Gujarat Industrial Investment Corporation Ltd., Gandhinagar V. The Dy.CIT.,Gandhinagar Circle, Gandhinagar

ITA 2390/AHD/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6351 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 26-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; Earning of tax free income; Unabsorbed depreciation; Rule 8D; Set aside
• Section: 43B; 14A; 115JB; 201; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO .2390/AHD/2014 / ASSTT. YEAR : 2011 - 2012 GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD. , 6 TH FLOOR, BLOCK NO.11 , UDYOG BHAVAN , SECTOR 11 , GANDHINAGAR - 382011. PAN: AAACG5304Q VS . D.C.I.T , GANDHINAGAR CIRCLE , GANDHINAGAR ./ ITA NO.2319/AHD/2014 / ASSTT. YEAR: 2011 - 2012 D.C.I.T , GANDHINAGAR CIRCLE , GANDHINAGAR VS. GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD., 6 TH FLOOR, BLOCK NO.11, UDYOG BHAVAN, SECTOR 11, GANDHINAGAR - 382011. PAN: AAACG5304Q ./ ITA NO.1906/AHD/2015 / ASSTT. YEAR: 2012 - 2013 D.C.I.T , GANDHINAGAR CIRCLE , GANDHINAGAR VS. GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD., 6 TH FLOOR, BLOCK NO.11, UDYOG BHAVAN, SECTOR 11, GANDHINAGAR - 382011. PAN: AAACG5304Q ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 2 (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI SANJAY R. SHAH , A.R REVENUE BY : SHRI S.K DEV , SR. DR / DATE OF HEARING : 27 / 12 / 201 8 / DATE OF PRONOUNCEMENT: 01/02 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THESE ARE THREE APPEALS BY THE REVENUE AND THE ASSESSEE . T HE REVENUE AND ASSESSEE ARE IN CROSS - APPEALS AGAINST COMMON ORDER OF THE LD.CIT(A) DATED 22/05/2014 FOR THE ASS ESSMENT YEAR 2011 - 12. THE REVENUE IS ALSO IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 23/04/2015 FOR THE ASS ESSMENT YEAR 2012 - 13. SINCE ALL THE ISSUES ARE MORE OR LESS INTERCONNECTED, THEREFORE ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. 2. FIRST , WE TAKE THE APPEAL OF REVENUE BEARING NO. 2319/AHD/ 2014 FOR A.Y. 2011 - 12. TH E REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL . 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE ADDITION MADE ON ACCOUNT OF NPA PROVISIONS WRITTEN BACK AMOUNTING TO RS.11,71,93,401/ - 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING PRIOR PERIOD EXPENSES AMOUNTING TO RS.87,13,687/ - TO BE REDUCED FROM COMPUTATION OF BOOK PROFIT U/S.115JB OF THE I.T. ACT, 1961. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 3 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNED CIT(APPEALS ) MAY BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. 3. THE IS SUE RAISED BY THE REVENUE IS THAT THE LD.CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF A PROVISIO N WRITTEN BACK FOR NON - PERFORMING ASSET S AMOU N TING TO RS. 11,71,93,401/ - 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN T HE BUSINESS OF EXTENDING FINANCIAL ASSISTANCE BY WAY OF TERM LOAN S, FINANCIAL SERVICES AND IMPLE MEN TATION OF JOINT AND ASSOCIATED SECTORS PROJECT S IN THE S T ATE OF GUJARAT. 4.1 THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS WRITTEN BACK THE PROVISION CREATED FOR INVESTMENT IN THE EARLIER YEARS AMOUNTING TO RS. 11,71,93,401/ - . THE ASSESSEE IN THE STATEMENT OF INCOME CLAIMED THE DEDUCTION OF SAID AMOUNT FROM THE TOTAL INCOME ON THE GROUND THAT THESE PROVISIONS WERE NOT ALLOWED IN THE RESPECTIVE ASSESSMENT S PERTAINING TO A.Y S. 2001 - 02 TO 2009 TO 2010. THUS, THE PROVISION WRITTEN BACK H AS ALREADY BENN SU FFERED THE INCOME TAX. THEREFORE THE SAME IS ELIGIBLE FOR D EDUCTION FROM THE TOTAL INCOME. 