TaxTMI 
TaxTMI 
2020 (2) TMI 948
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....0/- which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, the Ld. C.I.T(A) was wrong in dittoing the order of the A.O. and confirming the disallowance of Rs. 16,85,08,240/- u/s 40(a)(ia) for non-deposit of TDS, which is completely arbitrary, unjustified and illegal. 4. For that on the facts of the case, the Ld. CIT(A) was wrong in disallowance of u/s. 40(a)(ia) amounting to Rs. 16,85,08,240/- as the expenses were paid during the year under section 40(a)(ia), although section 40(a)(ia) is only applicable to amount payable, therefore, the whole addition is completely arbitrary, unjustified and illegal. 5. For that on the facts of the case, the Ld. CIT(A) was wrong in restricting the disallowance u/s. 14A amounting to Rs. 1.58 crores by invoking Rule 8D(2)(iii), but shares are held as stock-in-trade to the assessee bank, therefore, the disallowance of Rs. 1.58 crores u/s. 14A is completely arbitrary, unjustified and illegal. 6. For that the charging interest u/s 234D is mechanically wrong and illegal. 7. For that the assessee reserves the right to adduce any further ground or grounds, evidence or evid....
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....e at a time to maintain old contacts and also to make new contacts. The main purpose of the organization is to induce its officers to attend such places for maintaining and making contacts for the benefit of business. Even if some personal advantage is obtained by officers, it will be in nature of maintaining good relations with officers and in nature of staff welfare expenses. Therefore, the expenses are incurred wholly and exclusively for the purpose of business. By obtaining membership for a period of more than one year, there may be an advantage which is in the field of revenue benefit and not for obtaining any capital asset or obtaining benefit in capital field. Therefore, such expenses will be of revenue nature. For that assessee relied on the judgment of the Hon`ble Delhi High Court in the case of CIT vs. Samtel Color Ltd. [2009-TMI-32263-Delhi High Court] vide judgment dated January 30, 2009 in IT Appeal no. 1153 of 2008, wherein the Hon`ble Delhi High Court had occasion to consider allowability of corporate membership fees of clubs as allowable business expenditure. We find merit in the submissions of the ld counsel and direct the AO to treat entrance fees paid to club as ....
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....n 14A read with rule 8D in respect of shares held in stockhas been discussed and adjudicated in favour of assessee. Learned counsel for the assessee submitted that the present issue is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench. 15. Learned Departmental Representative relied upon the orders of the authorities below. 16.We see no reasons to take any other view of the matter than the view so taken by the Division Bench of ITAT, New Delhi vide order dated 19.11.2018. In this order, the Tribunal has inter alia observed as follows: "6. We have carefully considered the submissions and perused the records. There is no denial of the assertions by the assessee that the assessee is engaged in the business of trading in share and all the shares are held by the assessee company as part of its stock-in-trade and not as an investment as is evidenced by the balance sheet of the company. However, Ld. AO recorded that a profit making company pays dividend to its shareholders who have invested some money to its shares, whether the Shareholder is a trader of share or not. Ld. AO further noted that the assessee comp....
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....ee is engaged in the trading of shares. 10. In fact, this question had fallen for consideration in the case of Maxopp investment Ltd versus CIT (2018) 91 taxman.com 154 (SC), wherein the Hon'ble Apex Court considered two cases wherein the question of apportionment of expenditure had arisen and predominant intent of investment in shares was pleaded, though an different facts, on the ground that the objective of investing in shares was not to the dividend income, but to either retain controlling interest over the company in which the investment was made or to earn the profit from trading in shares. The question was whether the disallowance under section 14 A of the Act could be invoked in the cases where exempt income was earned from shares held as "trading assets" or "stock in trade". The first case relates to Maxopp investment Ltd and the second case relates to the case of State Bank of Patiala. In the case of Maxopp investment Ltd the assessee company is in the business of finance, investment and was dealing in shares and securities; that they held the shares and securities, partly as investments on the "capital account" and partly as "trading assets" for the purpose of a....
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....allowance 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 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 immaterial. In fact, it would be a quirk of fate that when the investee company declared dividend, those shares are held by the assessee, though the assessee has to ultimately trade those shares by selling them to earn profits. The situation here is, therefore, different from the case like Maxopp Investment Ltd. where the assessee would continue to hold those ....