2017 (10) TMI 1014
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....t income in the relevant previous year. The assessee appears to have suo motto disallowed a sum of Rs. 1,00,21,247/- during the course of scrutiny. It thereafter contested Assessing Officer's show cause notice seeking to invoke Section 14A r.w. Rule 8D inter alia by pleading that there has to be an express satisfaction u/s.14A(2) qua its accounts establishing a direct nexus with the exempt income in question, its interest free funds were much more than tax free investments and that the relevant facts involved in deriving the impugned exempt income did not warrant any such disallowance. The Assessing Officer however rejected all these contentions in his assessment order. He observed first of all that the assessee has not discharged its initial onus of proving the above direct nexus between tax free investments vis-àvis the non interest bearing funds. He then invoked proportionate interest and administrative disallowance under Rule 8D (2) (ii & iii) to the tune of Rs. 37,11,56,870/- and Rs. 3,33,94,517/-; respectively totaling to Rs. 40,45,51,387/- as reduced by the above suo motu disallowance of Rs. 1,00,21,247/-; coming to Rs. 39,45,30,140/- under challenge being made in ass....
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....usiness. Therefore the decisions referred by the appellant in this regard are not applicable to the banking company whose principal business is of borrowing and lending/investments. Coming to the method of computation of disallowance under section 14 A, assessing officer disallowed expenses relatable to exempt income as per rule 3D which is mandatory from assessment year 2008-09. For interest, proportionate expense is disallowable whereas for other expenses 5% of average investment value is disallowable. Considering the fact that appellant claimed huge administrative and other expenses, the disallowance of administrative expenses made by the assessing officer @.5% of investment resulting in exempt income is as per the formula given in rule 3D which is mandatory for making disallowance. In view of this the addition @ 5% of investment resulting in exempt income made by the assessing officer is confirmed. Since rule 8D is mandatory from this year, disallowance of administrative and other expenses relating to exempt income are to be computed as per this. The basis of disallowance in earlier years cannot be applied this year since rule 8D is mandatory and has to be applied for this y....
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....sessment year deleting proportionate interest disallowance on the ground that assessee's interest free funds exceed its tax free investments amounting to Rs. 651crores. It then confirms latter limb of administrative disallowance amounting to Rs. 63.84lacs. We take cue therefrom to notice that assessee's tax free investments in the impugned assessment year read a figure of Rs. 684crores as against interest free funds in the nature of share capital and reserves amounting to Rs. 10,214crores. We therefore find no reason to concur with the above proportionate interest disallowance of Rs. 37,11,56,870/-. We now proceed to deal with administrative expenditure disallowance of Rs. 3,33,94,517/-. It is no more an issue that the above co-ordinate bench had upheld the same in preceding assessment year. We therefore adopt consistency to affirm this latter disallowance of administrative expenditure. This first substantive ground is taken as partly accepted. 5. The assessee's second substantive ground pleads that both the lower authorities have erred in law as well as on facts in adding speculative gains of Rs. 2,64,27,796/- amortized as per RBI guidelines as well as in disallowing such related....
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....50.09 Net gain/ loss over net book value 2.93 7.3 The assessee was asked to explain where the above amount of Rs. 2.93 crores has been offered as income in its annual accounts. In this regard, the assessee contended as under: GAIN ON SECURITIZATION OF ASSET OF Rs. 2.93 CRORES AS PER PARA 5.1.15 OF THE AUDITED ACCOUNTS During the hearing held on 10.11.2009, you have requested us to provide explanation that where the net gain of Rs. 2.93 on securitization transactions, as per para 5.1.15 (Page No. 60 of the annual report), has been accounted in the Profit and Loss. In this regard we submit as follows: For the year under consideration, the Bank has recognized income of Rs. 2,00,28,097 under the head Other Income, (Schedule 14, sub-clause, VII, miscellaneous income) and Rs. 93,13,051 was shown under the head other liabilities and provisions (Schedule 5, sub clause VII, others including provisions). The method of accounting followed in this regard is as per the RBI guidelines. In terms of the RBI Notification, a copy of which is enclosed for your reference, any loss arising on account of the sale pursuant to securitization proposal should be accounted and charged to the....
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....09 ITR 335, Hon'ble Allahabad High Court in the case of Kailash Auto Finance Ltd. 320 ITR 394 and also Hon'ble High Court of Delhi in the case of Elgi Finance Ltd. 293 ITR 357. 28. In our considered opinion, the amortization merely represents a timing difference and since the bank is consistently making profits and paying tax at the highest rate without claiming any tax holiday benefit, it can be safely concluded that the method followed is revenue neutral. We draw support from the decision of the Hon'ble High Court of Bombay in the case of Nagri Mills Co. Ltd. 33 ITR 681. 29. Considering the facts in totality in the light of the judicial decisions referred to hereinabove, we do not find any merit in the findings of the ld. CIT(A). We accordingly set aside the findings of the ld. CIT(A) and direct the A.O to delete the addition of Rs. 93.13 lacs. Ground no. 3 is accordingly allowed. 20. As no distinguishing decision has been brought to our notice, respectfully following the findings of the Co-ordinate Bench (supra), we direct the A.O. to delete the impugned disallowance/additions. Ground no. 3 is accordingly allowed." 6. We draw support from above co-ordinate bench findin....
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....ground for the first time as under. "38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. vs. Commissioner of Income-tax (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. vs. Commissioner of Income-tax (supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first ti....