Intas Biopharmaceuticals Ltd. Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that addition on account of section 14A of the Income Tax Act while computing books profit under section 115JB of the Income Tax Act is not justifiable. Accordingly, addition u/s. 14A deleted and appeal of assessee allowed.
Facts- The assessee company is engaged in the business of manufacturing and marketing of Bio-Pharmaceutical Products. During scrutiny assessment, AO observed that as per the Circular No.5/2014 dated 11.02.2014, even where taxpayer in a particular year has not earned any exempt income, the provisions of Rule 8D r.w.s. 14A of the Act are applicable. The Assessing Officer observed that the assessee has given only general explanation that it has not incurred any expenses related to exempt income. The assessee has not given/submitted any proof of specific explanation other than this and, therefore, AO held that the assessee failed to prove that no interest-bearing funds were diverted for making any investment in the shares on which the income is exempt and, therefore, the disallowance u/s. 14A read with rule 8D was made to the extent of Rs.28,36,029/-.
AO further made observation that the assessee claimed deduction of Rs.10,98,75,057/- under Section 35(2AB) of the Act alongwith certificate in support of claim of deduction under Section 35(2AB) of the Act. In response to the query, the assessee furnished Form 3CL report issued by the Department of Scientific and Industrial Research (DSIR) vide letter dated 15.12.2014 wherein the details of expenditure incurred by the assessee and approved by the DSIR was given. The Assessing Officer made disallowance of Rs.87,66,984/- being at 200% of the amount of Rs.43,83,492/- which was not approved by the DSIR.
