DCIT, CIRCLE-1(1)(2), AHMEDABAD vs. CHIRIPAL INDUSTRIES LTD, AHMEDABAD

The Revenue has raised the following grounds of appeal :-

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

At the time of hearing none appeared on behalf of the assessee despite giving notice. Hence, we are proceeding on the basis of submissions made by the assessee before the CIT(A) & the Assessing Officer.

The Ld. DR submitted that the CIT(A) has erred in deleting the addition of Rs.8,91,35,894/- made under Section 80IA(4) of the Act. The Assessing Officer has categorically observed that the old machinery was also part of the estimated claimed deduction by the assessee. Ld. DR further submitted that since the power plant set up by the assessee is not a new power plant, the value of which is more than 20% of the total value of plant & machinery, the assessee company is not eligible for deduction under Section 80IA of the Act in view of the Explanation-2 to Sub-section (3) of Section 80IA of the Act.

As regards ground no.2, ld. DR submitted that the CIT(A) erred in restricting the addition of Rs.38,93,576/- made as per provisions of Section 14A read with Rule 8D of the Act of Rs.1,50,000/-. The Ld. DR submitted that the assessee made huge investment in shares, received dividend of Rs.3,07,95,922/- for which the calculation of the CIT(A) is totally contradictory to the administrative expenses incurred by the assessee as per Rule 8D.

We have heard Ld. DR and perused all the relevant material available on record. It is pertinent to note that the assessee has made investment in shares and received dividend of Rs.3,07,95,922/- and claimed the sum of exempt income without incurring expenses is not just and proper. The calculation done by the CIT(A) restricting the addition to Rs.1,50,000/- is not just and proper. Therefore, we remand back this issue to the file of the Assessing Officer for proper verification of the applicability of provisions of Section 14A Rule 8D in consonance with the judicial precedents set out by the Court. Ground no.2 is partly allowed for statistical purposes.

As regards ground no.3, the ld DR submitted that deleting the addition of Rs.38,93,576/- made while computing book profit under Section 115JB of the Act is not just and proper.

We have heard both the parties and perused all the relevant material available on record. This issue is already decided by Special Bench in case of ACIT vs. Vireet Investment, ITA No.502/Del/2012, order dated 16.06.2017, wherein it is held that no adjustment can be made under Section 115JB in respect of Section 14A of the Act. There is no need to interfere with the findings of the CIT(A). Ground No.3 is dismissed.