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Assessee by : Shri Divyesh I. Shah (AR) Revenue by : Shri Rajesh Kumar Yadav (DR) Date of hearing : 15.01.2018 Date of Pronouncement : 09.03.2018 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of the Income-Tax Act (“The Act”) is directed against the order of ld. CIT(A)-2, Mumbai dated 22.01.2015 for Assessment Year 2009-10. The assessee has raised the following grounds of appeal:
1.1 On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)- 2 ["the CIT(A)"] erred in dismissing the grounds relating to computation of the book profits u1s. 115JB of the Income Tax Act, 1961 ("the Act") on the alleged ground that the Deputy Commissioner of Income Tax (O.S.D.)-l, Mumbai ("the AO") had arrived at the total income under the normal provisions of the Act and as such was found to be infructuous.
- M/s Dandvati Investments & Trading Co. Pvt. Ltd.
1.2 The Appellant prays that it be held that the said ground would not be infructuous and as such be decided on merits. Without prejudice to the above, 2.1 On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in not appreciating the fact that the disallowance made u1s. 14A of the Act r.w.r. 8D(2)(iii) of the Income Tax Rules, 1962 ("the Rules") of Rs. 8,18,816/- would not be an addition under Clause (f) of Explanation 1 to Sec. 115JB of the Act. 2.2 The Appellant prays that it be held that the said addition be deleted. 3.1 On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in not appreciating the fact that the additions of the legal & professional fees would not be a part of the items specified under the Explanation 1 to the under Sec. 1I5JB of the Act. 3.2 The Appellant prays that it be held that the said addition be deleted.
Brief facts of the case are that the assessee-company filed its return of income for relevant Assessment Year on 28.09.2011 declaring taxable income of Rs. 1,07,15,420/-. The assessment was completed on 31.01.2014 under section 143(3). The Assessing Officer while passing other disallowance disallowed Rs. 24,54,558/- under section 14A. The disallowance under section 14A read with Rule8D consists of Rs. 4522/- (suo-moto disallowed by assessee) under Rule 8D2(i), Rs. 8,34,118/- under Rule 8D2(ii) was Rs. 8,18,186/- under rule 8D2(iii). On appeal before the ld. CIT(A), the disallowance of Rs. 8,34,118/- under Rule 8D2(ii) was deleted. However, the disallowance under Rule 8D2(iii) was sustained.
Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. - M/s Dandvati Investments & Trading Co. Pvt. Ltd.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the authorities below. At the outset of the hearing the ld. AR of the assessee submits that the only grievance of the assessee is that the disallowance sustained by ld. CIT(A) should not be added while making computation of book profit under section 115JB. The ld. AR submits that the issue raised in the present appeal is now covered by the decision of Special bench of Delhi Tribunal in ACIT vs. Vireet Investment (P) Ltd. [2017] 82 taxman.com 415 (Del. Trib.) (SB). On the other hand, the ld. DR for the Revenue submits that he has no objection, if the issue is restored back to the file of Assessing Officer to make fresh computation under Clause (f) of Explanation 1 to section 115JB(2) of the Act.
We have considered the rival submission of the parties and perused the order of lower authorities. We have seen that the sole ground of the appeal raised by the assessee is now covered by the decision of Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment (P) Ltd. (supra). The Special bench has held that computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation on contemplated under section 14A read with Rule 8D of Income-tax Rule 1962. Thus, considering the decision of Special Bench of Tribunal in ACIT vs. Vireet Investment (P) Ltd., the issue raised by assessee is directed to M/s Dandvati Investments & Trading Co. Pvt. Ltd. make fresh computation under section 115JB(2)(f) by following the decision of Special Bench as referred above. In the result, grounds of appeal raised by assessee are allowed.