DCIT (E), NEW DELHI vs. M/S PALIWAL INFRASTRUCTURE PVT. LTD., NEW DELHI

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ITA 5743/DEL/2016Status: DisposedITAT Delhi29 July 2019AY 2010-113 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 cannot be made while computing book profit under Section 115JB. This issue is covered by a Special Bench decision of the Tribunal.

What were the facts?

The assessee invested a significant amount in shares and securities, from which it derived exempt income. The AO added back expenses related to this exempt income to the book profit under Section 115JB. The CIT(A) deleted this addition.

What were the issues?

Whether expenses relatable to exempt income can be disallowed while computing book profit under Section 115JB. Whether Section 14A is applicable for computation of book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 14A,Section 10

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI

Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI

For Respondent: Shri Surender Pal, Sr. DR
Hearing: 29/07/2019

The aforesaid appeal has been filed by the revenue against impugned order dated 16.8.2016, passed by Ld. CIT (Appeals) 36 New Delhi for the assessment year 2010-11. Grounds raised by the revenue reads as under:- “In the facts and under the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 4,28,65,241/- made by the AO to the book profit u/s 115JB on account of expenditure relatable to income exempt u/s 10 of the Act in view of the provision of section 14A read with clause (f) of explanation 1 to section 115JB.”

2.

The facts in brief are that the qua the issue involved are that, assessee had invested amount of Rs. 49,53,49,937/- in shares, securities and investment in a partnership firm from where assessee has derived exempt income, that is, it does not form part of the total taxable income. AO has made disallowance u/s 14A while computing the book profit u/s 115JB, because the assessment has been on tax computed on book profit u/s 115JB, because the same was higher than the normal provision. Ld. CIT (A) following the ITAT order for the assessment year 2007-08 and 2008-09 has deleted the said disallowance.

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