TaxTMI 
TaxTMI 
2020 (3) TMI 713
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....22 crores. Thereafter, the assessee filed two revised returns viz., on 07.02.2013 with a total income of Rs. 490.07 crores and on 26.03.2014 admitting re-revised total income of Rs. 481.23 crores. The Assessing Officer completed the assessment u/s. 143(3) on 31.03.2015 making various additions/ disallowances. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) partly allowed the appeal. Aggrieved against certain issues on which dismissal and enhancement were made and on certain issues wherein the Ld. CIT(A) has not decided the issue the assessee filed the above appeal. Similarly, aggrieved against those issues where the Ld. CIT(A) allowed the appeal, the Revenue filed its above cross appeal. 3. The Ld. AR submitted that since the securities of the assessee's bank are held as stock in trade, the Ld. CIT (A) erred in disallowing and also enhancing the disallowance made u/s. 14A to Rs. 47,78,765/-, without appreciating the fact that no disallowance can be made u/s. 14A when the assessee has not incurred any expenditure for earning tax free income. The Ld. CIT(A) also erred in disallowing the sum u/s. 14A without recording the finding that....
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.... on the treasury department which was entrusted with the responsibility of managing the entire investment portfolio. Therefore, the Ld. CIT(A) gave an enhancement notice to the assessee after considering its plea, held that since the proportion of investments giving raise to exempt income to the total investment was to the tune of 0.99%, the disallowable portion under rule 8D(2)(i) worked out at Rs. 2,72,366/- and hence he directed the AO to disallowance this sum. Relying on the Supreme Court decision in the case of CIT vs Walfort Stock Brokers Pvt. Ltd., (2010) 326 ITR 1 (SC) and Godrej & Boyce Manufacturing Co. Ltd. vs DCIT and another (2017) 394 ITR 449 (SC), the CIT(A) held that section 14A is applicable in the assessee's case and hence confirmed the disallowance made u/s.14A r.w.r. 8D(2)(ii) by the AO also. Thus, the Ld. CIT(A) has enhanced the disallowance. Thus, the Ld. DR supported the orders of the lower authorities. 5. We heard the rival submissions. Since the Ld. CIT(A) has drawn due satisfaction u/. 14A r.w.r. 8D, the assessee's plea that no satisfaction was recorded u/s. 14A r.w.r. 8D has no merit. However, on the merits of the disallowance, the relevant porti....
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.... of all concerned." (emphasis supplied)" CBDT itself has accepted the line of thinking that income from investment made by a banking concern is part of its business of banking to be considered under the head 'Business and Profession'. Direct result of this view is that such investments would be only a part of stock-in-trade. In our opinion, how the assessee has treated the shares and mutual funds in its balance sheet prepared under Banking Regulation Act may not be relevant when the income therefrom is treated as a part of business profit and not under the head of 'Income from other sources'. There is no case for the Revenue that assessee was holding these investments solely for the purpose of earning 8 I.T.A. Nos.2325 & 2326/Mds/16 I.T.A. Nos.2433 & 2649/Mds/16 dividend. At para 17 of its judgment in the case of State bank of Patiala (supra), Hon'ble Punjab & Haryana High Court held as under:- "17. Under section 14A, an expenditure can be disallowed only if it is incurred by the assessee in relation to income exempt from tax. The dividend or interest from the assessee's stock-in-trade i.e. the securities was exempt from tax in view of sections 10(15)....
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....ure was incurred in relation to the same." We are, therefore, of the opinion that disallowance under Section 14A of the Act could not have been made in the assessee's case for investments which were considered as part of stock-in-trade for tax purposes. Such disallowance therefore stands deleted." Subsequent to this decision in the assessee's case, the Kolkata Bench of the ITAT in the case of UCO Bank in ITA No 1615/Kol/2016 & CO 51/Kol/2018 dated 21.08.2018 for ay 2012-13 and the Delhi Bench of the ITAT in the case of Punjab National Bank vs CIT, Rnage-14, New Delhi in (2019) (1) TMI 689-ITAT Delhi and ITA Nos. 4253 & 2236/Del/2011, ITA Nos. 1788 & 4722/Del/2012; ITA Nos. 2406/Del/2013; ITA Nos. 2469/Del/2014; ITA nos. 2469/Del/2011; ITA No. 4718/Del/2012 and ITA Nos 2966/Del/2013 dated 09.01.2019, on due analysis of the Supreme Court decisions in the case Maxopp Investment Ltd. Vs CIT 402 ITR 640 including the decision of Pr. CIT vs State Bank of Patiala etc., held that no disallowance u/s. 14A is permissible in terms of Rule 8D where the assessee's are engaged in banking business. Since, the assessee is engaged in the business of banking, therefore, following the abo....
