ACIT, Central Circle-4(1), Kolkata, Kolkata V. M/s Jay Shree Tea & Industries Ltd., Kolkata

ITA 37/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6378 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Assessee Lawyers: B K CHATURVEDI
• Keywords: Depreciation; Business expenditure; Earning of tax free income; Proportionate interest; Notional interest; Revised return
• Section: 14A; 115JB

Judgement Text

1 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () .., . ' # $% % , '() [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 37/KOL/2017 ASSESSMENT YEAR: 2013-14 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), KOLKATA. VS. JAY SHREE TEA & INDUSTRIES LTD. (PAN: AAACJ7788D) APPELLANT RESPONDENT DATE OF HEARING 11.04.2018 DATE OF PRONOUNCEMENT 08.06.2018 FOR THE APPELLANT SHRI G. HANGSHING, CIT FOR THE RESPONDENT SHRI B. K. CHATURVEDI, AR ORDER PER SHRI A.T.VARKEY, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF LD. LD. CIT(A)-2, KOLKATA DATED 22.11.2016 FOR AY 2013-14. 2. GROUND NOS. 1 AND 2 OF THE REVENUES APPEAL IS A GAINST THE ORDER OF LD. CIT(A) IN DELETING THE DISALLOWANCE U/S. 14A OF THE INCOME-TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) READ WITH RULE 8D OF THE INCOME-TAX RULE S, 1962 (HEREINAFTER REFERRED TO AS THE RULES). 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT FROM T HE TAX AUDIT REPORT THE AO OBSERVED THAT A SUM OF RS.1,63,302/- BEING THE DIRECT EXPEND ITURE RELATING TO EXEMPT INCOME HAS BEEN DISALLOWED AND ADDED BACK BY THE ASSESSEE IN ITS CO MPUTATION OF TOTAL INCOME UNDER RULE 8D(2)(I) OF THE RULES. BUT NO SEPARATE COMPUTATION OF DISALLOWANCE OF EXPENSES HAS BEEN FURNISHED BY THE ASSESSEE. ACCORDING TO AO, RELATE D INTEREST EXPENSES OUGHT TO HAVE BEEN DISALLOWED BY THE ASSESSEE IN ACCORDANCE WITH THE P ROVISIONS OF SEC. 14A OF THE ACT READ WITH RULE 8D(2)(II) OF THE RULES. BUT ON EXAMINATI ON, THE AO FOUND THAT THE DISALLOWANCE OF INTEREST EXPENSES MADE BY THE ASSESSEE WAS NOT I N CONFORMITY WITH RULE 8D(2)(II) OF THE RULES. HENCE, HE DETERMINED THE RELATED INTEREST EXPENDITURE U/S. 14A OF THE ACT AT RS.3,91,07,732/- AGAINST THE INTEREST EXPENDITURE C LAIMED BY ASSESSEE AT RS.37,56,87,038/- 2 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 AND ACCORDINGLY, ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. THE AO ALSO DISALLOWED EXPENDITURE UNDER RULE 8D(2)(III) OF THE RULES @ .5% OF AVERAGE VALUE OF INVESTMENTS OF RS.102,47,40,000/- I.E. RS.51,23,700 /-. ACCORDINGLY, THE AO MADE THE TOTAL DISALLOWANCE AT RS.4,43,94,734/- AND DEDUCTED THE A MOUNT ADDED BACK BY ASSESSEE AT RS.1,63,302/-, THEREFORE, TOTAL DISALLOWANCE COMES TO RS.4,42,31,432/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION BY FOLLOWING DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2008-09 AND DELE TED THE DISALLOWANCE MADE UNDER RULE 8D(2)(III) OF THE RULES BY FOLLOWING THE HONB LE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. IN ITA NO. 486/20 14. