DCIT, CIR-7(1), KOLKATA, Kolkata V. M/s J. K. Tyre & Industries Ltd., Kolkata

ITA 519/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6131 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: AKKAL DUDHWEWELA
• Keywords: Opportunity of being heard; Rule of consistency; Earning of tax free income; Bad and doubtful debts; Revised return
• Section: 14A; 115JB

Judgement Text

1 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) BEFORE . . , /AND , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI WASEEM AHMED, AM] I.T.A. NO. 519 & 520/KOL/2016 ASSESSMENT YEARS: 2009-10 & 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-7(1), KOLKATA. VS. M/S. J. K. TYRE & INDUSTRIES LTD. (PAN: AAACJ6716F) APPELLANT RESPONDENT DATE OF HEARING 26.04.2018 DATE OF PRONOUNCEMENT 18.07.2018 FOR THE APPELLANT SHRI S. DASGUPTA, ADDL. CIT, DR FOR THE RESPONDENT SHRI AKKAL DUDHWEWELA, FCA ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)- 20, KOLKATA DATED 16.12.2015 FOR AYS 2009-10 AND 20 10-11. SINCE GROUNDS ARE IDENTICAL AND FACTS ARE COMMON, WE DISPOSE OF BOTH THESE APPE ALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE BY TAKING THE CASE OF AY 2009-1 0 AS THE LEAD CASE. 2. THESE APPEALS OF REVENUE ARE TIME BARRED BY SEVE N DAYS AND REVENUE HAS FILED A CONDONATION PETITION. AFTER HEARING BOTH THE SIDES , WE CONDONE THE DELAY AND ADMIT THE APPEALS FOR HEARING. 3. GROUND NO.1 OF REVENUES APPEAL IS AGAINST THE A CTION OF LD. CIT(A) IN ALLOWING BAD DEBTS WRITTEN OFF. 4. BRIEFLY STATED FACTS AS NOTED BY THE AO ARE THA T THE ASSESSEE CLAIMED DEDUCTION OF AN AMOUNT OF RS.28,31,143/- UNDER THE HEAD BAD DEBTS WRITTEN OFF WHILE COMPUTING ITS TAXABLE INCOME. ACCORDING TO AO, AS PER COMBINED R EADING OF SEC. 36(1)(VII) AND THE PROVISIONS OF SEC. 36(2)(I) OF THE ACT, THE PRIMARY CONDITION FOR A BAD DEBT TO BE ALLOWED AS DEDUCTION IS THAT THE SAME MUST BE WRITTEN OFF IN T HE ACCOUNTS AND SUCH DEBT OR PART THEREOF MUST HAVE BEEN TAKEN INTO ACCOUNT WHILE COMPUTING T HE TOTAL INCOME OF THE PREVIOUS YEAR IN 2 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 WHICH THE AMOUNT OF SUCH DEBT OR PART THEREOF IS WR ITTEN OFF OR OF AN EARLIER PREVIOUS YEAR. IN THE CASE OF THE ASSESSEE, THE BAD DEBTS WRITTEN OFF HAVE NOT BEEN DEBITED TO THE ACCOUNTS. IT IS NOT DENIED THAT PROVISIONS OF DOUBTFUL DEBTS WERE M ADE IN EARLIER YEARS THAT WERE DISALLOWED IN THE ASSESSMENT. ACCORDING TO AO, IT IS PERTINENT TO MENTION THAT A CREATING 'PROVISION' IS NOT AN ITEM OF EXPENDITURE. IT IS JUST IDENTIFICATI ON OF CERTAIN AMOUNTS AGAINST CERTAIN FUTURE LIABILITIES, EITHER ASCERTAINED OR NOT. AS IT IS NO T EXPENDITURE, THE DISALLOWANCE OF THE SAME WHILE COMPUTING TOTAL INCOME IS OBVIOUS BUT SUCH DI SALLOWANCE DOES NOT AFFECT THE ACTUAL PROFIT OF THE ASSESSEE. ON THE OTHER HAND, WHEN AN AMOUNT OF BAD DEBT IS WRITTEN OFF, IT TANTAMOUNT TO EXPENDITURE, AND HAS DIRECT IMPACT ON THE PROFIT OF THE ASSESSEE, WHICH MUST BE PASSED THROUGH THE PROFIT & LOSS ACCOUNT. IN THE PRESENT CASE, THE ACCOUNTS HAVE NOT BEEN DEBITED ACCORDINGLY. THE AO ALSO OBSERVED THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO ESTABLISH THAT THE PROVISION MADE EARLIER INCLUDED THE PARTY, AGAINST WHICH THE DEBT HAS BEEN WRITTEN OFF, NATURE OF DEBT AND THE AMOUNT WRITTEN OFF. AS PROVISIONS FOR DOUBTFUL DEBT MAY ALSO INCLUDE NON-TRADE DEBTS, THIS EXERCISE IS VERY MUCH NECESSARY. IT IS ALSO THE PRIMARY ONUS ON THE ASSESSEE TO PROVE THAT THE AMOUNT OF DE BT WRITTEN OFF WAS CONSIDERED IN THE ACCOUNTS OF THE ASSESSEE EITHER IN THE FINANCIAL YE AR UNDER CONSIDERATION OR ANY EARLIER PREVIOUS YEAR, I.E., THE DEBT CLAIMED AS WRITTEN OF F HAD ACTUALLY GENERATED OUT OF NON-RECOVERY OR SHORT-RECOVERY OF REVENUE RECEIPTS THAT HAS ALREADY BEEN OFFERED TO TAX. IN THE PRESENT CASE THE ASSESSEE HAS FAILED TO DISCHAR GE ITS ONUS AS STATED ABOVE. THE AO