JCIT, (OSD), CIR-4(1), KOLKATA, KOLKATA vs. M/S APEX ENTERPRISES (INDIA) LTD., KOLKATA

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-16, Kolkata [in short the ld CIT(A)] in Appeal No.482/CIT(A)- 16/Kol/2014-15/C-4(1) dated 29.03.2016 against the order passed by the JCIT(OSD) Circle-4, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 14.12.2011 for the Assessment Year 2009-10.

The first issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in restricting the disallowance of expenditure of Rs. 11,696/- u/s 14A of the Act, in the facts and circumstances of the case.

The brief facts of this issue is that the assessee is an investment company and had filed its return of income for the assessment year 2009-10 on 11.06.2010 declaring total income of Rs. 7,12,310/-. The assessee company claimed dividend income of Rs. 1,16,175/- as exempt u/s 10(34) of the Act. The assessee voluntarily worked out the 2 M/s Apex Enterprise(India) Ltd. A.Yr.2009-10 disallowance u/s 14A read with Rule 8D of the Rules at Rs. 2,17,267/- and offered the same to tax in the return of income by considering the only dividend bearing investments. The ld. AO ignored the same and proceeded to make fresh disallowance u/s 14A read with Rule 8D of the rules under all 3 limbs thereon and arrived the disallowance figure of Rs. 2,28,963/-. This disallowance was made by the ld. AO without considering the disallowance of Rs. 2,17,267/- already made by the assessee in the return of income. Before the Ld. CIT(A), this fact was brought to his knowledge. The Ld. CIT(A) deleted the entire disallowance of Rs. 2,28,963/- made by the ld. AO in view of the fact that the assessee itself had duly worked out the disallowance u/s 14A in consonance with the decision of this Tribunal in the case of REI Agro reported in 144 ITD 141.

The assessee also added back a sum of Rs. 2,17,267/- in the computation of book profits u/s 115JB of the Act in the return of income which was replaced by ld. AO at Rs. 2,28,963/-. This was also deleted by the Ld. CIT(A) in first appeal. In effect the disallowance u/s 14A was arrived finally at Rs. 2,17,267/- both under normal provisions of the Act as well as u/s 115JB of the Act, which is the same figure as was offered to tax by the assessee in the return of income. Aggrieved the revenue is in appeal before us on the following grounds:

We have heard the rival submissions. From the facts narrated above we are convinced that the Ld. CIT(A) had rightly deleted the disallowance of Rs.2,28,963/- u/s 14A of the Act in view of the fact that the assessee itself had worked out the disallowance by considering the rule 8D and by considering all the investments which yielded dividend income, in line with the decision of this Tribunal in the case of REI 2

The next ground to be decided in this appeal is as to whether the Ld. CIT(A) was justified in deleting the addition made towards write back of provision for doubtful debts of Rs. 65,60,963/- both from computation of income under normal provisions of the Act as well as u/s 115JB of the Act.

The brief facts of this issue is that the assessee made provision for doubtful debts during the assessment years 2003-04 to 2006-07 for non-performing assets and had added back the same in the respective return of income, both under normal provisions of the Act as well as under computation of book profits u/s 115JB of the Act. During the year under appeal, the assessee wrote back those provisions for non-performing assets in the sum of Rs. 65,60,963/- by crediting to profit and loss account. Since, this sum was already offered to tax in the earlier years at the time of making provision, the same should not be subjected to double tax at the time of write back of the said provision. Accordingly, the assessee claimed the same as a deduction both under normal provisions of the act as well as under computation of book profits u/s 115JB of the Act. The ld. AO did not appreciate this contention and added the sum of Rs. 65,60,963/- again under normal provisions of the Act and in the computation of book profits u/s 115JB of the Act. The Ld. CIT(A) observed that since the assessee has already offered to tax in the earlier years, the said sum of Rs. 65,60,963/-, if brought to tax, in this year merely because it has been written back to profit and loss account, during the year under appeal, would only result in double taxation. Accordingly, he deleted the said addition made by the ld. AO under normal provisions of the Act.