DCIT, CIRCLE-4(1)(1), Mumbai V. M/S. DEEP FINANCIAL CONSULTANT PRIVATE LIMITED , Mumbai

ITA 2574/MUM/2022

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT) as the appellant and M/s. Deep Financial Consultant Private Limited as the respondent. The dispute centered on the inclusion of a disallowance of Rs.12,05,987 in the computation of book profit under section 115JB of the Income Tax Act, which was related to expenses claimed under section 14A for earning exempt dividend income. The Assessing Officer had added this amount to the book profit during a reassessment, which was contested by the assessee. The First Appellate Authority deleted this addition, referencing a Special Bench decision that such disallowances should not affect the computation of book profit under section 115JB. The Tribunal agreed with the First Appellate Authority, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302354 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 06-10-2022
• Other Referred Cases: ACIT vs. Vireet Investments Pvt. Ltd, Reliance Industrial Infrastructure Ltd vs. Addl. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JANVI R. GADA
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.2574/Mum/2022 (Assessment Year :2011-12) The DCIT-4(1)(1) Room No.640, 6 th Floor Aayakar Bhavan M.K.Road, Mumbai – 400 020 Vs. M/s. Deep Financial Consultant Private Limited 14, Laxmi Niwas Church Road Vile Parle West Mumbai – 400 056 PAN/GIR No.AAACD3768K (Appellant) .. (Respondent) Assessee by Ms. Janvi R. Gada Revenue by Smt. Mahita Nair Date of Hearing 19/01/2023 Date of Pronouncement 31/03/2023 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 12/08/2022, passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) r.w.s. 147 for the A.Y.2011-12. ITA No.2574/Mum/2022 M/s. Deep Financial Consultant Pvt. Ltd. 2 2. The only issue raised by the Revenue is deletion of adjustment of Rs.12,05,987/- on account of adjustment made u/s.115JB being the disallowance determined u/s.14A r.w.r. 8D. 3. The brief facts are that assessee had filed return of income for A.Y.2011-12 on 29/09/2011 showing ‘Nil’ income. Thereafter assessment order u/s. 143(3) was passed on 31/10/2013 determining income under normal provisions at loss of Rs. (- 37,56,361) and book profit u/s.115JB was computed at Rs.2,20,50,370/-. Since the taxable income under the provision of section 115JB was more, therefore, tax payable was computed u/s.115JB of the Act. Thereafter, the assessment was reopened by issuance of notice u/s.148 dated 31/03/2018 on the ground that in the new addition of disallowance u/s.14A of Rs. 12,05,987/- was made to the book profit u/s.115JB of the Act. 3.1. The ld. AO is of the opinion that the assessee had earned dividend income of Rs.44,53,091/- which was claimed as exempt and the assessee reduced the said dividend income at the time of computing the book profit u/s.115JB. He has noted that assessee has made disallowance u/s.14A in the computation of income alongwith return of income at Rs.12,05,987/- and was added to the total income under the normal provisions of the Act. However, assessee has not added the same disallowance u/s.14A of Rs.12,05,987/- while computing book profit u/s.115JB. Accordingly, the ld. AO added Rs.12,05,987/- as disallowance to the book profit u/s.115JB. ITA No.2574/Mum/2022 M/s. Deep Financial Consultant Pvt. Ltd. 3 3.2. The Ld. First Appellate Authority after considering the submissions made by the assessee, has deleted the said addition on the ground that, this issue stands covered in favour of the assessee by the Special Bench of ITAT in the case of ACIT vs. Vireet Investments Pvt. Ltd (2017) 58 ITR 313, wherein the Tribunal has held that no disallowance u/s.14A can be made while computing book profit u/s.115JB. Apart from that, he has also referred to ITAT Mumbai Bench in the case of Reliance Industrial Infrastructure Ltd vs. Addl. CIT in ITA No.69 & 70/Mum/2009. 4. After hearing both the parties and on perusal of the impugned order, we find that only the issue is, whether the disallowance u/s.14A which was made by the assessee and added to the computation of income under the normal provisions of the Act, whether same should be added to the book profit u/s.115JB of the Act. Now this issue stands covered by series of the decisions of the Tribunal following the judgment of Special Bench in the case of Vireet Investments Pvt. Ltd. vs ACIT. ITAT Special Bench has also held that computation under Clause ‘f’ of Explanation-1 to Section 115JB(2) of the Act is to be made without resorting to the computation as contemplated u/s.14A r.w.r. 8D and therefore, it cannot be added to the book profit u/s.115JB. Accordingly, we do not find any infirmity in the order of the ld. CIT(A) and consequently the Revenue’s appeal is dismissed. 5. In the result, appeal of the Revenue is dismissed. ITA No.2574/Mum/2022 M/s. Deep Financial Consultant Pvt. Ltd. 4 Order pronounced on 31 st March, 2023 Sd/- (GAGAN GOYAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 31/03/2023 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//