5. HOWEVER, THE AO FOUND THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES IN THE EARLIER ASSESSMENT ORDER THE ADDITION WAS SUSTAINED ON ACCOUNT OF SUCH PROVISION WRITTEN BACK. THEREFORE , THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 4 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT (A). THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THAT IT HA D CREATED PROVISION AGAINST THE INVESTMENT IN THE EARLIER YEAR WHICH WAS NOT ALLOWED AS DEDUCTION. NOW IN THE YEAR UNDER CONSIDERATION SAME PROVISION HAS BEEN WRITTEN BA C K . T HEREFORE THE DEDUCTION FOR THE SAME IN THE STATEMENT OF INCOME WAS CLAIMED. 7. THE LD.CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND KEEP ING IN MIND THE DECISION OF HIS PREDECESSOR ABOUT THE EARLIER ASSESSMENT YEARS DELETED THE ADDITION MADE BY THE AO . 8. BEING AGGRIEVED BY THE ORDER OF LD.CIT (A) REVENUE IS IN APPEAL BEFORE US . 9 . THE LD.DR, AND LD.AR, BEFORE US , RELIED ON THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 10 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 10.1 AT THE OUTSET WE FIND THAT IN THE IDEN TICAL FACTS AND CIRCUMSTANCES THE TRIBUN AL IN THE CASE O F THE ASSESSEE HAS CONFI R MED THE DELETION FOR THE ADDITION MADE BY THE AO IN ITA NO/419/AHD/2012 ABOUT A. Y . 2008 - 2009 VIDE ORDER DATED 18/09/2018 THE RELEVAN T EXTRACT OF THE ORDER IS REPRODUCED BELOW: 63. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ON PERUSAL OF THE REVISED COMPUTATION OF INCOME WE NOTE THAT THE PROVISION HAS ALREADY BEEN ADDED BY THE ASSESSEE TO THE TOTAL INCOME AS EVIDENT FROM THE SAME WHICH IS R EPRODUCED AS UNDER: ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 5 REVISED STATEMENT OF TOTAL INCOME AMOUNT RS. AMOUNT RS. 1. BUSINESS INCOME: NET PROFIT AS PER PROFIT AND LOSS ACCOUNT 139,640,216 ADD: DISALLOWANCES/ITEMS TREATED SEPARATELY: DEPRECIATION 3,853,921 UNPAID LEAVE SALARY 1,291,978 UNPAID INTEREST ON BANK LINE OF CREDIT 24,609,375 PRELIMINARY EXPENDITURE WRITTEN OFF 3,985,000 VRS EXPENDITURE 6,912,699 FRINGE BENEFIT TAX 442,160 DONATIONS - INVESTMENTS WRITTEN OFF 1,342,000 PRIOR PERIOD EXPENSES 979,496 PROVISION ON NON PERFORMING ASSETS 827,002,427 870.419.056 1,010,059,272 LESS: AMOUNTS NOT TAXABLE/CONSIDERED SEPARATELY: DIVIDEND RECEIVED FROM DOMESTIC COMPANY 11,966,238 PROFIT ON SALE OF FIXED ASSETS 3,783 PROFIT ON SALE OF INVESTMENTS 555,242,195 567,212,216 LESS: EXPENSES/CLAIMS ALLOWABLE: AMOUNT ALLOWABLE UNDER SECTION 43B OF THE ACT O N THE BASIS OF PAYMENTS MADE DISALLOWANCE U/S 43B IN EARLIER YEARS NOW WRITTEN BACK 1,103,934,501 DEPRECIATION AS PER INCOME TAX ACT 3,483,803 VRS EXPENDITURE (L/5TH) 6,912,699 PREMIUM ON PRE - PAYMENT EXCESS PROVISION WRITTEN BACK PRELIMINARY EXPENDITURE U/S. 35D [1 /10TH] 797,000 ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 6 63.1 THUS THERE IS NO AMBIGUITY THAT THE IMPUGNED PROVISION HAS SUFFERED THE TAX IN THE AY 2006 - 07. THEREFORE WE DO NOT WANT TO DISTURB THE FINDING OF THE ID. CIT - A. HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 10 . 2 THE ISSUE IN THE INSTANT APPEAL IS IDENTICAL TO THE APPEAL IN ITA NO. 4 19/AHD/2012 (SUPRA) . T HEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT FIND ANY REASO NS TO DISTURB THE FINDINGS OF LD. CIT (A). HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 11. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT LD.CIT (A) ERRED IN REDUCING THE SUM OF RS. 87,13,687/ - (CORRECT AMOUNT RS. 2,12,423/ - ) FROM THE BOOK PROFIT COMPUTATION U/S 115JB OF THE ACT . 12. AT THE OUTSET THE LD.AR, BEFORE US , SUBMITTED THAT THE AMOUNT MENTIONED IN THE GROUND OF APPEAL BY THE REVENUE IS INC ORRECT . A S PER THE LD. AR, THE AMOUNT INVOLVED IN THE ISSUE UNDER CONSIDERATION IS OF RS.2,12,423/ - ONLY . 