TaxTMI 
TaxTMI 
2015 (9) TMI 1177
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....e A.O. to verify the same and consider the allowability of set off of loss on sale of such investment against other income. 3. The Ld.Commissioner of Income Tax-I, Baroda has further erred in law and in facts in holding that the expenditure incurred in relation to income required to be disallowed by the application of Rule 8D and directing the A.O. to verify and quantify such disallowance. 4. The appellant craves liberty to add, alter, amend, revise or substitute any of the ground(s) of appeal contained hereinabove. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 27/11/2009, thereby the Assessing Officer (AO in short) made disallowance of Rs. 62,500/- and computed taxable income at Rs. 12,14,779/- as against the total taxable income as per return of Rs. 11,52,279/-. Subsequently, the ld.CIT revised the assessment order by initiating the proceedings u/s.263 of the Act. The ld.CIT while framing the order u/s.263 of the Act, set aside the assessment order dated 27/11/2009 and directed to reasses....
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.... which does not form part of the total income and expenditure incurred by way of interest, etc. has to be disallowed as per Rule 8D of the IT Rules. The ld.Sr.counsel for the assessee submitted that on both the counts, it is misplaced and contrary to the settled position of law. He submitted that it was pointed out to the ld.CIT in the written submissions that the assessee is a Co-operative bank and is carrying on its activities as per various provisions of The Banking Regulation Act 1949 and RBI Act, Co-operative Society Act, etc. It was submitted that As per section 5(b) of the Banking Regulation Act, "banking means for the purpose of lending or investment, of deposit of money from the public, re-payable on demand or otherwise and withdrawal by cheques, drafts or otherwise". The ld.Sr.counsel for the assessee submitted that it was submitted before the ld.CIT that deposit into the government security is normal business activity of the assessee. Therefore, any loss occurred on the sale of such government security was a trading loss and this loss was rightly required to be set off against the business income. In support of this contention, he placed reliance on the decision of the T....
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.... had purchased 6.25% GOI 2018 security valued at Rs. 2 crores (2,00,000 units each of Rs. 100/-) on 18.04.2005. The same were sold on 10/07/2006 (i.e. after 1 year and 3 months) at Rs. 1,69,20,000/- and the loss of Rs. 30,80,000/- was debited to 'investment depreciation fund' in the balance-sheet and also reduced from the total business income. The ld.CIT was of the opinion that as per section 70 of the Act, the loss on account of sale of Government securities is "Long Term Capital Loss" and is required to be set off against any capital gains only and not from "other heads of income". Another ground for initiating proceedings was that on verification of the profit and loss account for the year 2006-07 relevant to AY 2007-08 and statement of computation of income, it is seen that assessee had claimed exempted interest income and dividend income of Rs. 15,97,250/- (Rs.4,93,250/- + Rs. 11,04,000/-). Scrutiny of balance-sheet as on 31/03/2007 revealed that there were "Deposits" worth Rs. 34,48,33,450/- (current account, saving account and fixed deposit account) on which assessee has paid interest of Rs. 2,75,55,485/- (as per P&L A/c.). Further, verification revealed that there was inve....
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.... Deputy Commissioner of Income Tax and another reported in (2010) 328 ITR 81(Bom), where Bombay High Court has quashed the order and judgement of Special Bench rendered in M/s.Daga Capital(supra), this Court in case of Commissioner of Income-tax IV v. Sintex Industries Ltd. reported in (2013) 33 taxmann.com 240(Gujarat), was considering the issue pertaining to disallowance of part of remuneration paid to the Directors. The Assessing Officer noted the fact that the assessee had earned exempt income under section 10(35) of the Act arising out of Mutual Fund Investment and, therefore, heldthe opinion that the expenditure incurred for earning exempt income should be disallowed under section 14A of the Act and when no bifurcation was made by the assessee, the Assessing Officer disallowed the total expenditure under such head and added back the entire sum being the amount of salary of the Directors to the income of the assessee. Both the tribunal and the Commissioner did not approve such decision, relying on judgement of Bombay High Court in case of Godrej & Boyce Mfg. Co. Ltd (supra) by holding that in absence of Rule 8D of the Income-tax Rules, no disallowance can be made under section....