FURTHER OBSERVED THAT EXCEPT FOR STRENUOUSLY CLAIMING THAT THE BAD DEBTS WERE WRITTEN OFF OUT OF THE PROVISIONS FOR DOUBTFUL DEBTS CREATED EARLIER WHICH HAVE BEEN DISALLOWED IN ASSESSMENT, THE ASSESSEE DOES NOT HAVE ANYTHING MUCH TO SAY IN ITS FAVOUR. AS REGARDS THE DECISION OF THE APEX COURT IN THE CASE OF VIJAYA BANK -VS-CIT, THE AO OBSERVED THAT THE ASSESSEE IN THAT CASE BEING A BANKING COMPANY HAS AN ENTIRELY DIFFERENT PERSPECTIVE AS FAR AS WRITING OFF BAD DEBTS IS CONCERNED. HENCE, ACCORDING TO AO, THE CASE RELIED UPON IS SQUARELY DISTINGUISHABLE FROM THE PRESENT CASE OF THE ASSESS EE. AS REGARDS THE DECISION OF THE HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT -VS- MOD I XEROX LTD, RELIED UPON BY THE ASSESSEE, ACCORDING TO AO THAT THE ASSESSEE IN THAT CASE HAD COMPLIED WITH THE REQUIREMENT OF ESTABLISHING THAT THE AMOUNT HAS BEEN CONSIDERED IN COMPUTING INCOME FOR EARLIER YEAR. SO THE AO CONCLUDED THAT IN THE PRESENT CASE. THE A SSESSEE HAS FAILED TO COMPLY WITH THAT BASIC REQUIREMENT. THEREFORE, THE AO FINALLY HELD T HAT THE ASSESSEE-COMPANY HAS FAILED TO 3 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 DISCHARGE ITS PRIMARY ONUS IN ESTABLISHING THAT THE AMOUNT WRITTEN OFF REPRESENT DEBTS THAT WERE OFFERED TO TAX ON EARLIER OCCASION, WHICH IS P RIMARY CONDITION FOR A CLAIM OF WRITTEN OFF DEBT TO BE ALLOWED AS DEDUCTION. HENCE, THE AMOUNT OF RS.28,31,143/- UNDER THIS HEAD WAS DISALLOWED BY THE AO. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A), WHO ALLOWED THE ASSESSEES GROUNDS OF APPEAL. AGGRIEVED, REVENUE I S BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE IN THE PAPER BOOK. WE NOTE THAT THE ASSESSEE CARRIES ON THE BUSINESS O F MANUFACTURING AUTOMOBILE TYRES, TUBES AND FLAPS AND GENERATION AND DISTRIBUTION OF POWER AND IS ALSO AN EXPORT HOUSE. DURING THE ASSESSMENT YEAR 2009-10, THE ASSESSEE WROTE OFF RS. 28,31,143/- OUT OF PROVISION MADE FOR DOUBTFUL DEBTS IN EARLIER YEARS BY DEBITING THE P&L ACCOUNTS AND WHENEVER, THE SAID PROVISION WAS MADE, ACCORDING TO ASSESSEE, IT HAS A LWAYS OFFERED THE SAME FOR TAX IN ITS RETURNS OF INCOME. IT WAS BROUGHT TO OUR NOTICE TH AT THE COMPANY CREATED PROVISION FOR DOUBTFUL DEBTS BY DEBITING THE SAME TO P&L ACCOUNT TO SHOW THE TRUE AND CORRECT POSITION OF ITS PROFIT. SINCE THE INCOME TAX ACT SPECIFICAL LY PROVIDES THAT ANY PROVISION DEBITED TO THE PROFIT & LOSS ACCOUNT WOULD NOT BE AN ALLOWABLE EXPENDITURE; HENCE, THE ASSESSEE ALWAYS OFFERED THE SAME FOR TAX BY ADDING THE SAME IN TAXABLE PROFIT WHILE COMPUTING THE TAXABLE INCOME. HOWEVER, IN ANY SUBSEQUENT YEAR, WH EN THE ASSESSEE FELT THAT ANY PARTICULAR DEBT IS NOT RECOVERABLE, THE ASSESSEE WRITES OFF TH E SAME OUT OF SUCH PROVISION AND CLAIMS THE SAME U/S 36(1)(VII) OF THE ACT AS WRITES OFF OF BAD DEBTS, OUT OF SAID PROVISION WHICH WAS OFFERED TANTAMOUNT TO DEBIT IN P& L ACCOUNT OF THE RELEVANT YEAR. ACCORDING TO LD. AR, THE AO FAILED TO APPRECIATE THE FACT THAT SUCH WRITE OF F OF BAD DEBTS PERTAINED TO SALE OF TYRES & TUBES WHICH IS ASSESSEES CORE BUSINESS AND HAS ALR EADY BEEN DEBITED TO PROFIT & LOSS ACCOUNT AND WRONGLY CONCLUDED THAT SINCE THE BAD DE BTS WRITTEN OFF WAS NOT DEBITED TO PROFIT & LOSS ACCOUNT OF THE PREVIOUS YEAR HENCE TH E SAME IS NOT ALLOWABLE. WE NOTE FROM A PERUSAL OF THE AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE COMPANY VIDE NOTE NO. 10(A) OF SCHEDULE 14B FORMING PART OF AUDITED BALANCE SHEET CLEARLY SHOWS THAT APART FROM PROVISIONS FOR DOUBTFUL ADVANCES OF RS. 32.34 LACS AS ON 01/04/2008 AS WELL AS ON 31/03/2009, THERE WAS AN OPENING BALANCE OF RS. 311 .60 LACS ON ACCOUNT OF PROVISIONS FOR DOUBTFUL DEBTS AS ON 01/04/2008 AND AFTER ADDING RS .30.00 LACS BEING PROVISION FOR 4 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 DOUBTFUL DEBTS MADE DURING THE YEAR AND REDUCING TH E AMOUNT OF RS.28.31 LACS BEING