Bennett Coleman & Co. Ltd. Vs DCIT (ITAT Mumbai)
Indexation Allowed in MAT Book Profits -No Extra 14A Disallowance When Suo-Moto Exceeds Exempt Income – Mumbai ITAT
The appeal was filed by Bennett Coleman & Co. Ltd. against the order of CIT(A), NFAC, Delhi dated 27.03.2024. The primary issue concerned disallowance u/s 14A r.w.r. 8D. Assessee earned exempt dividend income of Rs.2.16 crore & had suo-moto disallowed Rs.8.92 crore in computation. AO, without pointing out any defect in the working, invoked Rule 8D & enhanced disallowance to Rs.15.18 crore, thereby making an additional disallowance of Rs.6.26 crore. CIT(A) confirmed.
Tribunal observed that since suo-moto disallowance exceeded exempt income & AO had not demonstrated any error, there was no justification for enhancement. The additional disallowance of Rs.6.26 crore was directed to be deleted.
On MAT computation u/s 115JB, AO added Rs.15.18 crore u/s 14A. Tribunal followed Special Bench ruling in ACIT Vs Vireet Investment Pvt. Ltd. (58 ITR (T) 313) holding that disallowance u/s 14A cannot be imported into clause (f) of Explanation 1 to s.115JB. Accordingly, MAT addition was deleted.
Assessee also contested denial of deduction of Rs.20.02 crore being difference between book gains & indexed capital gains on STT-paid securities while computing book profit u/s 115JB. AO refused indexation benefit. Tribunal noted that Karnataka HC in Best Trading & Agencies Ltd. Vs CIT [2020] 119 taxmann.com 129, as well as ITAT in Thomas Cook India Ltd. & KSIIDC Ltd., held that indexed cost of acquisition is allowable in computing book profit u/s 115JB. Relying on these precedents, Tribunal directed AO to grant indexation benefit. Accordingly, Assessee’s appeal was partly allowed.