13. ON THE OTHER HAND THE LD. D R FAIRL Y AGREED TO THE SUBMISSION OF LD. AR. THEREFORE, WE ARE ADJUDICATING THE ISSUE ON HAND TAKING THE AMOUNT INVOLVED IN THE DISPUTE FOR RS. 2 ,1 2 ,423/ - ONLY. 14. THE ASSESSEE IN HIS FINANCIAL STATEMENT HAS SHOWN A NET PROFIT BEFORE THE PROVISION OF TAX AND PRIOR PERIOD ADJUSTMENT AMOUNTING TO RS. 1141.77 LACS ONLY. THE RELEVANT EXTRACT OF THE PROFIT AND LOSS ACCOUNT IS REPRODUCE D AS UNDER: ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 7 GUJARAT INDUSTRIAL INVESTMENT CORPORATION LIMITED GANDHLINGAR PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH 2011 (RS. IN LACS) PARTICULARS SCHEDULE 2010 - 11 RS. 2009 - 10 RS. PROFIT/(LOSS) BEFORE PROVISION FOR TAXATION LESS: PROVISION FOR TAX CURRENT TAX (MAT) FRINGE BENEFIT TAX FOR EARLIER YEAR INCOME TAX (MAT) 1141.77 2162.52 (41.00) (1.72) - (326.61) - (4.03) (42.72) (330.64) PROFIT (LOSS) AFTER TAX PRIOR PERIOD INCOME (SEE NOTE NO . 12 OF SCH . L). PRIOR PERIOD OF EXPENSES (SEE NOTE NO.12 OF SCH. L) 1099.05 3.07 (5.82) 1831.88 0.59 (5.42) NET PROFIT ADD: BALANCE AS PER LAST BALANCE SHEET 1096.93 (18407.45) 1827.05 (20234.50) PROFIT (LOSS) CARRIED TO BALANCE SHEET (17310.52) (18407.45) 14.1 THE ASSESSEE IN THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT, HAS TAKEN NET PROFIT OF RS. 11, 41,77,188/ - ONLY. THE RELEVANT EXTRACT OF THE BOOK PROFIT STANDS AS UNDER: COMPUTATION OF BOOK PROFIT U/S. 115JB NET PROFIT AS PER PROFIT AND LOSS ACCOUNT 114,177,188 LESS: PRIOR PERIOD EXPENSES (NET) 212,423 ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 8 ADD: DISALLOWANCE U/S 14A 1,183,509 ADD: PROVISION FOR NPA ON LOANS 66,130 ____________________ ADD: PROVISION FOR NPA ON INVESTMENTS 38,050,937 39,300,576 153,265,341 LESS : ADJUSTMENTS AS PER EXPLANATION WRITE BACK OF PROVISION FOR NPA ON LOANS (REFER NOTE 3) 117,193,401 145,282,706 7,982,635 DIVIDEND EXEMPT U/S. 10(34) 28,089,305___ LESS: BROUGHT FORWARD LOSS OR DEPRECIATION WHICHEVER IS LOWER ______________ AS PER BOOKS OF ACCOUNT (RS. 320.02 LACS OR BOOK PROFIT WHICHEVER IS LOWER) 7,982,635 14.2 HOWEVER, THE AO IN WORK ING OUT THE BOOK PROFIT UNDER THE PROVISION OF MAT HAS TAKEN THE NET PROFIT OF RS. 11 , 41 , 77 , 188 / - WITHOUT MAKING ANY ADJUSTMENT PRIOR PERIOD ITEM AS EVIDENT FROM HIS ORDER WHICH IS EXTRACTED BELOW : - NET PROFIT AS PER P&L ACCOUNT RS. 11,41,77,188/ - ADD: I) DISALLOWANCE U/S.14A II) PROVISION OF NPA RS. 1,16,21,865/ - RS. NIL RS. 12,57,99,053/ - LESS: I) DIVIDEND INCOME EXEMPT U/S 10(34) II) THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT (AFTER SET OFF OF DEPRECIATION OF RS.2,43,55,105/ - IN THE ASSESSMENT ORDER FOR A.Y. 2007 - 08) III) NPA PROVISION FOR LOANS & ADVANCE RS. 2,80,89,306/ - RS. NIL RS. NIL BOOK PROFIT RS. 9,77,09,747/ - THUS THE AO HAS NOT REDUCED THE AMOUNT OF PRIOR PERIOD EXPENSE (NET) FROM THE NET PROFIT SHOWN IN THE PROFIT & LOSS ACCOUNT. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 9 15. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD.CIT (A). THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THAT THE AO HA D TAKEN THE WRONG AMOUNT OF NET PROFIT SHOWN UNDER THE PROFIT AND LOSS ACCOUNT WITHOUT MAKING ANY ADJUSTMENT OF THE PRIOR PERIOD ITEM. 15.1 THE ASSESSEE FURTHER SUBM ITTED THAT THE AO SHOULD HAVE TAKEN THE NET PROFIT AFTER REDUCING THE PRIOR PERIOD ADJUSTMENT. 15.2 THE ASSESSEE ALSO SUB MITTED THAT THERE C OULD NOT BE ANY ADJUSTMENT IN EXPLANATION 1 TO SECTION 115JB OF THE ACT ON ACCOUNT OF PRIOR PERIOD ADJUSTMENT . 16. THE LD.CIT (A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT THE AO HAS NOT GIVEN THE BENEFIT OF PRIOR PERIO D ADJUSTMENT AS CLAIMED BY THE ASSESSEE WITHOUT SPECIFYING ANY REASON . A CCORDINGLY , THE LD. CIT - A DELETED THE ADDITION MADE BY THE AO. 17. B EING AGGRIEVED BY T HE ORDER OF LD.CIT ( A) , T HE R EVENUE IS IN APPEAL BEFORE US. 18. BOTH THE AUTHORITIES BELOW RELIED ON THE ORDE R OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 19. W E HAVE HEAR D THE RIVAL CONTENTIONS & PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS A SETTLED LA W THAT THE ADJUSTMENT IN THE WOR K OF BOOK PROFIT CAN BE MADE ONLY IN RESPECT OF THE ITEM S SPECIFIED U/S 115JB OF THE ACT . I N THE INSTANT CAS E , THE ASSESSEE H AS