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Income Tax Appellate Tribunal, BENCH ‘D’ KOLKATA
Before: Hon’ble Shri P.M.Jagtap, AM & Shri S.S.Viswanethra Ravi, JM ]
This is an appeal by the Revenue against the order dated 02.01.2017 passed by C.I.T-(A)-2, Kolkata for A.Y.2014-15.
2. The only issue to be decided is as to whether the CIT(A) is justified in deleting the addition made on account of provision u/s 14A while computing the disallowance under MAT proceedings in the facts and circumstances of the case.
3. The ld. DR relied on the order of the AO and the ld. Counsel for the assessee supported the order of the CIT(A). 4. Heard rival submissions and perused the record including the case law/order as relied on by the assessee. On perusal of record, we find that the similar issue was decided by this Co-ordinate Bench, ITAT, Kolkata in the case of TMT Viniyogan Pvt. Ltd supra as referred by the ld.AR before us, wherein the Tribunal held that no disallowance could be made u/s. 14A while computing the book profit u/s. 115JB of the Act and remanded the matter to the file of AO for computing the disallowance under clause (f) to section 115JB of the Act by placing reliance on the decision of the Hon’ble High Court of M/s PAN Emami Cosmed Ltd A.Y.2014-15 Calcutta in the case of CIT Vs. Jayshree Tea Industries Ltd in GA No. 1501 of 2014 (ITAT No. 47 of 2014) dt. 19-11-14. Relevant partition of order dt. 15-12-2017 is reproduced herein below for better understanding:-
We have heard the rival submissions and perused the materials available on record. The issue in the instant case relates to the disallowances made by Assessing Officer u/s 14A r.w.r 8D of the Income Tax Rules while determining the income under normal computation of· income. The disallowance of the same was also made while determining the profit u/s 115JB of the Act. However, we note that in recent judgment of Special Bench of Hon'ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Act. Relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962. " The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case. Thus it can be concluded that the disallowance made under section 14A r.w.r 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 of section 115JB of the Act. However it is also clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so we draw our support from the judgment of Hon'ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd. in GO NO.1501 of 2014 (ITAT NO.47 of 2014) dated 19.11.14 wherein it was held that the disallowance in relation to exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. The relevant extract of the judgment is reproduced below:- "we find computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has M/s PAN Emami Cosmed Ltd A.Y.2014-15
not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 under section 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal. We accept the submission of Mr. Khaitan, learned Senior Advocate that the provision of section 115JB in the matter of computation is a complete code in itself and resort need not and cannot be made to section 14A of the Act. " In view of above we hold that the disallowances made under the provisions of Sec. 14A r.w.s 8D of the IT Rules, cannot be applied to the provision of Sec.115JB of the Act as per direction of the Hon'ble jurisdictional High Court in the case of CIT Vs. Shree Tea Industries Ltd. (Supra). Therefore, the AO shall work out the disallowances in terms of the clause (f) to Explanation-1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit & loss account as mandated under the provisions of law. Therefore we are inclined to restore this issue to the file of AO for fresh adjudication in accordance to law and in the light of above discussion. Thus this ground of appeal of the assessee is allowed for statistical purposes."
5. In view of said decision of Hon’ble High Court of Calcutta and respectfully following the same, we remand the matter to the AO and to work the disallowance relating to exempt income in terms of clause (f) to Explanation-1 of Section 115JB of the Act. Order of CIT(A) is set aside. Ground raised by the revenue is allowed for statistical purpose.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 04.07.2018.
Sd/- Sd/- [P.M.Jagtap] [ S.S.Viswanethra Ravi ] Accountant Member Judicial Member Dated : 04.07.2018. [RG Sr.PS] M/s PAN Emami Cosmed Ltd A.Y.2014-15 Copy of the order forwarded to: 1.M/s PAN Emami Cosmed Ltd., 687, Emami Tower, Anandpur, E.M.Bypass, Kolkata-700107.
A.C.I.T., Circle-6(2), Kolkata.
C.I.T.(A)-2, Kolkata 4. C.I.T.-2, Kolkata..
CIT(DR), Kolkata Benches, Kolkata.