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE ON ACCOUNT O F INTEREST EXPENSES UNDER RULE 8D(2)(II) OF THE RULES. THUS, THE AO WORKED OUT TH E DISALLOWANCE OF THE INTEREST AS PER THE PROVISION OF RULE 8D(2)(II) OF THE RULES AT RS.3,91 ,07,732/- AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. C IT(A) AFTER HEARING THE SUBMISSION OF THE ASSESSEE THAT NO BORROWED FUND HAS BEEN UTILIZED IN THE IMPUGNED INVESTMENT AS THERE WAS SUFFICIENT OWN FUND AVAILABLE WITH IT DELETED THE A DDITION BY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR AY 2008-09. AGGRIE VED, REVENUE IS BEFORE US. WE NOTE THAT THE ISSUE I.E. DISALLOWANCE MADE UNDER RULE 8D (2)(II) OF THE RULE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE B Y THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA NOS. 2009-2010/KOL/2014 FOR AYS 2010-11 AND 2011-12 DATED 02.06.2017 WHEREIN VIDE PARA 7 THE ITAT HAS HELD AS UNDER: 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNC EMENTS CITED AND PLACED RELIANCE UPON. AT THE OUTSET, WE FIND THAT ISSUE RAISED BY REVENUE IS COV ERED IN ASSESSEES OWN CASE IN ITA NO. 675/KOL/2014 FOR A.Y. 2009-10 DATED 03.02.2017, THE RELEVANT EXTRACT OF ORDER IS REPRODUCED BELOW:- IT IS OBSERVED THAT A SIMILAR DISALLOWANCE ON ACCO UNT OF PROPORTIONATE INTEREST EXPENDITURE BY APPLYING RULE 8D(2)(II) WAS MADE IN ASSESSEES CASE FOR A.Y. 2008-09 AND THE ORDER OF THE LD. CIT(APPEALS) DELETING THE SAID DISALLOWANCE WAS UPH ELD BY THE TRIBUNAL VIDE ITS ORDER DATED 13.07.2016 PASSED IN ITA NO. 2773/KOL/2013 FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPHS NO. 6 & 7 OF ITS ORDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. ADMITTEDLY THE DISALLOWANCE U/S 14A TO THE TUNE OF RS.92,89,825/- HAVE BEEN MADE BY THE LD. AO BY INVOKING THE PROVISIONS OF RULE 8D(2)(II) OF THE RU LES. WE FIND THAT THE ASSESSEE COMPANY IS HAVING 3 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 SHARE CAPITAL OF RS.10.67 CRORES AND SUFFICIENT FRE E RESERVES OF RS.123.67 CRORES AS ON 31.3.2007 AND RS.137.99 CRORES AS ON 31.3.2008, BUT WHEREAS T HE TOTAL INVESTMENTS AS ON 1.4.2007 WAS ITA NO.2009-2010/KOL/2014 A.YS. 2010-11 & 201-12 DCIT C IR-4 KOL. VS. M/S JAY SHREE TEA & INDS. LTD. PAGE 4 RS.105.86 CRORES AND AS ON 31.3.2008 WA S RS.94.68 CRORES. WE FIND THAT THE LD. CIT(A) HAD GIVEN RELIEF AFTER GOING THROUGH THE COPY OF TH E AGREEMENT OF CONSORTIUM OF THE BANKS AND SANCTION LETTERS OF THE BANKS SUBMITTED BY THE ASSE SSEE THAT THE LOAN WAS SANCTIONED FOR THE PURPOSE OF WORKING CAPITAL AND PURCHASE OF FIXED ASSETS. WE HOLD THAT THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS TO MAKE THE INVESTMENTS AND WHEN THAT POINT I S NOT IN DISPUTE, NO DISALLOWANCE COULD BE MADE U/S 14A OF THE ACT READ WITH RULE 8D(2)(II) OF THE RULES. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS:- CIT-VS.- RELIANCE UTILITIES & POWER LTD. REPORTED IN 313 ITR 340 (BOM.) INTEREST ON BORROWED CAPITAL- INVESTMENTS BY ASSESS EE- FINDING THAT INVESTMENTS WERE FROM INTEREST FREE FUNDS AVAILABLE WITH ASSESSEE-BORROWED CAPITAL FOR THE PURPOSES OF BUSINESS-INTEREST DEDUCTIBLE UNDER INCOME TAX ACT U/S 36(1)(III). G.D. METSTEEL PVT. LTD. VS.- ACIT REPORTED IN 142 TTJ 641 (MUMBAI TRIBUNAL) HELD THAT THE INVESTMENTS ARE MADE BY THE ASSESSEES OWN FUNDS AN D HAVE BEEN MADE IN THE EARLIER YEARS, NO DISALLOWANCE U/S 14A IS REQUIRED TO BE MADE. THE HE AD NOTE READS AS UNDER:- BUSINESS EXPENDITURE-DISALLOWANCE UNDER SECTION 14 A-APPORTIONMENT OF EXPENDITURE- WHEN INVESTMENTS ARE MADE FROM OWN FUNDS, MERELY BECAUSE THE ASSESSEE HAD TO SUBSEQUENTLY BORROW THE FUNDS FOR BUSINESS USE, IT CANNOT BE SAID THAT THE BORROWED FUNDS HAVE BEEN USED FOR THE PURPOSES OF INVESTMENTS. CIT VS.