Income Tax Appellate Tribunal - Mumbai
Bengal Finance & Investments P. Ltd, ... vs Department Of Income Tax on 31 July, 2012
आयकर अपील य अ धकरण,
धकरण, मंुबई यायपीठ 'बी', मंुबई ।
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "B", MUMBAI
सव ी आर.एस. याल, लेखा सद य एवं ी ववेक वमा, या यक सद य, के सम ।
Before Shri R.S.Syal, AM and Shri Vivek Varma, JM
आयकर अपील सं./ITA No.5620/Mum/2010
( नधारण वष / Assessment Year : 2007-2008)
M/s.Bengal Finance & Investments The Asstt.Commissioner of Income-tax
Private Limited बनाम/
Circle 8(1)
2-B, 10 Mittal Industrial Estate Mumbai.
Andheri (East), Mumbai - 400 059. Vs.
PAN : AABCB7225Q.
(अपीलाथ /Appellant) ( यथ /Respondent)
आयकर अपील सं./ITA No.5937/Mum/2010
( नधारण वष / Assessment Year : 2007-2008)
The Asstt.Commissioner of Income-tax M/s.Bengal Finance & Investments
Circle 8(1) बनाम/
Private Limited
Mumbai. 2-B, 10 Mittal Industrial Estate
Vs. Andheri (East), Mumbai - 400 059.
(अपीलाथ /Appellant) ( यथ /Respondent)
राज व क ओर से /Revenue by : Shri Mohit Jain
नधा रती क ओर से/Assessee by : Shri Ajay R.Singh
सनवाई
ु क तार ख / घोषणा क तार ख /
Date of Hearing : 24.07.2012 Date of Pronouncement : 31.07.2012
आदे श / O R D E R
Per R.S.Syal, AM :
These two cross appeals - one by the assessee and the other by the Revenue - arise out of the order passed by the Commissioner of Income-tax (Appeals) on 14.05.2010 in relation to the assessment year 2007-2008.
2 ITA No.5620 & 5937/Mum/2010M/s.Bengal Finance & Investments Pvt.Ltd.
2. The only issue raised by the assessee in its appeal is computation of disallowance u/s 14A read with Rule 8D.
3. We have heard the rival submissions and perused the relevant material on record. It is noted that the question of making disallowance u/s 14A is no more res integra in view of the judgment of the Hon'ble Bombay High Court in Godrej & Boyce Ltd. Mfg. Co. VS. DCIT [(2010) 328 ITR 81 (Bom)] holding that the provisions of section 14A are applicable in circumstances as are prevailing presently and the disallowance has to be worked out by the AO on some `reasonable basis' and not rule 8D. Under such circumstances, we set aside the impugned order and restore the matter to the file of the AO for deciding the quantum of disallowance, as per the afore- noted judgment, after allowing a reasonable opportunity of being heard to the assessee.
4. The Revenue in its appeal is aggrieved against the direction of the learned CIT(A) in deleting the addition of the amount of disallowance u/s 14A and disallowance of `10.06 lakh of prior period expenses while computing profits u/s 115JB of the Act.
5. We have heard the rival submissions and perused the relevant material on record. It is observed that the Assessing Officer added the amount disallowed by him u/s 14A to the tune of `78.84 lakh to the book profit computed u/s 115JB. The learned CIT(A) ordered for the deletion of this amount. The learned AR has placed on record a copy 3 ITA No.5620 & 5937/Mum/2010 M/s.Bengal Finance & Investments Pvt.Ltd.
of the order passed by the Mumbai Bench of the Tribunal in the case of M/s.Essar Teleholdings Ltd. v. DCIT in ITA No.3850/Mum/2010 in which it has been held that the amount disallowed u/s 14A cannot be added to the amount of book profit u/s 115JB. In this order it has been laid down that unless a particular expenditure is debited to the profit and loss account relating to the earning of exempt income, the same cannot be imported into the computation of book profit as clause (f) of Explanation 1 to section 115JB which only refers to the amount debited to the profit and loss account. In reaching this conclusion the Mumbai Bench relied on another order of the Delhi Bench in the case Goetze (India) Ltd. v. CIT [(2009) 32 SOT 101 (Del.)] laying down similar proposition. The learned AR has also placed on record one more order passed by the Delhi Bench in the case of Quippo Telecom Infrastructure Ltd. v. ACIT in ITA No.4931/Del/2010 in which it has been reiterated that the amount disallowed u/s 14A cannot be considered while computing book profit u/s 115JB of the Act. No contrary decision has been brought on record by the learned Departmental Representative. In view of these facts, we are of the considered opinion that the learned CIT(A) was justified in directing that the amount of disallowance u/s 14A cannot be considered while computing book profit u/s 115JB.
6. As regards the other amount of `10.06 lakh, being prior period expenses, we find that the same have been debited to the profit and loss account. Starting point for computing book profit u/s 115JB is the amount of net profit as disclosed by Profit and loss account. Only 4 ITA No.5620 & 5937/Mum/2010 M/s.Bengal Finance & Investments Pvt.Ltd.
the items enumerated in Explanation 1 to section 115JB are required to be increased for determining the book profit. There is no reference to increasing the amount of net profit by the prior period expenses in Explanation 1 to section 115JB. In view of these facts, we are of the considered opinion that the learned CIT(A) was justified in directing accordingly.
7. प रणामतः नधा रती क अपील सां यक य उ े य के लए वीकत ृ क जाती है । राज व क अपील खा रज क जाती है । In the result, assessee's appeal is allowed for statistical purposes and the Revenue's appeal is dismissed.
Order pronounced on this 31st day of July, 2012.
आदे श क घोषणा दनांकः को क गई ।
Sd/- Sd/-
(Vivek Varma) (R.S.Syal)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मंुबई Mumbai; दनांक Dated 31st July, 2012.
Devdas*
आदे श क त ल प अ े षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु (अपील) / The CIT(A)-XVI, Mumbai.
4. आयकर आयु / CIT
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
ु / BY ORDER,
आदे शानसार
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.
उप/ Registrar)
आयकर अपील य अ धकरण,
धकरण, मंुबई / ITAT, Mumbai