STARTED COMPUTATION OF BOOK PROFIT BEFORE THE PROVISION OF TAX AND PRIOR PERIOD ADJUSTMENT . A CCORDINGLY , THE ASSESSEE RIGHTLY ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 10 REDUCED THE PRIOR PERIOD ADJUSTMENT FROM THE NET PROFI T TO ARRIVE AT THE CORRECT BOOK PROFIT U/S 115JB OF THE ACT. 19.1 WE FURTHER FIND THAT AO HAS TAKEN THE SAME AMOUNT OF NET PROFIT WHICH WAS TAKEN BY THE ASSESSEE BUT THE OMITTED TO ADJUST THE PRIOR PERIOD ITEM . T HEREFORE , IN OUR CONSIDERED VIEW THE AO HAS TAKEN THE WRONG AMOUNT OF NET PROFIT FOR THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. 19.1 WE ALSO FIND THAT IN THE SIMILAR FACTS AND CIRCUMSTANCES THE ITAT MUMBAI IN THE CASE OF SHIVSHAHI PUNARVASAN PRAKALP LIMITED VS ITO REPORTED IN 1 5 TAXMANN.COM 352 HAS SET ASIDE THE ISSUE IN FAVOR OF THE ASSESSEE BY OBSERVING AS FOLLOWS: 4.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 1,93,061/ - WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB. UNDER THE PROVISIONS OF SECTION 115JB, BOOK PROFIT HAS TO BE THE PROFIT DISCLOSED AS PER P&L ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIO NS OF PART II AND III OF SCHEDULE - 6 OF THE COMPANIES ACT, 1956 AND LAID BEFORE THE COMPANY IN ITS AGMS AND TO THE SAID PROFIT, ONLY ADJUSTMENTS AS SPECIFIED IN EXPLANATION - 1 TO SECTION 115JB COULD BE MADE . THERE IS NO DISPUTE THAT CLAIM ON ACCOUNT OF PRIOR PERIOD EXPENSES HAD BEEN DEBITED IN THE P&L ACCOUNT PREPARED UNDER THE COMPANIES ACT AND LAID BEFORE AGM. THERE IS NO PROVISION FOR ANY ADJUSTMENT ON ACCOUNT OF PRIOR PERIOD EXPENSES IN EXPLANATION - 1 TO SECTION 115JB(2). THEREFORE, ANY ADDITION ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES WHILE COMPUTING BOOK PROFIT IS NOT PERMITTED IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. ( SUPRA ). WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE. I N VIEW OF THE ABOVE , WE DO NOT FIND ANY REAS ON TO DISTURB THE FINDINGS OF LD.CIT (A) . A CCORDINGLY , WE DIRECT THE AO TO REDUCE THE PRIOR PERIOD ADJUSTMENT IN WORKING OUT THE B OOK PROFIT U/S 115JB OF THE ACT IN THE GIVEN FACTS & CIRCUMSTANCES . HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 11 20. IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED . 21. COMING TO THE ASSESSEE APPEAL IN IT A NO. 2390/AHD/2014 FOR A.Y 2011 - 12. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. THE APPELLANT BEING DISSATISFIED WITH THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 BARODA (LEARNED CIT(A)), PREFERS AN APPEAL AGAINST THE SAME ON THE FOLLOWING AMONGST OTHER GROUNDS, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING ADDITION OF RS.40,9 1,687 UNDER SECTION 14A R.WR 8D. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS.40,9 1,687 ON ACCOUNT OF PROPORTIONATE EXPENDITURE RELATABLE TO EXEMPT INCOME COMPUTED AS PER RULE 8D WITHOUT ESTABLISHING THAT EXPENDITURE WAS IN FACT INCURRED BY THE APPELLANT FOR EARNING EXEMPT INCOME. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. IN RESPECT OF COMPUTATION OF DISALLOWANCE UNDER AS PER RULE 8D, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE AVERAGE INVESTMENT NET OF PROVISION FOR DIMINUTION THEREOF. IN THE FACTS & C IRCUMSTANCES OF THE CASE THE VALUE OF AVERAGE INVESTMENT NET OF PROVISION FOR DIMINUTION IN VALUE THEREOF SHOULD HAVE BEEN CONSIDERED. IT IS SUBMITTED THAT IT BE SO HELD NOW. 4. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS.40 ,9 1,687 UNDER SECTION 14A R.W.R 8D TO BOOK PROFIT U/S 1 15JB OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW. IT IS SUBMITTED THAT THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES IS APPLICABLE TO COMPUTATION OF TOTAL INCOME UNDE R CHAPTER IV WHEREAS THE BOOK PROFIT IS BEING CALCULATED UNDER CHAPTER XII - B OF THE ACT, WHICH IS AN INDEPENDENT CODE IN ITSELF AND HENCE PROVISIONS OF SECTION 14A AND RULE 8D CANNOT BE APPLIED TO COMPUTATION OF BOOK PROFIT UNDER SECTION 1 1 5JB. IT IS SUB MITTED THAT IT BE SO HELD NOW. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 12 YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER AND/OR AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING OF APPEAL . 22. THE FIRST ISSUE R AISED BY THE ASSESSEE IS THAT LD.CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF R S. 40,91,687/ - U/S 14A R.W.R 8D OF INCOME TAX RULE. 23. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS EARNED DIVIDEND INCOME AMOUNTING TO RS. 2,80,89,306/ - WHICH WAS CLAIMED AS EXEMPT U/S 10 ( 34 ) OF THE ACT. THE ASSESSEE AGAINST SUCH D IVIDEND INCOME MADE THE DISALLOWANCE OF RS. 11,83,509/ - SUO MOTO IN THE COMPUTATION OF INCOME U/S 14A R.W.R. 8D OF THE INCOME TAX RULE . 24. HOWEVER, THE AO FOUND THAT THE ASSESSEE HAS NOT MADE THE DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT, IN PURSUANCE TO THE RULE 8D OF THE INCOME TAX RULE. ACCORDINGLY , THE A O WORKED OUT THE DISALLOWANCE AS PER THE RULE 8D OF INCOME TAX RULE ON ACCOUNT OF ADMINISTRATIVE EXPENSES AMOUNTING TO RS. 40,91,687/ - ONLY A ND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 25. AGGRIEVED ASSESSEE PREFERRED A N APPEAL BEFORE THE LD.CIT (A). THE ASSESSEE BEFORE LD.CIT (A) SUBMITTED THAT IT HAS ALREADY MADE THE DISALLOWANCES OF RS.11,83,509/ - AGAINST SUCH EXEMPT INCOME. THE AO WITHOUT FINDING OUT ANY DEFECT IN THE SUO MOTO DISALLOWAN CE MADE BY IT HAS INVOKED THE PROVISIONS OF RULE 8D FOR THE DISALLOWANCE. AS PER THE ASSESSEE, THE AO HAS NOT RECORDED THE SATISFACTION BEFORE RESORTING TO THE DISALLOWANCE UNDER RULE 8D OF INCOME TAX RULE. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 13 25. 1 THE ASSESSEE ALSO SUBMITTED THAT T H E AO HAS WRONGLY CONSIDERED THE GROSS VALUE OF INVESTMENT WITHOUT ADJUSTING THE PROVISION MADE IN RESPECT OF SUCH INVESTMENTS. 26. HOWEVER, THE LD.CIT (A) WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND ACCORDINGLY CONFIRMED THE ORDER OF THE AO AFTER HAVING A RELIANCE ON THE ORDER OF H I S PREDECESSOR PERTAINING TO THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10. 27. BE ING AGGRIEVED BY THE ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US. 28. THE LD AR, BEF ORE US , FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 120 AND SUBMITTED THAT THE DISALLOWANCE C OULD N OT HAVE BEEN MADE U/S 14A R.W. RULE 8D WITHOUT RECORDING THE SATISFACTION. 28.1 THE ASSESSEE ALREADY MADE SUO MOTO DISALLOWANCE OF RS. 11,83,509/ - AGAINST THE EXEMPTED INCOME WHICH WAS REJECTED BY THE AO BEFORE INVOKING THE PROVISIONS OF SECTION 14A R.W RULE 8D OF I N COME TAX ACT BUT WITHOUT ADDUCING ANY REASON THEREON . 29. ON THE OTHER HAND LD. DR, VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 30. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORDS. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 14 30.1 AT THE OUTSET, WE NOTE THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO.208/AHD/2012 VIDE ORDER DATED 18/09/2018 PERTAINING TO ASSESSMENT YEAR 2008 - 09 H AS DECIDED THE ISSUE PARTLY IN FAVOR OF THE ASSESSEE. THE RELEVANT EXTRACT IS REPRODUCED AS UNDER: 51.1 THUS IN VIEW OF THE ABOVE WE HOLD THAT THE AO HAS CORRECTLY INVOKED THE PROVISION OF SECTION 14A RULE 8D OF THE INCOME TAX RULE FOR THE DISALLOWANCE OF THE ADMINISTRATIVE EXPENSES. 51.2 HOWEVER WE FURTHER NOTE THAT THE AO SHOULD HAVE TAKEN THE NET AMOUNT OF INVESTMENT AFTER REDUCING THE FOLLOWING AMOUNT FROM THE GROSS VALUE OF THE INVESTMENT. 1. THE PROVISION CREATED FOR NPA INVESTMENT. 2. THE INVESTMENT FROM WHICH INCOME WAS CHARGEABLE TO TAX I.E GUJARAT VENTURE CAPITAL FUND. 51.3 IN VIEW OF ABOVE WE DIRECT THE AO TO COMPUTE THE DISALLOWANCE UNDER RULE 8D OF INCOME TAX RULE AFTER CONSIDERING TO THE ABOVE STATED DIRECTION. THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. 