- HDFC BANK LTD REPORTED IN 366 ITR 505 (BO M.) HELD, DISMISSING THE APPEAL, (I) THAT THE FINDING OF FACT GIVEN BY THE TRIBUNAL WAS THAT THE ASSESSEES OWN FUNDS AND OTHER NON-INTEREST BEARING FUNDS WERE MORE THAN THE INVESTMENT IN THE TAX-FREE SECURITIES. THIS FACTUAL POSITION WAS NOT ONE THAT WAS DISPUTED. UNDISPUTEDLY, THE ASSESSEES CAPITAL, PROFIT RESERVES, SURPLUS AND CURRENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN THE TAX FREE SECURITIES. IN VIEW OF THIS FACTUAL POSITION, IT WOULD HAVE TO BE PRESUMED THAT THE INV ESTMENT MADE BY THE ASSESSEE WOULD BE OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. 6.1. SIMILAR VIEWS WERE EXPRESSED IN THE FOLLOWING DECISIONS:- WOOLCOMBERS OF INDIA LTD. VS.- CIT REPORTED IN 134 ITR 219 (CAL.) EAST INDIA PHARMACEUTICALS WORKS LTD. VS.- CIT REP ORTED IN (1997) 224 ITR 627 (SC). 6.2. WE FIND THAT THOUGH THE DECISION IN THE CASE OF RELIANCE UTILITIES POWER LTD. WAS RENDERED IN THE CONTEXT OF ALLOWABILITY OF INTEREST U/S 36(1)(I II) OF THE ACT, THE ANALOGY DRAWN THEREON WOULD APPLY WITH EQUAL FORCE FOR ADJUDICATING THE ISSUE O F DISALLOWANCE U/S 14A OF THE ACT. WE ALSO FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS.- HDFC BANK LTD. REPORTED IN 366 ITR 505 (BOM.) HAD ALSO HELD THE SAME VIEW. 7. IN VIEW OF THE AFORESAID FACTS AND FINDINGS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE LD. CIT(A ) HAD RIGHTLY DELETED THE DISALLOWANCE U/S 14A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE TO THE TUNE OF RS.92,89,825/-. ACCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATI ON AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2008-09, WE RES PECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH RENDERED IN A.Y. 2008-09 AND UPHOLD THE IMPUG NED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF PROPORTIONATE INTEREST UNDER RULE 8D(2)(II). GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 4 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) AS THERE WAS NO CHANGE IN THE FACTS OF THE CASE. WE UPHOLD T HE IMPUGNED ORDER OF THE LD. CIT(A). HENCE, AO IS DIRECTED ACCORDINGLY. THIS GROUND OF REVENUES A PPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH CITED SUPRA AND SINCE THERE IS NO CHANGE IN FACTS OR LAW IN THE PRESENT CASE, WE UPHO LD THE IMPUGNED ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION AS MADE BY THE AO UNDER RU LE 8D(2)(II) OF THE RULES. HOWEVER, COMING TO RULE 8D(2)(III) OF THE RULES, WE NOTE THA T ASSESSEE HAD EARNED EXEMPT INCOME TO THE TUNE OF RS. 1.53 CR. HOWEVER, THE LD. CIT(A) E RRED IN RELYING ON HONBLE DELHI HIGH COURT DECISION IN HOLCIM INDIA PVT. LTD. WHEREIN IT WAS HELD THAT WHEN THERE IS NO EXEMPT INCOME, NO DISALLOWANCE U/S. 14A OF THE ACT IS CALL ED FOR. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT DISALLOWANC E @ .5% ON THE DIVIDEND EARNING SCRIP AS HELD BY COORDINATE BENCH IN THE CASE OF REI AGRO LTD. VS. DCIT 144 ITD 141. WE ORDER ACCORDINGLY. THEREFORE, THIS GROUND OF APPEAL OF REVENUE IS PARTLY ALLOWED. 