Bombay Oxygen Investments Ltd. Vs CIT (ITAT Mumbai)
ITAT Mumbai held that increasing book profits under section 115JB of the Income Tax Act on account of disallowance u/s. 14A read with rule 8D is not justifiable. Accordingly, appeal of the assessee allowed.
Facts- The assessee is engaged in manufacturing and trading of industrial gases such as oxygen, nitrogen and argon. Twin issues involved in respect of disallowance made under section 14A are towards disallowance made while computing assessed income under the normal provisions of the Act as well as adjustment made while computing book profit under section 115JB of the Income Tax Act. CIT(A) granted partial relief. Being aggrieved, the present appeal is filed.
Conclusion- Since no proper satisfaction has been recorded by the ld. Assessing Officer in terms of the provisions of section 14A(2) of the Act, “having regard to the accounts of the assessee”, about the correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income, we do not find any reason for upholding the disallowance made by the AO under section 14A read with Rule 8D. We delete the disallowance made by the ld. Assessing Officer and direct to adopt the suo moto disallowance made by the assessee under section 14A of the Act.