30.2 HOWEVER, WE NOTE THAT THE FACT S OF THE CASE ON HAND ARE DIFFERENT FROM THE FACT OF THE CASE IN ITA NO.208/AHD/2012 (SUPRA) . AS SUCH ASSESSEE MADE SUO MO TO DISALLOWANCE IN THE ABOVE CASE FOR RS 1 LAKH ONLY W ITHOUT FURNISHING ANY BASIS . T HEREFORE , THE ITAT CONFIRMED THE ORDER OF THE LOWER AUTHORITIES FOR MAKING THE DISALLOWANCE AS PER THE PROVISIONS OF SECTION 14A R.W . RULE 8 D OF THE INCOME TAX RULE AFTER SMALL MODIFICATION AS DISCUSSED ABOVE. 30.3 BUT IN THE CASE IN HAND THE ASSESSEE HAS GIVEN TH E BASIS OF DISALLOWANCE OF RS.11,83,509/ - AS EVIDENT FROM NOTES F O RMING PART OF THE RETURN OF INCOME WHICH IS EXTRACTED BELOW: ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 15 11. DURING THE YEAR UNDER CONSIDERATION THE CORPORATION HAS RECEIVED DIVIDEND OF RS. 2,80,89,306/ - FROM DOMESTIC COMPANY WHICH IS EXEMPT FROM TAX U/S 10(34) OF THE ACT. IT IS SUBMITTED THAT ALL TAX FREE INVESTMENTS HAVE BEEN MADE ENTIRELY OUT OF OWN FUNDS AND NO BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF INVESTMENT IN TAX FREE INVESTMENTS. THE COMPANY FURTHER S UBMITS THAT NO ADMINISTRATIVE OR OTHER EXPENDITURE ARE SPECIFICALLY INCURRED FOR EARNING SUCH TAX FREE INCOME. HOWEVER, CONSIDERING THE POSSIBILITY OF INDIRECT ADMINISTRATIVE EXPENSES THE CORPORATION HAS DISALLOWED THE SALARIES OF EMPLOYEES WORKING IN PRO JECT DIVISION BEING RS. 10,51,299/ - WHICH DEALS WITH MANAGEMENT OF INVESTMENT IN TAX FREE SECURITIES AND HAS FURTHER DISALLOWED RS. 1,32,21,000/ - BEING 1% OF TOTAL ADMINISTRATIVE EXPENSES OF RS. 1,32,21,000/ - (EXCLUDING PAYMENTS TO EMPLOYEES). 30.4 THUS IN OUR CONSIDERED VIEW THE AO WAS UNDER THE OBLIGATION BEFORE THE RESORTING TO THE DISALLOWANCE AS PER THE SECTION 14A OF THE ACT R.W RULE 8D TO REJECT THE DISALLOWANCE MADE BY THE ASSESSEE WITH COGENT REASONS . B UT THE AO HAS NOT REJECTED THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE WITH ANY COGENT REASONS AMOUNTING TO RS.11,83,509/ - AGAINST THE EXEMPTED INCOME. 30.5 IN THIS REGARD WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE HIGH COURT OF MUMBAI IN THE CASE OF PCIT VS RELIANCE CAPITAL ASSET MANAGEMENT LIMITED REPORTED IN 400 ITR 217 WHEREIN IT WAS HELD AS UNDER: 19. THE ASSESSING OFFICER DID NOT SPECIFICALLY RECORD THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPENDITUR E IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HOWEVER, HE FELT OBLIGED AND GOING BY THE PRESENCE OF RULE 8D THAT ONCE SECTION 14A IS ATTRACTED, THE DISALLOWANCE IS TO BE MADE AS PER RULE 8D ONLY WHICH HAS BEEN PRES CRIBED BY THE LEGISLATURE. THE ASSESSING OFFICER HAS NOT ADVERTED TO THE PLAIN LANGUAGE OF SUB - SECTION (2) OF SECTION 14A. IN VIEW OF THE ABOVE , WE HOLD THAT THE PRINCIPLE LAID DOWN BY THE ITAT IN THE CASE OF THE ASSESSEE IN ITA NO. 20 8 /AHD/2012 PERTAINING TO A.Y 20 09 - ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 16 10 ARE NOT APPLICABLE TO THE CASE ON HAND AS THE FACTS ARE DIFFERENT IN THE PRESENT CASE. T HEREFORE AFTER HAVING A RELIANCE ON THE JUDGMENT OF HON BLE HIGH COURT OF BOMBAY , WE ARE INCLINED TO RE VERSE THE ORDER OF THE A UTHORITIES BEL OW . A CCORDINGLY , WE SET A SID E THE ORDER OF LD.CIT (A) AND DIRECT THE AO TO DELE TE THE ADDITION MADE BY HIM U/S 14A R.W RULE 8D OF THE INCOME TAX ACT. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 31. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE LD.CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE UNDER CLAUSE (F) EXPLAN ATION 1 TO SECTION 115JB OF THE ACT F OR THE AMOUNT OF RS. 40,91,687/ - WHICH WAS DISALLOWED UNDER THE PROVISION OF SECTION 14A R.W RUL E 8D OF THE INCOME TAX RULE. 32. THE AO WHILE CALCULATING THE BOOK PROFIT U/S 115J B OF THE ACT HAS MADE DISALLOWANCE OF THE EXPENSES AMOUNTING TO RS. 40,91 ,687/ - WHICH WAS DISALLOWED U/S 14A R.W RULE 8D OF INCOME TAX RULE. 33. AGGRIEVED ASSESSEE PREFERRE D AN APPEAL TO LD.CIT (A) THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THAT THE DISALLOWANCES MADE U/S 14A R.W RULE 8D CANNOT BE IMPO RTED WHILE MAKING THE DISALLOWANCE U/S 115JB OF THE ACT. 34. HOWEVER, THE LD.CIT (A) WAS NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSEE . A CCORDINGLY , HE CONFIRMED THE ORDER OF THE AO AFTER HAVING RELIANCE IN THE ORDER OF HIS PREDECESSOR PERTAINING TO THE EARLIER ASSESSMENT YEAR. 35. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT (A) ASSESSEE IS IN APPEAL BE FORE US. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 17 36. THE LD. AR, BEFORE US , REITERATED THE SUBMISSION AS MADE BEFORE THE LD.CIT (A) WHEREAS LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 37. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 37.1 AT THE OUTSET WE NOTE THAT THE IMPUGNED ISSUE IS COVERED PARTLY IN FAVOR OF THE ASSESSEE IN ITS CASE IN ITA NO.11 70 /AHD/2011 VIDE ORDER DATED 18/09/2018 . THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 17. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER MADE THE ADDITION OF DISALLOWANCE MADE U/S 14A READ R.W.R. 8D OF THE INCOME - TAX RULES WHILE DETERMINING THE BOOK PROFIT UNDER SECTIO N 115JB OF THE ACT. IT IS SETTLED LAW THAT THE AMOUNT OF DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT CANNOT BE IMPORTED WHILE DETERMINING THE BOOK PROFIT U/S 115JB OF THE ACT. IN THIS REGARD, WE RELY ON THE JUDGMENT HON BLE GUJARAT HIGH COURT IN THE CAS E OF ALEMBIC LTD. IN TAX APPEAL NO. 1249/2014 WHERE THE FOLLOWING QUESTION WAS RAISED : (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN HOLDING THAT ADJUSTMENT MADE ON ACCOUNT OF DISALLOWANCE U/S 14A O F THE ACT IN COMPUTATION OF BOOK PROFIT U/S115JB OF THE ACT IS NOT AS PER LAW WITHOUT APPRECIATING THAT THE AMOUNT DISALLOWABLE UNDER SECTION 14A IS COVERED UNDER CLAUSE (F) OF EXPLANATION TO SECTION 115JB (2) AND, THUS SAID AMOUNT HAS TO BE ADDED BACK WHI LE COMPUTING AMOUNT OF BOOK PROFITS? 17.1 THE ABOVE QUESTION RAISED BEFORE THE HON BLE GUJARAT HIGH COURT WAS ANSWERED AS BELOW: 8. TAKING INTO CONSIDERATION THE EVIDENCE ON RECORD AND CONSIDERING THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER O F INCOME TAX I VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD. (SUPRA), WE ARE OF THE OPINION THAT ISSUE NOS. (III) AND (IV) REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THAT VIEW OF THE MATTER, WE ANSWER QUESTIONS (III) A ND (IV) REFERRED TO US IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL OF REVENUE IS DISMISSED . 17.2 WE ALSO NOTE THAT IN THE RECENT JUDGMENT OF SPECIAL BENCH OF HON BLE DELHI TRIBUNAL IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. REP ORTED IN 82 TAXMANN.COM 415 HELD THAT THE DISALLOWANCES MADE U/S 14A R.W.R. 8D CANNOT BE THE SUBJECT MATTER OF DISALLOWANCES WHILE DETERMINING THE BOOK PROFIT U/S 115JB OF THE ACT. THE RELEVANT PORTION OF THE SAID ORDER IS REPRODUCED BELOW: ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 18 IN VIEW OF ABO VE 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. 17.3 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 PROVISIONS OF SECTION 14A R.W.R. 8D CANNOT BE RESORTED WHILE DETERMINING THE EXPENSES AS MENTIONED UNDER CLAUSE (F) TO EXPLANATION 1 TO SECTION 115JB OF THE ACT. 17.4 HOWEVER, IN OUR CONSIDERED VIEW THE DISALLOWANCE NEEDS TO BE MADE AS PER CLAUSE (F) TO SECTION 115JB OF THE ACT INDEPENDENTLY ON ACCOUNT OF DIVIDEND/ EXEMPTED INCOME AS SPECIFIED. THE JUDGMENT OF HON BLE GUJARAT HIGH COURT RELIED ON IN THE CAS E OF ALEMBIC LTD. (SUPRA) , DOES NOT DENY FOR MAKING THE DISALLOWANCE AS PER CLAUSE (F) U/S 115JB OF THE ACT FOR THE EXPENSES INCURRED IN RELATION TO DIVIDEND INCOME. 