5. GROUND NO. 3 OF REVENUES APPEAL IS AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF NOTIONAL INTEREST OF RS.75,00,000/- ON STICKY LOAN. BRIEFLY STATED FACTS ARE THAT THE AO OBSERVED FROM THE NOTE TO FINANCIAL STATEMEN T OF ACCOUNTS CONTAINED IN THE ANNUAL REPORT THAT THE ASSESSEE COMPANY HAS NOT RECOGNIZED INCOME ON ACCOUNT OF INTEREST EARNED ON STICKY LOAN AMOUNTING TO RS.5,00,00,000/-. ACCO RDING TO AO, SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, AN AMOUN T OF INTEREST OF RS.75,00,000/- CALCULATED @ 15% ON THE SAID SUM OF RS. 5,00,00,000 /- HE ADDED TO THE RETURNED INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DIRECTED TO DELETE THE ADDITION BY FOLLOWING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA NO. 684/KOL/2012 DATED 02.02.2013. AGGRIEVED, REVENUE IS BEFORE US. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE VIDE GA NO. 1501 OF 2014, ITAT 47 OF 2014 DATED 19.11.2014 WHEREIN THE SIMILAR QUE STION AROSE WHICH READS AS UNDER: 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF CIT (APPEALS) THAT AD DITION OF NOTIONAL INTEREST OF RS.12,87,900/- ON STICKY LOANS WAS NOT WARRANTED BY DISREGARDING THAT THE ASSESSEE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING AND AS PER ACCOUNTI NG STANDARD INTEREST ACCRUED SHOULD HAVE BEEN RECOGNIZED ON ACCRUAL BASIS? 5 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 ON THIS QUESTION, THE HONBLE HIGH COURT HAS OBSERV ED AS UNDER: SO FAR AS THE QUESTION NO. 3 IS CONCERNED, THE DE PARTMENT HAS ACCEPTED THE POSITION AS WE FIND FROM THE ORDERS MADE EARLIER AND EVEN FROM THE APPEAL THEREFROM BEING INCOME TAX APPEAL NO. 151 OF 2009 IN THIS ASSESSEES CASE WHER E THE DEPARTMENT DID NOT CARRY ANY CHALLENGE IN THAT REGARD. THEREFORE, FOLLOWING ORDER OF HONBLE HIGH COURT CI TED SUPRA, WE DISMISS THIS GROUND OF APPEAL OF REVENUE. 7. GROUND NO. 4 OF REVENUES APPEAL IS AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 14,43,103/- ON ACCOUNT OF DEPRECIAT ION ON PLANT AND MACHINERY AND OTHER BUSINESS ASSETS PURCHASED OUT OF AMOUNT WITHDRAWN F ROM THE CREDIT AVAILABLE WITH NABARD. BRIEFLY STATED FACTS AS OBSERVED BY THE AO ARE THAT THE ASSESSEE COMPANY HAD WITHDRAWN AMOUNTS FROM NABARD IN EARLIER YEARS AND OUT OF THOSE AMOUNTS IT PURCHASED PLANT AND MACHINERIES AND OTHER BUSINESS ASSETS. TH E AO AS HAS BEEN DONE IN EARLIER YEARS, 40% OF THE DEPRECIATION OF RS.14,43,103/- CLAIMED O N PLANT AND MACHINERIES AND OTHER ASSETS PURCHASED OUT OF NABARD WITHDRAWALS WAS DISA LLOWED AND ADDED BACK FOR TAXATION. AGGRIEVED, ASSESSEE HAS PREFERRED AN APP EAL BEFORE THE LD. CIT(A), WHO DIRECTED TO DELETE THE ADDITION BY FOLLOWING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA NO. 684/KOL/2012 DATED 02.02.2013. AGGRIEVED, REVENUE IS BEFORE US. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE VIDE GA NO. 687 OF 2013, ITAT 63 OF 2013 DATED 17.06.2013 WHEREIN THE HONBLE HIG H COURT HAS OBSERVED AS UNDER: HAVING REGARD TO THE LAW, WE ARE OF THE VIEW THAT THE LEARNED TRIBUNAL VERY RIGHTLY CONFIRMED THE DELETION OF DISALLOWANCE OF THE CLAIM OF THE ASSESSEE TO DEPRECIATION AS MADE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . THEREFORE, FOLLOWING ORDER OF HONBLE HIGH COURT CI TED SUPRA, WE DISMISS THIS GROUND OF APPEAL OF REVENUE. 