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....t to just Rs. 25.82 crores. Therefore, the Ld. CIT(A) held that, prime facie, the assessee had inflated its claim by adopting different method of computation for this claim in comparison to the method adopted in the earlier years viz., ay 2010-11 & 2011-12 and the new method does not correctly reflect the profits from the eligible business. Therefore, the Ld. CIT(A) issued notice for enhancement. The assessee filed the revised computation claiming deduction u/s. 36(1)(vii) at Rs. 34,41,12,325/- only as against Rs. 35,93,12,994/- claimed originally. Thereafter, the Ld. CIT(A) found that the method employed by the assessee bank, the computation and the consequent claim of deduction u/s. 36(1)(vii) as per its revised computation is not in accordance with provisions of section 36(1)(vii) r.w.s. 29 apart from being unscientific. Therefore, he recomputed the deduction at Rs. 22.94 crores only. Thus, he enhanced the income at Rs. 5,26,32,261/-. Thus, the Ld. DR supported the order of the Ld. CIT(A). 8. We heard the rival submissions. It is clear from the above, that the assessee followed a particular method of accounting for claiming the impugned deduction during the period relev....
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.... In this regard, the Ld. AR invited our attention to the copy of the letter issued by Deputy Director & CPIO in RTI-09/01/2018- 19/CD(Cen) dated 24.05.2018 to the Chief Manager, wherein the following observations were made : a. As regards point no.1 of your application, it is submitted that the village level population data was not released on 31.03.2011 in respect of Census 2011. b. In respect of point nos. 2 & 3 of your application, it is informed that the date of release of first and final population data of Census 2011 is 30.04.2013 which included information upto village level in rural areas and upto ward level in urban areas. and submitted that the Ld. CIT(A) may be directed to dispose the assessee's appeal on merits. 11. We heard the rival submissions. The A O while finalising the assessment did not agree with the method of computation adopted by the assessee for claiming the deduction u/s. 36(1)(viia) and he adopted a different method of computation. On appeal, the Ld. CIT(A) held that by adopting the different method, the AO arrived at the same figure of Rs. 90.08 crores as an allowable amount. Therefore, he held that the asseesee's appeal is purely....
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....payment made towards leave encashment on retirement. The AO did not consider. Aggrieved, the assessee filed appeal before the CIT(A). The Ld. CIT(A) apart from relying on the Supreme Court order of Staying the operation of the order of Calcutta High Court decision in the case of M/s. Exide Industries Ltd. SLP (Civil) C.C. No. 12060 of 2008 dated 08.09.2008 held that the assessee's original claim was correct in as much as it had on its own disallowed the provision for leave encashment on retirement to the extent of Rs. 6,81,00,000/- and had claimed deduction of Rs. 3,03,67,103/- on actual payment basis. Therefore, the Ld. CIT(A) held that there is no merit in the assessee's claim of additional sum of Rs. 3,37,32,897/-. Therefore, we do not find any reason to interfere with the order of the Ld. CIT(A) and hence the corresponding grounds of the assessee are dismissed. 14. Revenue's Appeal in ITA 3197/Chny/ 2017 : 15. The Ld. DR submitted that the Ld. CIT(A) erred in deleting the disallowance on stale draft account at Rs. 3,23,82,457/- quoting the "The Depositor Education and Awareness Fund Scheme, 2014"of the RBI guideline. Per contra, the Ld. AR supported the order of the....
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....wing the co-ordinate bench decision, supra, we do not find merit in the Revenue's appeal, therefore, the corresponding grounds are dismissed . 16. The Ld. DR submitted that the Ld. CIT(A) erred in deleting the disallowance of ex-gratia payment following the decision of the CIT vs Maina Ore Transport Pvt. Ltd., 324 ITR 100 (Bom) and Kumaran Mills Ltd vs CIT (2000) 241 ITR 564 (Mad) which are distinguishable and not applicable to this case. Per contra, the Ld. AR supported the order of the Ld. CIT(A) and relied on this tribunal decision in its case in 72 ITR (Trib) 26 (Chennai), the relevant portion is extracted as under : "24. Ground No.4 challenges the disallowance of ex-gratia payment of Rs. 4,46,29,688/-. We dealt with this issue in assessee's own case in ITA No.1342/Chny/2013 for AY 2007-08 for the reasons stated vide para 6.3 of the order therein, we allow this ground of appeal in favour of the assesseebank. We direct the AO to allow the ex-gratia of Rs. 4,46,29,688/- as a deduction. Hence, this ground of appeal is allowed. 24.1 In the result, ground of appeal No.4 of the assessee is allowed. " Following the co-ordinate bench decision, supra, we....