THE BAD DEBTS WRITTEN OFF DURING THE PREVIOUS YEAR AND CLAIMED AS BAD DEBTS THE CLOSING BALANCE AS ON 31/03/2009 REMAINED OF RS. 313.29 LACS. THE A SSESSING OFFICER WITHOUT APPRECIATING THE AFORESAID FACTS AND WITHOUT GOING THROUGH THE A CCOUNTS OF THE ASSESSEE WRONGLY CONCLUDED THAT ASSESSEE DID NOT ESTABLISH THE NATUR E OF DEBTS BAD DEBTS, WHEN IT WAS POINTED OUT TO AO THAT WRITE OFF OF BAD DEBTS PERTAINED TO SALE OF TYRES & TUBES WHICH IS ASSESSEES CORE BUSINESS AND THE FACT THAT IT HAS ALREADY BEEN DEBITED TO PROFIT & LOSS. IN OTHER WORDS THE AMOUNT WRITTEN OFF REPRESENTS DEBTS THAT WERE O FFERED TO TAX AS PROVISIONS FOR DOUBTFUL DEBTS IN EARLIER YEARS. 7. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT TH E LD. CIT(A)S PREDECESSOR FOR AY 2008-09 (PRECEDING ASSESSMENT YEAR) HAD ALLOWED THE ASSESSEES CLAIM FOR BAD DEBT OF RS.32,40,056/- BY OBSERVING AS UNDER: 3. GROUND NO. 1 IS GENERAL IN NATURE . GROUND NO . 2, 3 & 4 RELATE TO THE DISALLOWANCE OF THE CLAIM REGARDING BAD DEBT OF RS. 32,40,056/ -. THE A O FOUND THAT THE ASSESSEE HAD DEDUCTED A SUM OF RS.32,40,056/- ON ACCOUNT OF BAD DEBT IN ITS COMPUTATION OF TOTAL INCOME. THE AO ALSO FOUND THAT THE BAD DEBT WAS NOT CHARGED TO THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT YEAR. IT WAS ARGUED AT THE ASSESSMENT STAGE THAT TH E ASSESSEE HAD IN EARLIER YEARS, MADE PROVISIONS FOR DOUBTFUL DEBTS WHICH WAS ALSO DEBIT ED TO THE PROFIT AND LOSS ACCOUNT FOR THOSE YEARS. THE PROVISIONS SO MADE WERE ADDED BACK IN T HE COMPUTATION OF INCOME AS THE SAME WERE NOT ALLOWABLE AS DEDUCTION. IN THE YEAR UNDER CONSIDERATION, THE BAD DEBT FOR WHICH DEDUCTION WAS CLAIMED HAS BEEN WRITTEN OFF IN THE B OOKS OF ACCOUNT BY DEBITING THE PROVISION ACCOUNT AND CREDITING THE DEBTORS ACCOUNTS. THE AO DID NOT ACCEPT THE EXPLANATION. THE AO WAS OF THE OPINION THAT THE BAD DEBT CANNOT BE SAID TO HAVE BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT AS THE SAME WAS NOT CHARGED TO THE PROFIT A ND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE AO PLACED RELIANCE ON THE DECISI ON OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS HOTEL AMBASSADOR (2002) 253 ITR 430. THE AO HAS HELD THAT THE CLAIM OF BAD DEBT WAS NOT ALLOWABLE AS THE SAME HAS NOT BEEN WRITTEN OFF IN THE BOOKS ACCOUNT. THE LD. AR REITERATED THE SUBMISSION MADE AT THE ASSESS MENT STAGE. IT WAS CONTENDED THAT THE AO HAS ERRED IN HOLDING THAT THE BAD DEBT HAS NOT B EEN WRITTEN OFF IN THE BOOKS OF ACCOUNT ON THE GROUND THAT THE SAME WAS NOT CHARGED TO THE PRO FIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE AO HAS ACTUALLY FAILED TO APPRE CIATE THE ACCOUNTING ENTRIES THAT WERE MADE IN THE BOOKS OF ACCOUNT. AS THE PROVISION FOR DOUBTFUL DEBT HAD ALREADY BEEN MADE IN THE EARLIER YEARS, THE ASSESSEE DEBITED THE PROVISION ACCOUNT AND CREDITED THE RESP ECTIVE DEBTORS ACCOUNT. THE DEBT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT AS THE DEBTORS' ACCOUNTS HAVE ALREADY BEEN CREDITED. THE COPY OF THE PROVISION ACCOUNT AS WELL AS DEBTORS' A CCOUNTS WAS FILED IN COURSE OF THE APPELLATE PROCEEDINGS TO SHOW THAT THE DEBT HAD ACT UALLY BEEN WRITTEN OFF BY THE ASSESSEE COMPANY IN ITS BOOKS OF ACCOUNT. I FIND THAT THE BA D DEBT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT BY CREDITING THE DEBTORS' ACCOUNTS. THE JUD GMENT OF THE HON'BLE KERALA HIGH COURT 243 ITR 430 RELIED UPON BY THE AO IS DISTINGUISHABL E ON FACTS. IN THAT CASE, THE WRITE OFF WAS MADE AFTER THE AUDITED ACCOUNTS WERE FINALIZED, AND CONSEQUENTLY, THE SAME WAS NOT REFLECTED IN THE PROFIT AND LOSS ACCOUNT. BUT, IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE WRITE OFF WAS ACTUALLY MADE BY ADJUSTING THE DEBTORS ACCOUNTS IN THE YEAR UNDER APPEAL AND THAT THE PROFIT AND LOSS ACCOUNT WAS CHARGED IN THE RESPECTI VE YEARS WHEN THE PROVISION WAS MADE FOR 5 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 SUCH AMOUNTS. IN VIEW OF THE ABOVE, THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE CLAIM OF BAD DEBT WAS NOT ALLOWABLE AS THE SAME WAS NOT CHARGED TO THE PROFIT AND LOSS ACCOUNT OF THE RELEVANT YEAR. GROUND NO. 2, 3 & 4 ARE ALLOWED. 