9. GROUND NO. 5 OF REVENUES APPEAL IS AGAINST THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.4,43,94,734/- MADE BY THE AO AT THE TIME OF COMPUTATION OF BOOK PROFIT IGNORING THE PROVISION OF CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS THE AO COMPUTED THE BOOK PROFIT U/S. 115JB OF THE ACT AS UNDER: 6 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 PARTICULARS AMOUNT AMOUNT PROFIT AS PER REVISED RETURN: ADD: I) EXPENSES DISALLOWABLE U/S. 14A OF THE ACT BOOK PROFIT U/S. 115JB ROUNDED OFF : RS.29,21,88,924/- RS. 4,43,94,734/- RS.33,65,83,658/- RS.33,65,83,660/- SINCE THE AMOUNT OF TAX COMPUTED UNDER NORMAL PROVI SIONS OF THE ACT IS MORE THAN THE TAX ON THE BOOK PROFIT COMPUTED U/S. 115JB, ACCORDING T O AO, THE ASSESSEE IS REQUIRED TO PAY THE TAX CALCULATED ON THE TOTAL INCOME COMPUTED UND ER NORMAL PROVISIONS OF THE ACT AND HENCE, HE ADDED A SUM OF RS.4,43,94,734/- TO THE B OOK PROFIT COMPUTED U/S. 115JB OF THE ACT ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE ACT. ON APPEAL, THE LD. CIT(A) DIRECTED TO DELETE THE ADDITION BY FOLLOWING THE COORDINATE BEN CH DECISION IN ASSESSEES OWN CASE IN ITA NO. 684/KOL/2012 DATED 02.02.2013. AGGRIEVED, REVENUE IS BEFORE US. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ISSUE HAS BEEN DEALT WI TH BY THIS TRIBUNAL IN ITA NO. 2009- 2010/KOL/2014 FOR AYS. 2010-11 AND 2011-12 DATED 02 .06.2017, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 16. WE HAVE HEARD RIVAL CONTENTIONS OF THE PARTIE S AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ISSUE IN THE INSTANT CASE IS WITH REGARD TO THE DISALLOWANCE MADE BY AO UNDER THE PROVISION OF CLAUSE (F) TO EXPLANATION-1 OF SEC. 1 15JB OF THE ACT. THE AO WHILE DETERMINING THE PROFIT UNDER THE NORMAL PROVISION OF THE ACT HA S DISALLOWED THE INTEREST EXPENSES UNDER SEC. 14A R.W.R. 8D(2)(II) OF INCOME TAX RULES 1962. THE AO IN HIS ASSESSMENT ORDER AT THE SAME TIME, WHILE DETERMINING THE PROFIT UNDER THE P ROVISION OF MAT ALSO ADDED THE SAME AMOUNT OF DISALLOWANCE MADE U/S. 14A R.W.S 8D(2)(II ) OF IT RULES. IN THIS REGARD, WE FIND THAT VARIOUS COURTS HAS HELD THAT THE DISALLOWANCE MADE UNDER THE NORMAL PROVISION U/S.14A OF THE ACT CANNOT BE IMPORTED OR CANNOT BE EQUATED TO THE DISALLOWANCE MADE U/S. 115JB OF THE ACT. IT IS BECAUSE THE PROVISIONS OF MAT ARE SELF-CONTAI NED CODE AND BEGINS WITH NON-OBSTANTE CLAUSE. THEREFORE IT HAS NO RELATION WITH OTHER PRO VISION OF THE ACT. INDEED, THE IMPUGNED ISSUE OF ASSESSEE IS COVERED IN ITS FAVOUR IN ASSESSEES OWN ASSESSMENT IN ITA NO.684/KOL/2012 FOR AY 2008-09 DATED 08.02.2013 AND THERE IS NO DISPUTE WITH REGARD TO THAT. HOWEVER SUBSEQUENT TO THE ITAT ORDER IN THE OWN CASE OF THE ASSESSEE, THE HON'BLE JURISDICTIONAL 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 HAS HELD THAT THE DISALLOWANCE IN RE LATION TO 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 BELO W:- WE FIND COMPUTATION OF THE AMOUNT OF EXPENDITURE R ELATABLE TO EXEMPTED INCOME OF THE ASSESSEE MUST BE MADE SINCE THE ASSESSEE HAS NO T CLAIMED SUCH EXPENDITURE TO BE NIL. SUCH COMPUTATION MUST BE MADE BY APPLYING CLAU