S. 115JA r.w. S. 14A — Provisions of Ss.(2) and Ss.(3) of S. 14A cannot be imported into clause (f) of Explanation to S. 115JA while computing adjusted book profit.

Goetze (India) Ltd. v. CIT

A.Y. : 2000-01. Dated : 20-5-2009

S. 115JA r.w. S. 14A — Provisions of Ss.(2) and Ss.(3) of
S. 14A cannot be imported into clause (f) of Explanation to S. 115JA while
computing adjusted book profit.

For the relevant assessments year, the CIT, acting u/s.263,
estimated certain expenditure for earning dividend income and added said
amount to book profit of assessee for purpose of computing adjusted book
profits u/s.115JA.

The Tribunal set aside the CIT’s order. The Tribunal noted
as under :

(1) Under the provision contained in S. 14A, no deduction
is to be allowed in respect of expenditure incurred by the assessee in
relation to income which does not form part of the total income under this
Act.

(2) Under clause (f) of the Explanation to S. 115JA, the
amount of expenditure relatable to any income to which any of the provisions
of Chapter III apply has to be added to the book profit.

(3) Since the issue of expenditure related to divided
income, which is a matter falling under Chapter III, it was clear on perusal
of these two provisions that they are similar in nature. Clause (f) uses the
words ‘expenditure relatable to any
income’ while S. 14A uses the words ‘expenditure incurred by the assessee in
relation to income’. These words have the same meaning.

(4) Further, S. 14A contains two more sub-sections,
Ss.(2) and Ss.(3), which do not find a place in clause (f).

(5) Therefore, insofar as computation of adjusted book
profit is concerned, provisions of Ss.(2) and Ss.(3) of S. 14A cannot be
imported into clause (f) of the Explanation to S. 115JA.