8. WE NOTE THAT THIS ORDER OF THE LD. CIT(A) HAS BE EN ACCEPTED BY THE DEPARTMENT WHICH FACT IS DISCERNIBLE FROM A PERUSAL OF FORM 36 FILE D BY THE DEPARTMENT AGAINST THE ORDER OF LD. CIT(A) FOR AY 2008-09 (SUPRA) AND GROUND OF AP PEAL FOR AY 2008-09 PLACED AT PAGE 57 OF THE PAPER BOOK. 9. SO WHEN THE DEPARTMENT HAS ACCEPTED THE ORDER OF LD. CIT(A) FOR AY 2008-09 AND THE LD. CIT(A) FOR THIS RELEVANT AY 2009-10 HAS FOL LOWED THE REASONED ORDER OF HIS PREDECESSOR, AS PER RULE OF CONSISTENCY UNLESS THER E IS CHANGE IN FACTS OR LAW IS BROUGHT OUT, THIS GROUND OF APPEAL OUGHT NOT TO HAVE BEEN ASSAI LED. THE LD. DR COULD NOT POINT OUT ANY CHANGE IN FACTS OR LAW ON THIS GROUND FROM THAT OF THE PRECEDING YEAR, SO ON CONSISTENCY AS WELL AS ON MERITS AS DISCUSSED ABOVE, THIS GROUND O F APPEAL OF REVENUE IS DISMISSED. 10. GROUND NOS. 2 AND 3 OF REVENUES APPEAL ARE AGA INST THE ACTION OF LD. CIT(A) IN ALLOWING WEIGHTED DEDUCTION @ 125% U/S. 35(1)(II) O F THE ACT. 11. BRIEFLY STATED FACTS AS NOTED BY THE AO ARE THA T THE ASSESSEE COMPANY PAID A SUM OF RS.50,00,000/- TO IIT, CHENNAI TO CARRYOUT RESEARCH IN THE FIELD OF ITS CORE BUSINESS I.E. AUTOMOTIVE TYRES AND CLAIMED WEIGHTED DEDUCTION U/S . 35 (L)(II) OF THE ACT @125% AS, ACCORDING TO THE ASSESSEE-COMPANY, THE IIT, CHENNAI IS AN APPROVED NOTIFIED INSTITUTION U/S. 35 (L)(II) OF THE ACT. ACCORDING TO AO IT WAS PRIM ARY RESPONSIBLY OF THE ASSESSEE TO MAKE THE CLAIM OF WEIGHTED DEDUCTION IN THE RETURN OF IN COME FILED U/S. 139(1). IT HAD THE OPPORTUNITY TO FILE REVISED INCOME UP TO 31.03.2009 ALSO. EVEN THEN, NO REVISED RETURN WAS FILED. ACCORDING TO AO, IT IS A WELL SETTLED PRINCI PLE THAT A CLAIM MADE IN THE RETURN CANNOT BE REVISED OTHERWISE THAN BY FILING REVISED RETURN OF INCOME. SINCE THE ASSESSEE DID NOT MAKE ANY CLAIM IN THE RETURN OF INCOME U/S 139( 1) OF THE ACT, OR EVEN IN A REVISED RETURN, ACCORDING TO AO, IT IS NOT ENTITLED TO MAKE ANY FUR THER CLAIM IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE INDIA L TD -VS- CIT [284 ITR 323 (SC) (2006)1. ACCORDINGLY, THE CLAIM OF DEDUCTION35(1)(I I) OF THE ACT @125% OF THE AMOUNT PAID TO IIT, CHENNAI, COU1D NOT BE ACCEDED BY THE AO AND HE ADDED THE SAME. 6 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 12. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO ALLOWED THE ASSESSEES GROUND OF APPEAL. AGGRIEVED, REVENUE IS BEFORE US. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE IN THE PAPER BOOK. WE NOTE THAT THE LD. CIT(A) ALLOWED THE CLAIM OF AS SESSEE BY FOLLOWING THE DIRECTION OF ITATS ORDER DATED 29.10.2009 IN ASSESSEES OWN CAS E BY OBSERVING AS UNDER: 7. APPEAL ON GROUNDS NO. 9 AND 10 ARE AGAINST THE DISALLOWANCE OF RS.50,00,000/- AS WEIGHTED DEDUCTION @ 125% U/S. 35(1)(II) FOR PAYMEN T MAKE TO IIT CHENNAI TO CARRY OUT RESEARCH IN THE FIELD OF ASSESSEES CORE BUSINESS. SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEARS BUT IT WAS ALLOWED BY THE ITAT. FOLLOWING TH E DIRECTION OF HONBLE ITAT ON THIS ISSUE MY PREDECESSOR IN HIS ORDER FOR ASSESSMENT YEAR 200 5-06 IN APPEAL NO. 218/CC-VI/LD. CIT(A)C-1/10-11 DATED 20.12.2012, HAS DISCUSSED THI S ISSUE IN DETAIL AND ALLOWED THE APPEAL. I FIND NO REASON TO INTERFERE IN THE FINDINGS OF MY PREDECESSOR ON THIS ISSUE. ACCORDINGLY ASSESSEES APPEAL ON GROUND NOS. 9 AND 10 ARE ALLOW ED. 14. MOREOVER, WE NOTE THAT BOTH GROUND NOS. 2 AND 3 OF REVENUES APPEAL HAS BEEN ANSWERED BY THE TRIBUNAL IN DETAIL IN ASSESSEES OW N CASE FOR AY 2005-06 WHEREIN IT HAS BEEN HELD AS UNDER: 6. