TaxTMI 
TaxTMI 
2018 (12) TMI 50
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....ncome. It is prayed that the additions being unwarranted be deleted. 3. That on the facts and circumstances of the case and provisions of the law, the Ld.CIT(A) was not justified in not allowing the deduction towards leave encashment of Rs. 165,26,00,000/- claimed during the course of assessment proceedings. It is prayed to allow the deduction towards leave encashment. 4. That the above grounds of appeal are independent and without prejudice to one another. Your appellant craves leave to add, alter, amend or delete any of grounds of appeal at the time of hearing." ITA No.7106/Del/2017 "1. On the facts and under the circumstances of the case, the ld.CIT(A) has erred in law in deleting the penalty of Rs. 6,30,77,695/- u/s 271(1)(c ) with regard to the addition made u/s 14A of the Act read with rule 8D(iii) of Rs. 19,44,224/- which was also sustained by Ld.CIT(A). 2. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal." 2. Brief facts of the case are as under: ITA No. 1519/Del/2016 Assessee filed its return of income on 28/09/12 declaring total income of....
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.... 6.1. At the outset, Ld.Counsel submitted that, this issue stands squarely covered by following observation by Hon'ble Supreme Court in case of Maxopp Investments vs CIT reported in (2018) 91 taxman.com 154, in favour of assessee: "36. There is yet another aspect which still needs to be looked into. What happens when the shares are held as 'stock-in-trade' and not as ' investment, particularly, by the banks? On this specific aspect, CBDT has issued circular No. 18/2015 dated November 02, 2015. 37. This Circular has already been reproduced in Para 19 above. This Circular takes note of the judgment of this Court in Nawanshahar case wherein it is held that investment made by a banking concern are part of the business or banking. Therefore, the income arises from such investment is attributable to business of banking falling under the head 'profits and gains of business and profession'. On that basis, the Circular contains the decision of the Board that no appeal would be filed on this ground by the officers of the Department and if the appeals are already filed, they should be withdrawn. A reading of this circular would make i....
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....lfort Share & Stock Brokers (P.) Ltd. case. Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be apportioned. 40. We note from the facts in the State Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT A) disallowed the entire deduction of expenditure. That view of the CIT A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. It is to be kept in mind that in those cases where shares are held as 'stock-in-trade', it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes i....
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.... Court in the case of Maxxop Investment vs CIT (supra), we allow this ground raised by assessee and hold that these were not investments made by assessee in order to fall within the ambit of Rule 8D (iii) of Income tax Rules 1963. 8.1. Accordingly the ground raised by assessee stands allowed. 9. Ground No. 3 is in respect of claim of leave encashment claimed by assessee amounting to Rs. 165.26 crores during the year under consideration. 9.1. Ld.Counsel submitted that section 43B (f) of the Act do not cover any claim regarding leave encashment and therefore no disallowance could be made. He submitted that Hon'ble Calcutta High Court in case of Exide Industries Ltd vs. Union of India reported in 292 ITR 470 had struck down constitutional validity of section 43B (f) of the Act being arbitrary, unconstitutional and de hors the facts of decision in case of Bharat Earth Movers reported in 245 ITR 428. 9.2. On contrary, Ld.Sr.DR placed reliance upon orders passed by authorities below and submitted that, certain deductions could be allowed, only on actual payment. He placed reliance upon decision of coordinate Bench in the case of Nainital Almora Kshetriya Bank in ITA No. 4240/....