SE (F) OF EXPLANATION 1 UNDER SECTION 115JB OF THE ACT. WE REMAND THE MATTER FOR SUCH COMPUTATION TO BE MADE BY THE LEARNED TRIBUNAL. WE ACCEPT THE SUBMISSION OF M R. KHAITAN, LEARNED SENIOR ADVOCATE THAT THE PROVISION OF SECTION 115JB IN THE MATTER OF COMPUTATION IS A 7 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 COMPLETE CODE IN ITSELF AND RESORT NEED NOT AND CAN NOT BE MADE TO SECTION 14A OF THE ACT. THEREFORE, THE ARGUMENT PLACED BY LD. AR FOR THE A SSESSEE THAT THE INSTANT ISSUE IS ALREADY COVERED IN FAVOUR OF ASSESSEE DOES NOT HOLD GOOD. I NDEED THE DISALLOWANCES MADE UNDER THE PROVISIONS OF SEC. 14A R.W.S 8D OF THE IT RULES, CA NNOT BE APPLIED TO THE PROVISION OF SEC. 115JB OF THE ACT AS PER THE DIRECTION OF THE HON'BL E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAYSHREE TEA INDUSTRIES LTD. (SUPRA). THERE FORE, THE AO SHALL WORK OUT DISALLOWANCES IN TERMS OF THE CLAUSE (F) TO EXPLANATION-1 OF SEC. 115JB OF THE ACT INDEPENDENTLY AFTER CONSIDERING THE EXPENSES DEBITED IN THE PROFIT & LO SS ACCOUNT AS MANDATED UNDER THE PROVISIONS OF LAW. THUS THIS GROUND OF APPEAL OF TH E REVENUE IS PARTLY ALLOWED. WE ALSO NOTE THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE VIDE GA NO. 1501 OF 2014, ITAT 47 OF 2014 DATED 19.11.2014 WHEREIN THE SIMILAR QUESTION AROSE WHICH READS AS UNDER: 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. TRIBUNAL HAS ERRED IN LAW IN UPHOLDING THE ORDER OF CIT(APPEALS) THAT DIS ALLOWANCE UNDER SECTION 14A OF THE I. T. ACT, 1961, AMOUNTING TO RS.2,20,15,787/- IS NOT TO BE CONSIDERED FOR BOOK PROFIT FOR CALCULATION OF BOOK PROFIT UNDER SECTION 115JB OF T HE I. T. ACT, 1961? ON THIS QUESTION, THE HONBLE HIGH COURT HAS OBSERV ED AS UNDER: WE FIND COMPUTATION OF THE AMOUNT OF EXPENDITURE RELATABLE TO EXEMPTED INCOME OF THE ASSESSEE MUST BE MADE SINCE THE ASSESSEE HAS NOT CL AIMED SUCH EXPENDITURE TO BE NIL. SUCH COMPUTATION MUST BE MADE BY APPLYING CLAUSE (F) OF EXPLANATION 1 U/S. 115JB OF THE ACT. WE REMAND THE MATTER FOR SUCH COMPUTATION TO BE MADE B Y THE LEARNED TRIBUNAL. RESPECTFULLY FOLLOWING THE ORDER OF HONBLE HIGH CO URT, (SUPRA), WE RESTORE THE MATTER TO AO TO CALCULATE THE BOOK PROFIT U/S. 115JB OF THE A CT AS PER THE DICTUM OF HONBLE HIGH COURT. IT IS REITERATED THAT THE DISALLOWANCES MAD E UNDER THE PROVISIONS OF SEC. 14A R.W.S 8D OF THE IT RULES, CANNOT BE APPLIED TO THE PROVIS ION OF SEC. 115JB OF THE ACT. THEREFORE, THE AO SHALL WORK OUT DISALLOWANCES IN TERMS OF THE CLAUSE (F) TO EXPLANATION-1 OF SEC. 115JB OF THE ACT INDEPENDENTLY AFTER CONSIDERING TH E EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT AS MANDATED UNDER THE PROVISIONS OF LAW. ACCORDINGLY, THIS ISSUE OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 8TH JUNE, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 8TH JUNE, 2018 JD.(SR.P.S.) 8 ITA NO.37/KOL/2017 JAY SHREE TEA & INDUSTRIES LTD. , AY- 2013-14 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-4(1), KOLKATA. . 2 RESPONDENT JAY SHREE TEA & INDUSTRIES LTD., 15 TH FLOOR, INDUSTRY HOUSE, 10, CAMAC STREET, KOLKATA-700 017. 3 . THE CIT(A), KOLKATA (SENT THROUGH E-MAIL) 4. 5. CIT , DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SENIOR PVT. SECY .