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This appeal by assessee is directed against the order of ld. Commissioner of Income-tax (Appeals)-6, Mumbai [ld. CIT(A)] dated 24.10.2014 for Assessment Year 2007-08. The assessee has raised the following grounds of appeal:
1) On facts, circumstances and judicial pronouncements, provisions of rule 8D r.w.s. 14A are not applicable while computing the book profits u/s 115JB, invoking such rule to effect the addition by Hon Assessing Officer and its confirmation by Hon. CIT A is bad in law and erroneous in facts and liable to be deleted. 2) On the given facts, circumstances and judicial pronouncements; hon. CIT (A) erred in framing the order in absence of reasonable opportunity of making the submissions to the assessee in principles of natural justice and such assessments are in violation of principles of natural justice and liable to be quashed.
Mum 15-M/s Samarpan Fabricators Pvt. Ltd.
Brief facts of the case are that the assessment for Assessment Year 2007- 08 was completed under section 143(3) on 07.12.2009. The Assessing Officer while passing the assessment order made the disallowance of Rs. 2,60,727/- under section 14A and also added the disallowance to the book profit under section 115JB. On appeal before the ld. CIT(A), the appeal of the assessee was dismissed vide order dated 17.05.2010. However, on further appeal before the Tribunal, the appeal was restored to the file of ld. CIT(A) for fresh adjudication. Thereafter, the ld. CIT(A) passed fresh order under section 143(3) rws 254 dated 24.10.2014, again confirming the action of Assessing Officer in upholding the addition of disallowance under section 14A of Rs. 2,60,727/- in computation of book profit under section 115JB. Therefore, further aggrieved by the order of ld. CIT(A) the assessee has filed the present appeal before us.
We have heard the ld. Authorized Representative (AR) of the assessee ld. and Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee submits that the ground of appeal
raised by assessee is covered in favour of assessee by the decision of Hon’ble Bombay High Court in case of CIT vs. M/s Bengal Finance & Investments Pvt. Ltd. (ITA No. 337 of 2013 dated 10.02.2015, decision of Special Bench of Delhi Tribunal in ACIT vs Vireet Investment (P.) Ltd. 82 taxmann.com 415 & in DCIT vs Morgan Stanley (ITA No. 5289 & 5290/Mum/2015 dated 29.01.2018. The ld. AR of the assessee 2 Mum 15-M/s Samarpan Fabricators Pvt. Ltd. further submits that no addition of disallowance under section 14A in computing book profit under section 115JB and can be made. On the other hand, the ld. DR for the Revenue submits that in view of the decision of Special Bench of Delhi Tribunal, the issue may be restored to the file of Assessing Officer for fresh computation under clause (f) of Explanation-1 to section 115JB of the Act.
1. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that the assessee has not disputed the disallowance under section 14A r.w. Rule 8D for Rs. 2,60,727/-. The only grievance of assessee is that while computing the book profit under section 115JB, the disallowance under section 14A be not added to the book profit under section 115JB. The Hon’ble jurisdictional High Court in CIT vs M/s Bengal Finance & Investments Pvt. Ltd. (supra) also held that amount disallowed under section 14A cannot be added to the book profit for the purpose of section 115JB. The Special Bench of Delhi Tribunal in ACIT vs Vireet Investment (P.) Ltd. (supra) also held that computation under clause (f) of Explanation 1 to section 115JB to be made without resorting to the computation as contemplated under section 14A r.w. Rule 8D. The coordinate bench in DCIT v/s Morgan Stanley (supra), took a similar as expressed by Hon’ble Bombay High Court in CIT Vs M/s Bengal Finance & Investments Pvt. Ltd. (supra) and by Special Bench in Vireet Investment (P.) Ltd. The only 3 Mum 15-M/s Samarpan Fabricators Pvt. Ltd. issue involve in the present case as to whether the disallowance of section 14A be added to the computation of 115JB or not. The Special Bench of Delhi Tribunal in ACIT versus Vireet Investment (P) Ltd(supra) held that computation under clause (f) of Explanation 1 to section 115 JB(2) is to be made without resorting to computation as contemplated under section 14A read with Rule 8D. Therefore, respectfully following the decision of Special Bench this ground of appeal is restored to the file of assessing officer to work out the computation under section 115 JB by following the direction of Special Bench in Vireet Investment (P) Ltd (supra). Needless to say that the assessing officer shall grant opportunity of hearing to the assessee before passing the order on computation under clause (f) of Explanation 1 to section 115JB. In the result ground of appeal raised by assessee is allowed for statistical purpose.
4. In the result, appeal filed by assessee is allowed for statistical purpose.