TaxTMI 
TaxTMI 
2018 (8) TMI 1882
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....tion, the assessee bank filed the Cross Objection on the same grounds on which the intimation under Rule 27 of the ITAT Rules was given. Considering the reasons put-forth fact that contentions raised in the Cross Objection are only legal in nature, we deem it fit to condone the delay and admit the assessee's Cross Objection. 3. Ground no. 1 of the department's appeal is against the action of the Ld. CIT(A) in deleting the disallowance of Rs. 66,80,772/- made u/s. 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") without giving the AO proper opportunity of being heard in terms of Rule 46A of the Income Tax Rules, 1962 (hereinafter referred to as the "Rules"). 4. Briefly stated facts of the case are that in the tax audit report issued on 08.03.2012, the auditor had reported that a sum of Rs. 73,32,304/- u/s. 40(a)(ia) of the Act on account of non-deduction of TDS. In the return of income filed u/s. 139 of the Act, the assessee had, however, disallowed expenditure of only Rs. 6,50,532/- u/s. 40(a)(ia) of the Act. When confronted by the AO to explain the reason for not disallowing the differential figure of Rs. 66,80,772/-, the assessee submitted that the....
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....supporting evidences in form of challan/Forms have not been provided in this matter. In this view of the matter and to meet the ends of justice, I am of the considered opinion that the Ld. AO may verify the issue at hand, and seek the relevant supporting evidences in respect of the assessee's claim of Rs. 66,80,772/-, and if the AO finds that the impugned taxes thereon is deposited before the due date of filing of income tax return or that the payees have furnished form 15G/15H to the assessee, then such amounts shall be deleted from the additional and remaining amounts, if any, for which relevant supporting are not furnished may be decided afresh as per law. Needless to say, the Ld. AO shall allow sufficient opportunity of being heard to assessee in this regard. This ground of assessee's appeal is accordingly allowed for statistical purposes as indicated above." Aggrieved by the order of the Ld. CIT(A) the revenue is now in appeal before us. 5. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. CIT(A) has not deleted the disallowance made by the AO, therefore, the grounds of appeal raised by the revenue it....
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....me derived by it which is exempt from tax was incidental to the principal banking business of the assessee. The AO, however, disregarded the contention put-forth and computed the disallowance u/s. 14A in terms of Rule 8D(2)(ii) and (iii) of the Rules at Rs. 36,24,11,122/- and Rs. 2,90,37,490/- respectively. Aggrieved by the AO's order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the disallowance made on account of proportionate interest of Rs. 36,24,18,122/- under Rule 8D(2)(ii) but confirmed the disallowance of Rs. 2,90,37,490/- made by the under Rule 8D(2)(iii). Aggrieved by the said order, the revenue is in appeal before us and the assessee has filed the Cross Objection before us. 8. We have heard the rival submissions and perused the material placed on record. The Ld. DR submitted that merely because the assessee was a dealer in shares, it could not take a stand that expenditure incurred in connection with earning of tax free income was not disallowable u/s 14A of the Act. He submitted that the Hon'ble Supreme Court in its recent judgment in the case of Maxopp Investment Ltd Vs CIT (402 ITR 640) had considered the issue of disallowability of....
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....anath Pasari Vs Asst. CIT (ITA No. 1682/Kol/2011) (ITAT Kol) 10. In so far as disallowance made by the AO under the third limb of Rule 8D(2) which was upheld by the Ld. CIT(A) and objected by the assessee through CO, the Ld. AR submitted that the assessee had made investment in shares in the course of carrying on its principal business of banking. He submitted that in order to conform with RBI regulations concerning maintaining CRR & SLR, the assessee is required to hold certain securities and also in the course of carrying on banking business the shares of bodies corporate are required to be held. Drawing attention to the judgment of the Hon'ble Supreme Court in the assessee's own case reported in 240 ITR 355, the Ld. AR submitted that although in the assessee's Balance Sheet, the shares & securities were declared under the head "Investments" yet the true character of such holding was considered by the Supreme Court to be on "trading" account. Accordingly the Ld. AR submitted that any gain or loss which the assessee earned from purchase and sale of shares & securities was always assessed by the tax authorities under the head "Profits & Gains of Business". In the course of carryi....
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....nterest gain of Rs. 3902.10 crores. The Hon'ble Gujarat High Court in its recent judgment in the case of Pr. CIT Vs Nirma Credit & Capital Pvt Ltd (supra) has held that the expression used in Rule 8D(2)(ii) is "interest expenditure" and not "interest paid" and accordingly the expenditure in this context must mean interest paid minus taxable interest earned. Applying the ratio laid down in this judgment to the facts of the present case, we find no infirmity in the order of the Ld. CIT(Appeals) deleting the interest disallowance made under Rule 8D(2)(ii). 13. In so far as disallowance of Rs. 2,90,37,490/- under Rule 8D(2)(iii) is concerned, we find that before the lower authorities the assessee had raised the plea that no disallowance u/s 14A was warranted since the assessee was a dealer in shares although in its Balance Sheet, shares were disclosed under the head "Investments". We find that the Hon'ble Supreme Court in its recent judgment dated 12.02.2018 in the case of Maxopp Investment Ltd Vs CIT (supra) did not uphold this line of argument and held that even in the case of a dealer in shares, earning dividend income from its stock-in-trade, may expose his to the rigors of Secti....
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....l is therefore dismissed and the grounds of assessee's CO are allowed. 14. Ground No. 3 of the appeal of the Revenue is against the action of the Ld. CIT(A) in directing the AO to re-compute and allow the benefit of unabsorbed losses and depreciation brought forward from earlier years. At the onset the Ld. DR appearing on behalf of the Revenue fairly stated that the directions given by the Ld. CIT(A) were only consequential in nature and in accordance with the provisions of law. We also do not find any infirmity in the order of the Ld. CIT(A) in this regard. Accordingly Ground No. 3 is dismissed. 15. Ground Nos. 4 & 5 of the appeal are against the action of the Ld. CIT(A) holding that the provisions of Section 115JB are not applicable to the assessee Bank. After hearing the rival submissions, we find that the Ld. CIT(A) has followed the decision of this Tribunal which decided this identical question in favour of assessee in its own case for AY 2002-03 in ITA No.1768/Kol/2009 dated 27.1.2015, wherein the Tribunal held as follows : "7.5. In view of the above, we hold that in view of the legislative change brought about by the introduction of Explanation 3 in section 115JB of th....