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR WHO REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE GROUNDS OF APPEAL FILED BEFORE THE TRIBUNAL. THE LEARNED DR ALSO SUBMITTED THAT ERSTWHILE SEC.35 OF THE ACT WAS DELETED BY SEC . 10 OF THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 (ACT 4 OF 1988). THE NOTIFICATION DATED 1 0.12.1973 (NOTIFICATION:P S.O.287) APPROVING OF IIT, MADRAS FOR THE PURPOSE OF SEC.35( 1)(II) OF THE ACT BASED ON WHICH THE CIT(A) ALLOWED DEDUCTION TO THE ASSESSEE U/S.35(1)(II) WIL L NOT HOLD GOOD WHEN THE ERSTWHILE SEC.35 OF THE ACT WAS OMITTED. ACCORDING TO HIM THERE IS NO N OTIFICATION AFTER 1973 NOTIFYING IIT, MADRAS AS AN APPROVED INSTITUTION FOR THE PURPOSE OF SEC.3 5(1)(II) OF THE ACT. EVEN ON THIS BASIS, ACCORDING TO HIM, THE ORDER OF THE CIT(A) CANNOT BE SUSTAINED. 6.1. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE RE LYING ON THE ORDER OF THE CIT(A) FURTHER SUBMITTED THAT BY SEC.95(2)(E) OF THE DIRECT TAX LA WS (AMENDMENT) ACT, 1989 (ACT 3 OF 1989), ERSTWHILE SEC.35 WHICH WAS DELETED BY SEC.10 OF THE DIRECT TAX LAWS (AMENDMENT ACT, 1987 (ACT 4 OF 1988), HAS BEEN RESTORED. THUS ACCORDING TO HIM THE ERSTWHILE SEC.35 OF THE ACT GOT REVIVED AND REMAINED IN SUSPENDED ANIMATION FOR A S HORT PERIOD. SINCE THE ERSTWHILE SEC.35 OF THE ACT HAS ALWAYS BEEN PART OF THE ACT, THE NOTIFI CATION DATED 10.12.1973 NOTIFYING IIT, MADRAS AS AN APPROVED INSTITUTION FOR THE PURPOSE O F SEC.35(1)(II) OF THE ACT WAS VALID AT ALL POINT OF TIME. OUR ATTENTION WAS ALSO DRAWN TO PARA 5.2 TO 5.5. OF THE CBDT CIRCULAR NO.551 DATED 23.1.1990 EXPLAINING THE PROVISIONS OF THE DI RECT TAX LAWS (AMENDMENT ACT, 1987 (AS AMENDED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 198 9, EXPLAINING THE RESTORATION OF ERSTWHILE SEC.35 OF THE ACT. IT WAS FURTHER SUBMITT ED BY HIM THAT U/S.24 OF THE GENERAL CLAUSES ACT, 1897 (ACT NO.X OF 1987), WHERE ANY ACT OF PARL IAMENT IS REPEALED AND RE-ENACTED WITH OR WITHOUT MODIFICATION, THEN, UNLESS IT IS OTHERWISE EXPRESSLY PROVIDED, ANY APPOINTMENT, NOTIFICATION, ORDER, SCHEME, RULE, FORM OR BYE-LAW MADE OR ISSUED UNDER THE REPEALED ACT OR REGULATION SHALL, SO FAR AS IT IS NOT INCONSISTENT WITH THE PROVISIONS RE-ENACTED, CONTINUE IN FORCE, AND BE DEEMED TO HAVE BEEN MADE OR ISSUED UN DER THE PROVISIONS SO RE-ENACTED, UNLESS AND UNTIL IT IS SUPERSEDED BY ANY APPOINTMENT, NOTI FICATION, ORDER, SCHEME, RULE, FORM OR BYE- LAW MADE OR ISSUED UNDER THE PROVISIONS SO RE-ENACT ED. ACCORDING TO HIM NOWHERE IT IS EXPRESSLY PROVIDED THAT APPROVAL OF IIT, MADRAS FOR THE PURPOSE OF SEC.35(1)(II) OF THE ACT WILL 7 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 NO LONGER HOLD GOOD. SEC.24 OF THE GENERAL CLAUSE A CT, 1897 REFERS TO REPEAL OF AN ACT AND REENACTMENT WITH OR WITHOUT MODIFICATION. THE QUEST ION IS AS TO WHETHER IT WILL APPLY WHERE THERE IS A STATUTORY AMENDMENT TO A PROVISION IN AN ENACTMENT WITHOUT THE ENACTMENT BEING REPEALED. THE LEARNED COUNSEL FOR THE ASSESSEE RELI ED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PARLE BISCUITS (P) LTD. VS. ST ATE OF BIHAR 2005 (192) E.L.T 23 (SC) WHEREIN THE HONBLE SUPREME COURT HELD THAT PROVISI ONS ANALOGOUS TO SEC.24 OF THE GENERAL CLAUSES ACT, 1897 ARE APPLICABLE EVEN WHEN THERE IS A STATUTORY AMENDMENT WITHOUT THERE BEING A REPEAL OF AN ENACTMENT AND REENACTMENT IN P LACE OF REPEALED LAW. 6.2. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE FIRST QUESTION THAT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER IN THE ABSENCE OF A CLAIM MADE BY THE ASSESSEE FOR DEDUCTION U/S.35(1)(II) OF THE ACT IN THE RETURN OF INCOME FILED OR BY FILING A REVISED RETURN OF INCOME A CLAIM CAN BE ENTERTAINED BY THE AO, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA L TD. VS. CIT 284 ITR 323(SC) WHEREIN THE HONBLE SUPREME COURT HELD THAT THE AO CANNOT ENTER TAIN A CLAIM BY THE ASSESSEE WITHOUT FILING A REVISED RETURN OF INCOME MAKING SUCH A CLA IM. FACTUALLY A CLAIM FOR DEDUCTION U/S.35(1)(II) OF THE ACT HAS BEEN MADE BY THE ASSES SEE BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS DIRECTED THE AO TO CONSIDER THE CLAIM OF THE AS SESSEE. THE HONBLE SUPREME COURT IN GOETZE INDIA LTD. (SUPRA) IN PARA 4 OF ITS JUDGMENT OBSERVED AS FOLLOWS:- 4. THE DECISION IN QUESTION IS THAT THE POWER OF T HE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISE D BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSE SSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RE TURN. IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961. THERE SHALL BE NO ORDER AS TO COSTS. A PERUSAL OF THE AFORESAID OBSERVATION OF THE HONB LE SUPREME COURT MAKES IT ABUNDANTLY CLEAR THAT THE TRIBUNAL HAS THE POWER TO ENTERTAIN A CLAIM DE HORS REVISED RETURN OF INCOME. THE CLAIM OF ASSESSEE REQUIRED EXAMINATION BY THE A O AND THEREFORE, THE TRIBUNAL REMANDED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH CONSID ERATION IN ACCORDANCE WITH LAW, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. THE GRIEVANCE PROJECTED BY THE REVENUE IN THIS REGARD IS THEREFORE WITHOUT ANY BASIS AND T HEREFORE THE SAME IS REJECTED. 6.3. THE NEXT QUESTION THAT NEEDS TO BE ANSWERED I S AS TO WHETHER IN A CASE EXPENDITURE IS INCURRED FOR SCIENTIFIC RESEARCH RELATING TO THE BU SINESS OF THE ASSESSEE, DEDUCTION U/S.35(1)(II) OF THE ACT CAN BE ALLOWED. IT IS NOT THE CASE OF TH E AO THAT DEDUCTION CANNOT BE ALLOWED TO THE ASSESSEE AS THE SCIENTIFIC RESEARCH FOR WHICH THE A SSESSEE INCURRED EXPENDITURE IN QUESTION RELATED TO ITS BUSINESS AND THEREFORE THE DEDUCTION CLAIMED CANNOT BE ALLOWED. IT IS NOT OPEN FOR THE REVENUE TO SET UP A TOTALLY NEW CASE IN ITS GROUNDS OF APPEAL WHICH WAS NEVER THE CASE OF THE AO/CIT(A). UNDER CLAUSE (II) TO SEC.35(1) OF THE ACT, ANY SUM PAID TO APPROVED SCIENTIFIC RESEARCH ASSOCIATION WHICH HAS AS ITS OB JECT THE UNDERTAKING OF SCIENTIFIC RESEARCH OR TO AN APPROVED UNIVERSITY, COLLEGE OR OTHER INSTITU TION TO BE USED FOR SCIENTIFIC RESEARCH IS DEDUCTIBLE. UNLIKE CL. (I) TO SEC.35(1) OF THE ACT, THIS CLAUSE DOES NOT LAY DOWN THAT THE 'SCIENTIFIC RESEARCH', FOR WHICH THE AMOUNT IS PAID SHOULD BE RELATED TO THE ASSESSEE'S BUSINESS. THEREFORE DEDUCTION U/S.35(1)(II) OF THE ACT HAS TO BE ALLOWED WHETHER THE EXPENDITURE INCURRED TOWARDS SCIENTIFIC RESEARCH IS IN CONNECTI ON WITH THE ASSESSEES BUSINESS OR NOT. 6.4. THE LAST QUESTION THAT NEEDS TO BE ANSWERED IS AS TO WHETHER THE NOTIFICATION APPROVING IIT, MADRAS AS AN APPROVED INSTITUTION FOR THE PURP OSE OF SEC.35(1)(II) OF THE ACT IS NO LONGER VALID. IT IS NO DOUBT TRUE AS POINTED OUT BY THE LE ARNED DR THAT ERSTWHILE SEC.35 OF THE ACT WAS DELETED BY SEC. 10 OF THE DIRECT TAX LAWS (AMENDMEN T) ACT, 1987 (ACT 4 OF 1988). THE 8 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 NOTIFICATION DATED 10.12.1973 (NOTIFICATION:P S.O.2 87) APPROVING OF IIT, MADRAS FOR THE PURPOSE OF SEC.35(1)(II) OF THE ACT WAS ISSUED UNDE R THE ERSTWHILE SECTION 35(1)(II). IT IS ALSO TRUE THAT THERE IS NO OTHER NOTIFICATION AFTER 1973 NOTIFYING IIT, MADRAS AS AN APPROVED INSTITUTION FOR THE PURPOSE OF SEC.35(1)(II) OF THE ACT. HOWEVER BY SEC.95(2)(E) OF THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989 (ACT 3 OF 1989), ERS TWHILE SEC.35 WHICH WAS DELETED BY SEC.10 OF THE DIRECT TAX LAWS (AMENDMENT ACT, 1987 (ACT 4 OF 1988), HAS BEEN RESTORED. THUS THE ERSTWHILE SEC.35 OF THE ACT GOT REVIVED AND REM AINED IN SUSPENDED ANIMATION FOR A SHORT PERIOD. SINCE THE ERSTWHILE SEC.35 OF THE ACT HAS A LWAYS BEEN PART OF THE ACT, THE NOTIFICATION DATED 10.12.1973 NOTIFYING IIT, MADRAS AS AN APPROV ED INSTITUTION FOR THE PURPOSE OF SEC.35(1)(II) OF THE ACT WAS VALID AT ALL POINT OF TIME. THEREFORE THE OBJECTION OF THE LEARNED DR IN THIS REGARD IS NOT ACCEPTED. WE ALSO FIND FOR