ACIT Vs Vireet Investment Pvt. Ltd. (ITAT Delhi)
The case involved an appeal by the ACIT and cross-objections by Vireet Investment Pvt. Ltd. concerning disallowance under Section 14A and its applicability to Minimum Alternate Tax (MAT) under Section 115JB of the Income Tax Act, 1961. The ITAT Special Bench was constituted to address whether expenses incurred to earn exempt income under Section 14A should be added back while computing book profits. The assessee, engaged in finance and investment activities, reported a taxable income of ₹6.17 crores but paid taxes under MAT provisions based on book profits of ₹32.18 crores. The Assessing Officer (AO) disallowed ₹2.82 crores under Section 14A, which was also added while computing book profits under Section 115JB. Additionally, the AO made adjustments related to dividend stripping under Section 94(7) and the non-charging of interest on loans.
The ITAT ruled that disallowance under Section 14A could not be added back while computing book profits under Section 115JB. The Tribunal also addressed other grounds, including the verification of revised computation under Section 94(7) and an addition of ₹4.02 crores for interest-free loans, where it found no basis for additions since the assessee had not claimed any interest expenses. The matter was remanded to the AO for recomputation of the disallowance under Section 14A. Ultimately, the ITAT partly allowed the revenue’s appeal and allowed the assessee’s cross-objection for statistical purposes.
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