17.5 THUS IT IS 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 ABOUT 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 FI ND COMPUTATION OF THE AMOUNT OF EXPENDITURE RELATABLE TO EXEMPTED INCOME OF THE ASSESSEE MUST BE MADE SINCE THE ASSESSEE HAS NOT CLAIMED SUCH EXPENDITURE TO BE NIL. SUCH COMPUTATION MUST BE MADE BY APPLYING CLAUSE (F) OF EXPLANATION 1 UNDER SECTION 115JB O F 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 RESO RT NEED NOT AND CANNOT BE MADE TO SECTION 14A OF THE ACT. 17.6 GIVEN ABOVE, WE HOLD THAT THE DISALLOWANCES MADE UNDER THE PROVISIONS OF SEC. 14A R.W.R. 8D OF THE IT RULES, CANNOT BE APPLIED TO THE PROVISION OF SEC. 115JB OF THE ACT AS PER THE DIRECTION O F THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. JAYSHREE TEA INDUSTRIES LTD. (SUPRA). 17.7 NOW THE QUESTION ARISES TO DETERMINE THE DISALLOWANCE AS PER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT INDEPENDENTLY ON ACCOUNT OF DIVIDEND INCOME. HOWEVER, WE ALSO NOTE THAT THERE IS NO MECHANISM GIVEN UNDER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT TO WORKOUT/ DETERMINE THE DISALLOWANCE. THEREFORE IN THE GIVEN FACTS & CIRCUMSTANCES, WE FEEL THAT AD - HOC DISALLOWANCE WILL SERVE THE JUSTICE TO THE REVENUE AND ASSESSEE. THEREFORE TO PUT THE DISPUTE TO REST IN GIVEN FACTS & CIRCUMSTANCES, WE DIRECT FOR THE AD - HOC DISALLOWANCE TO AVOID THE MULTIPLICITY OF THE PROCEEDINGS AND UNNECESSARY LITIGATION. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 19 17.8 WE ALSO FEEL TO BRING THIS FACT ON RECORD THAT WE HAVE RESTORED OTHER CASES INVOLVING IDENTICAL ISSUES TO THE FILE OF AO FOR MAKING THE DISALLOWANCE AS PER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT INDEPENDENTLY. BUT NOW WE ARE OF THE VIEW THAT AS THERE IS NO MECHANIS M PROVIDED UNDER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT TO MAKE THE DISALLOWANCE INDEPENDENTLY, THEREFORE THERE WOULD BE UNNECESSARILY FURTHER LITIGATION IF THE MATTER IS SENT BACK TO THE FILE OF AO. 17.9 THUS, CONSIDERING THE PECULIAR CIRCUMSTANCES OF THE CASE, WE PROPOSE TO LIMIT THE DISALLOWANCE ON AN AD - HOC BASIS @ 1% OF THE DIVIDEND/EXEMPT INCOME AS PER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT. THUS THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 37.2 AS THE ISSUE IS ALREADY COVERED PARTLY IN FAVOR OF THE ASSESSEE IN ITS CASE AS DISCUSSED ABOVE ; THEREFORE WE ARE NOT INCLINED TO PLACE RELIANCE ON THE ORDER OF THIS TRIBUNAL REFERRED ABOVE BY THE ASSESS EE I.E. GUJARAT F LUO RO CHEMICALS LIMITED VS DCIT REPORTED IN 97 TAXMANN,COM 10. THEREFORE RESPECTFULLY FOLLOWING THE SAME THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 37.3 IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 38. NOW COMING TO THE ITA NO, 1906/AHD/2015 FOR A.Y . 2 012 - 13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING/DELETING THE ADDITION OF RS.18,05,59,473/ - ON ACCOUNT OF NPA PROVISIONS WRITTEN BACK OF EARLIER YEARS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 20 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. 39. AT THE OUTSET WE NOTE THAT WE HAVE DECIDED THE IDENTICAL ISSUE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE IN ITA NO. 2319/AHD/201 4 FOR A.Y. 2011 - 12 VIDE PARA NO. 10 OF THIS ORDER. THEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT WANT TO DISTURB THE FINDINGS OF THE ORDER OF THE LD. CIT (A). HENCE GROUND OF APPEAL OF REVENUE IS DISMISSED. 40. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. 41 . IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE BEARING NO.2390/AHD/2014 FOR A.Y.2011 - 12 IS PARTLY ALLOWED AND BOTH THE APPEALS OF THE REVENUE BEARING NO. 2319/AHD/2014 FOR A.Y. 2011 - 12 AND 1906/AHD/2015 FOR A.Y. 2012 - 13 ARE DISMISSED . O RDER PRONOUNCED IN THE COURT ON 01/02 / 2019 AT AHMEDABAD. - SD - - SD - ( MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 01 / 02 /2019 M ANISH ITA NOS.2390/AHD/2014 & OTHER ASSTT. YEAR 2011 - 12 & 2012 - 13. 21 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .