallowance and therefore, the same could not be added back while computing Book Profits u/s 115JB. Therefore, the impugned order could not be faulted with.

3.

The appeal stand dismissed.

Order pronounced on 18th October, 2022.

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