DCIT CORPORATE CIRCLE 2(2), CHENNAI vs. INDUS FINANCE CORPORATION LIMITED, CHENNAI

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ITA 1683/CHNY/2017Status: DisposedITAT Chennai18 January 2018AY 2012-134 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 the computation of book profit under Section 115JB should be made without resorting to the disallowance computed under Section 14A read with Rule 8D. This followed a Delhi Special Bench decision.

What were the facts?

The Assessing Officer disallowed Rs. 61,31,776/- under Section 14A read with Rule 8D and added this disallowance to the book profit under Section 115JB. The CIT(A) deleted this addition, relying on a previous ITAT decision.

What were the issues?

Whether disallowances made under Section 14A are to be considered while computing book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI

Before: SHRI DUVVURU RL REDDY & SHRI S. JAYARAMAN

Hearing: 25.10.2017Pronounced: 18.01.2018

आदेश /O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

1.

The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-6, Chennai in dated 26.04.2017 for assessment year 2012-13.

:-2-: ITA No. 1683/Mds/2017

2.

M/s. Indus Finance Corporation Limited, the assessee, is engaged in non-banking financial services. In the assessment made for assessment year 2012-13, the AO disallowed Rs. 61,31,776/- u/s. 14A r.w.r. 8D under normal provisions of the Act. While computing the income u/s. 115JB, he added the disallowance made u/s. 14A r.w.r. 8D. Aggrieved, the assessee filed an appeal. The CIT(A) relying on the decision of this tribunal in the case of M/s. Beach Minerals Company Pvt. Ltd. vs ACIT in & 2188/Mds/2010 dated 06.08.2015, held that while computing “book profit” of the company under the provisions of section 115JB of the Act, any disallowance made under the normal provisions of the Act cannot be given effect to for arriving at the “Book Profit” for the purpose of section 115JB and allowed the appeal.

3.

Aggrieved, the Revenue filed this appeal with the following grounds:

“2.1 The CIT(A) erred in relying on the decision of the ITAT, Chennai in the case of M/s. Karmen International Pvt. Ltd., in directing the AO to limit the disallowance u/s. 14A of the Act, to the extent of exempted income reported. 2.2 The CIT(A) erred in directing the AO to limit the disallowance u/s. 14A to the extent of exempted income reported, without considering the CBDT’s Notification No. 43/2016 dated 02.06.2016, which effect from 2/6/2016 onwards (not on earlier years) 2.3 The CIT(A) failed to appreciate the fact that the above said decision of the ITAT has not been accepted by the department and further appeal had been filed which is still pending.

:-3-: ITA No. 1683/Mds/2017 3.1 The CIT(A) erred in relying on the decision of the ITAT, Chennai in the case of M/s. Beach Minerals Company Private Limited vs ACIT in & 2188/Mds/2010 dated 06.08.2015 and deleted the disallowance u/s. 14A of the Act for the computation of book profit u/s. 115JB of the Act. 3.2 The CIT(A) failed to appreciate the fact that the above said decision of the ITAT has not been accepted by the department and further appeal had been filed which is still pending. 3.3 The department’s appeal on similar issue in the case of M/s. Indian Bank for AYs 2007-08, 2008-09, 2009-10 & 2010-11 which is still pending before the Hon’ble High Court vide TCA No 929/2014.

4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored.”

4.

We heard the rival submissions and gone through the materials. The Revenue is on appeal mainly on the ground that it has filed the appeal against this tribunal order, which is relied on by the CIT(A), before the jurisdictional High Court and it is pending. Subsequent to the hearing, it has come to our notice that the ITAT Delhi Special Bench in the case of ACIT, Circle 17(1), New Delhi vs Vireet Investment Pvt Ltd., in (Delhi) of 2012 CO No. 68 (Delhi) of 2014 for assessment year 2008-09, dated 16.06.2017, after considering the decisions of the Hon’ble Delhi High Court taking diverse views, following the ratios laid in the case of CIT vs Vegetable Products Ltd., 88 ITR 192 SC, held that the computation under clause (f) of explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated u/s. 14A r.w.r. 8D of the Income Tax Rules, 1962. Following the Delhi Special Bench decision, an assessee’s appeal in ITA No. 2158/Mds/2017 dated

:-4-: ITA No. 1683/Mds/2017 02.01.2018 was allowed by a co-ordinate bench wherein one of us was a member. In the facts and circumstances, following the Delhi Special Bench decision, the Revenue’s appeal is dismissed.

5.

In the result, the Revenue’s appeal is dismissed.

Order pronounced on Thursday, the 18th day of January, 2018 at Chennai.

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