CE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NOWHERE IT IS EXPRESSLY PROVI DED THAT APPROVAL OF IIT, MADRAS FOR THE PURPOSE OF SEC.35(1)(II) OF THE ACT WILL NO LONGER HOLD GOOD. SEC.24 OF THE GENERAL CLAUSE ACT, 1897 REFERS TO REPEAL OF AN ACT AND RE-ENACTMENT WI TH OR WITHOUT MODIFICATION. PROVISIONS OF SEC.24 OF THE GENERAL CLAUSES ACT, 1897 ARE APPLICA BLE EVEN WHEN THERE IS A STATUTORY AMENDMENT WITHOUT THERE BEING A REPEAL OF AN ENACTM ENT AND RE-ENACTMENT IN PLACE OF REPEALED LAW AND THE RELIANCE PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PARLE B ISCUITS (P) LTD. VS. STATE OF BIHAR 2005 (192) E.L.T 23 (SC) FOR THE ABOVE PROPOSITION, IN O UR VIEW, IS ACCEPTABLE AND THE SAID STAND CLEARLY SUPPORTS THE PLEA OF THE ASSESSEE. THE SUBM ISSIONS OF THE LEARNED DR IN THIS REGARD ARE THEREFORE NOT ACCEPTED. SINCE BOTH ISSUES RAISED IN THE GROUNDS ARE ADDRESS ED IN DETAIL BY THE TRIBUNAL AND IS COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES O WN CASE AND SINCE THERE IS NO CHANGE IN FACTS OR LAW HAS BEEN BROUGHT OUT BY THE LD. DR, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND HENCE, THE SAME IS HEREBY UPHELD. THIS GROUND OF APPEAL OF REVENUE IS, THEREFORE, DISMISSED. 15. GROUND NO. 4 OF REVENUES APPEAL IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE MADE U/S. 14A READ WITH RULE 8D OF THE I. T. RULES, 1962 AND IN NOT CONSIDERING THE SAME AT THE TIME OF COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. 16. BRIEF FACTS AS NOTED BY THE AO FROM A PERUSAL O F P&L ACCOUNT THAT THE ASSESSEE RECEIVED DIVIDEND OF RS.57,840/- AND THE SAME WAS C LAIMED EXEMPT U/S. 10(34) OF THE ACT. ACCORDING TO AO, AS PER PROVISION OF SECTION 14A OF THE ACT, EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME IS NOT ALLOWABLE EXPENDITURE. ON BEING ASKED AS TO WHY THE EXPENDITU RE IN RELATION TO SUCH INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME , WOULD NOT BE DISALLOWED AND THE REPLY GIVEN BY THE ASSESSEE ON THAT THE AO REJECTED THE CLAIM OF ASSES SEE BY STATING AS UNDER: THE SUBMISSION OF THE ASSESSEE COMPANY HAS BEEN C ONSIDERED CAREFULLY. THE STRATEGIC REGARDING PURCHASE, SALES, RETENTION OF INVESTMENTS ETC. IS VERY VITAL FOR A COMPANY AND 9 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 REQUIRES THE INVOLVEMENT OF THE TOP MANAGEMENT BECA USE OVER AND ABOVE THE EXPERTISE AND BUSINESS PRUDENCE, IT ALSO DEMANDS THE AUTHORITY TO DECIDE. HENCE, EXPENDITURE IS ALWAYS INCURRED, EVEN IF IT IS NOT TANGIBLE, FOR THE INVES TMENT BY WAY OF ADMINISTRATIVE & OTHER EXPENSES. IN OTHER WORDS, A PORTION OF THE FINANCI AL & ADMINISTRATIVE EXPENSES ARE ALWAYS INTRINSICALLY RELATED TO SUCH INVESTMENTS. THUS, T HE ASSESSEES CLAIM THAT NO EXPENDITURE WAS INCURRED IN CONNECTION WITH EARNING OF DIVIDEND AND HENCE NO DISALLOWANCE IS CALLED FOR U/S. 14A, IS SQUARELY REJECTED. 17. AGGRIEVED AGAINST THE ACTION OF AO, ASSESSEE PR EFERRED AN APPEAL BEFORE THE LD. CIT(A) AND IT WAS ALTERNATELY SUBMITTED BEFORE THE CIT(A), THAT THOUGH THE ASSESSEE HAS NOT INCURRED ANY DIRECT OR INDIRECT EXPENDITURE TO EARN TAX FREE DIVIDEND INCOME, THE AFORESAID ISSUE OF APPLICABILITY OF SECTION 14A IS DULY COVER ED BY THE ORDER DT 29/11/2013 OF LD. CIT (A) IN APPEAL NO.242/CC/-VIICIT(A)C-II11- 12, IN AS SESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09, WHEREIN, THE LD. CIT (A) FOLLOWED THE DECISION OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD IN ITA NO. 1331/KOL/2011 AND HELD THAT DISALLOWANCE UNDER RULE 8D(III) SHOULD BE RESTRICTED TO 0.5% OF ONLY THOSE INVESTME NTS WHICH YIELDED TAX FREE INCOME DURING THE RELEVANT PREVIOUS YEAR. THEREFORE, ACCORDING T O THE ASSESSEE, THE ASSESSING OFFICER WHILE COMPUTING THE DISALLOWANCE UNDER RULE 8D (III ) OUGHT TO HAVE CONSIDERED ONLY THOSE INVESTMENTS THAT HAVE YIELDED TAX FREE DIVIDEND INC OME DURING THE RELEVANT YEAR. AND IT WAS