Bosch Chassis Systems India Pvt Ltd Vs ACIT (ITAT Pune)
Summary: The Pune Bench of the Income Tax Appellate Tribunal disposed of the assessee’s appeals for assessment years 2016-17 and 2017-18 through a common order. For AY 2016-17, the Tribunal held that the amendment to Rule 8D effective from 02.06.2016 was prospective and therefore could not apply to AY 2016-17. Following the principles recognised in CIT v. S.A. Wahab and the Supreme Court’s decision in CIT v. Essar Teleholdings Ltd., the Tribunal directed the Assessing Officer to compute the Section 14A disallowance using the pre-amendment 0.5% methodology and partly allowed the ground.
The Tribunal also held, following the Special Bench decision in Vireet Investment Pvt. Ltd. and the Mumbai Tribunal decision in Reliance Natural Resources Ltd., that a Section 14A read with Rule 8D disallowance could not be added while computing book profits under Section 115JB; the corresponding ground for AY 2016-17 was therefore allowed. For AY 2017-18, the Tribunal admitted additional legal grounds because they involved matters arising from facts already on record, relying upon National Thermal Power Co. Ltd. v. CIT and Jute Corporation of India Ltd. v. CIT. On the Section 14A issue, it held that only investments which actually yielded exempt income during the relevant year should be considered for computing the average investment under Rule 8D(2)(iii), following ACIT v. Vireet Investment Pvt. Ltd., and directed the Assessing Officer accordingly. The Tribunal again allowed the grounds concerning computation of book profits under Section 115JB.
