Section 14A of the Income-tax Act, 1961—Expenditure incurred in relation to income not forming part of total income - Disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB.

Facts: The issue raised by the Revenue is that CIT (A) erred in deleting the addition made by AO under the provisions of section 14A read with rule 8D under normal computation of income and MAT computation of income under section 115JB.

Held, that disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB while determining the book profit. In holding so, we draw support from the judgment of Hon'ble Calcutta High Court in the case of CIT v. Jayshree Tea Industries Ltd. wherein it was held that disallowance regarding exempted income needs to be made as per the clause (f) to Explanation-1 of Sec. 115JB independently.

Disallowance of the expenses under section 14A read with rule 8D cannot be made in absence of exempt income. Hence we do not find any reason to interfere in the order of the learned CIT (A). - DY. CIT V/s ASIAN GRANTIO INDIA LTD. - [2020] 182 ITD 441 (ITAT-AHMEDABAD)