BROUGHT TO THE NOTICE OF CIT(A) THAT DEPARTMENT HAS NOT PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL AND HENCE, THE ISSUE IS FINALLY SETTLED IN FAVOUR OF THE ASSESSEE COMPANY. AND IT WAS SUBMITTED THAT IF THE SAID ORDER OF TRIBUNAL IS FOLLOWED AND RULE 8D(III) IS APPLIED ON THE INVESTMENTS WHICH YIELDED TAX FREE INCOME DURIN G THE RELEVANT PREVIOUS YEAR DISALLOWANCE UNDER RULE 8D(III) SHOULD BE OF RS. 38 ,322/- ONLY. AFTER HEARING THE AFORESAID CONTENTIONS OF ASSESSEE, THE LD. CIT(A) PARTLY ALLO WED THE ASSESSEES GROUND OF APPEAL BY OBSERVING AS UNDER: 6. APPEAL ON GROUNDS NO. 7 AND 8 ARE AGAINST DISAL LOWANCE OF RS.75,039/- MADE UNDER SECTION 14A READ WITH RULE 8D. THE AO HAS MADE THI S DISALLOWANCE CALCULATING 0.5% OF AVERAGE TOTAL INVESTMENT MADE BY THE ASSESSEE. ON SIMILAR DISALLOWANCE IN ASSESSMENT YEAR 2008-09, MY PREDECESSOR HAS FOLLOWED AND APPLIED TH E RATIO DECIDED BY THE KOLKATA TRIBUNAL IN THE CASE OF REI AGRO LTD. IN ITA NO. 1331/KOL/20 11 DATED 19.06.2013. I FIND NO REASON TO INTERFERE IN THE DETAILED FINDING OF MY PREDECESSOR ON THIS ISSUE. THE AR HAS SUBMITTED A FRESH CALCULATION AS PER THE RATIO DECIDED BY THE HONBLE KOLKATA TRIBUNAL IN REI AGRO LTD. CASE (SUPRA). AS PER THIS CALCULATION AND AMOUNT EQUAL T O 0.5% OF THE AVERAGE VALUE OF INVESTMENT EARNING TAX FREE INCOME (NOT INCLUDED IN THE TOTAL INCOME) IS RS.38,322/-. ACCORDINGLY ADDITION MADE BY THE AO ON THIS GROUND IS RESTRICTED TO RS.3 8,322/-. THUS ASSESSEES APPEAL ON THIS GROUND IS PARTLY ALLOWED. 10 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 18. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF ITAT, KOLKATA BENCHES BY CONSISTENTLY FOLLOWING THE DICTUM OF LAW LAID IN REI AGRO, SUPRA, THE ACTION OF LD. CIT(A) IS CONFIRMED. 19. THE NEXT ISSUE OF REVENUES APPEAL IS AGAINST T HE ACTION OF LD. CIT(A) IN RESPECT OF CALCULATION OF BOOK PROFIT U/S. 115JB OF THE ACT. THE AO ADDED RS.75,039/- TO THE NET PROFIT TO COMPUTE BOOK PROFIT U/S. 115JB OF THE ACT TOWARDS NOTIONAL EXPENDITURE INCURRED TO EARN EXEMPTED INCOME. ON APPEAL, THE LD. CIT(A) WHILE GIVING RELIEF TO THE ASSESSEE HAS HELD AS UNDER: 8. APPEAL ON GROUND NO. 11 IS AGAINST DISALLOWANC E OF RS.75,039/- UNDER RULE 8D READ WITH SECTION 14A OF THE I. T. ACT, 1961 ON INCOME CALCUL ATED U/S. 115JB. THE JURISDICTIONAL KOLKATA TRIBUNAL HAS DECIDED IN MANY CASES THAT DISALLOWANC E ON THE SECTION 14A READ WITH RULE 8D IS TO BE MADE ON INCOME TO BE CALCULATED UNDER CHAPTER IV OF THE I. T. ACT. AS SECTION 115JB COMES IN CHAPTER XIIB, THEREFORE DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14A CANNOT BE MADE THEREON. I THINK FROM THE PLAN READING OF SEC TION 14A IT BECOMES VERY OBVIOUS. ACCORDINGLY FOLLOWING THE RATIO DECIDED BY THE JURI SDICTIONAL KOLKATA TRIBUNAL ON THIS ISSUE, ASSESSEES APPEAL ON GROUND NO. 11 IS ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 20. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT IN RESPECT OF DISALLOWANCE OF S EC. 14A APPLIED TO SEC. 115JB OF THE ACT, THE DISALLOWANCE COMPUTED BY RULE 8D CANNOT BE IMPO RTED TO INCOME COMPUTED U/S. 115JB OF THE ACT. THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING EXEMPT INCOME CAN BE ADDED TO WHILE COMPUTING SECTION115JB INCOME. S UBJECT TO THIS MODIFICATION THE ORDER OF THE LD. CIT(A) IS CONFIRMED. THIS GROUND OF APPE AL OF REVENUE IS, THEREFORE, PARTLY ALLOWED. 21. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 18/07/20 18 SD/- SD/- (WASEEM AHMED) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : `18TH JULY, 2018 JD.(SR.P.S.) 11 ITA NO.519 & 520/KOL/2016 J. K. TYRE & INDUSTRIES LTD., AY: 2009-10 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE-7(1), KOLKATA. 2. 3. 4. 5. 6. RESPONDENT M/S. J. K. TYRE & INDUSTRIES LTD., 7, COUNCIL HOUSE STREET, KOLKATA-700 001. CIT(A)-20, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY