TaxTMI 
TaxTMI 
2021 (1) TMI 75
X X X X Extracts X X X X
X X X X Extracts X X X X
....ereafter assessment was framed u/s 143(3) vide order dated 15.02.2005 and the total income was determined at Rs. 2096,09,70,902/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 27.12.2005 (Appeal No.173/2004-05) granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds of appeal: 1. "That the order is against the law and facts of the case. 2. That the learned Commissioner of Income Tax (Appeals) was not justified in confirming the action of Assessing Officer of treating the profit of Rs. 2,36,66,250/- as Business Income instead of Capital Gain. 3. That the learned Commissioner of Income Tax (Appeals) was not justified in confirming the action of Assessing Officer for not allowing the benefit of the carry forward loss of capital loss amounting to Rs. 402,87,40,991/-. 4. That the learned Commissioner of Income Tax (Appeals) was not justified in not directing the Assessing Officer to consider the claim of the income of those infrastructure projects where notifications are issued by the relevant Govt. authorities at a late....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was purchase and sale on various kinds of securities. He noted that bank has been offering the income on sale and purchase of such securities as Business Income over so many years but in the year under consideration, assessee was taking a plea that the income was on Capital Gain account. The submission of the assessee of the income to be on capital account was not found acceptable to AO. He therefore, held the profit on sale of Securities as Business Income instead of Capital Gain and also disallowed the claim of carry forward as capital loss. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now before us. 6. Before us Learned AR reiterated the submission made before the AO and CIT(A) and further submitted that assessee had decided to treat the HTM Securities which were proposed to be held till maturity as per capital. He therefore, submitted that the profit being treated as for capital. He submitted that the assessee being a Government undertaking the decision was taken after obtaining necessary approvals of the concerned authorities. He further submitted that the assessee rese....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's own case and for similar reasons find no reason to interfere with the order of CIT(A) thus the ground of appeal of the assessee is dismissed. 11. As far as ground No 3 is concerned, before us, Learned AR submitted that ground no.2 & 3 are interconnected and in the event the profit on the investment in HTM Categories is held to be on account of capital gain then the gain be allowed to be set off against the carry forward capital loss. Since we have held the profit earn on sale of securities which are held to be HTM Category to be on business account, the ground No 3 of the assessee claiming for set off against carry forward capital loss is dismissed. 12. Ground No.4 is with respect to the claim of assessee of the income from infrastructure project has been exempt u/s 10(23G). 13. AO noted that assessee had claimed income of Rs. 100,19,00,066/- as exempt u/s 10(23G). AO noted that assessee had not filed any evidence to show that the enterprises listed in the table in Para - 3 were notified by Central Govt. for the purpose of section 10(23G). He accordingly denied the claim of aggregating to Rs. 44,67,23,817/- u/s 10(23G). Aggrieved by the order of AO, assessee carrie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....received further notifications entitling the assessee to exemption u/s 10(23G) and therefore the matter be remitted to AO with necessary directions. We find that identical issue arose in assessee's own case in AY 2005-06 (ITA No 2047 & 2873/Del/2007 order dtd 25.10.2011) wherein the issue was set aside by the Co-ordinate Bench of Tribunal by observing as under: "10. We have heard both the sides and perused the records. The assessee's claim for exemption under Section 10(23G) was based on the certificates issued by the enterprises to whom the moneys have been lent. Those enterprises have made applications to the Government for claiming exemption under Section 10(23G), which the Government had not disposed off in time. That is why, even before the learned CIT(A), certain new certificates were filed. Learned CIT(A), in our view, has rightly directed the granting of exemption under Section 10(23G) of the Act in respect of interest on such bonds whose certificate of exemption was filed before him. The assessee has now pleaded before us that new certificates have also been received after the disposal of the appeal by the CIT(A) and he has sought....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Rs. 15,36,844/- made by the Assessee, held that disallowance u/s 14A be restricted to Rs. 1,88,40,576/-. Aggrieved by the order of CIT(A) assessee is now before us. 20. Before us, Learned AR reiterated the submissions made before the AO and CIT(A) and further submitted that assessee makes investments in terms of the mandatory directions of the Reserve Bank of India for SLR/SDR and such other purpose as issued from time to time. He further submitted that all these investments have been treated as stock-in-trade as per the prevailing bank practice. He submitted that provisions of disqualification u/s 14A would not apply to stock-in-trade. He further submitted that in view of the decision of Hon'ble Apex Court in the case of Maxopp Investment Ltd. vs CIT (2018) 402 ITR 640 (SC) there is no question of disallowance u/s 14A for the tax free earnings for securities held by Banks. He further submitted in assessee's own case in ITA No 4253 and 2236/Del/2011 and 2406/Del/2013 and 2469/Del2014 order dtd 09.01.2019, ITA No. 1519/Del/2016 order dtd 28.11.2018 addition has been deleted. He further submitted that even in A.Y 2012-13 the issue has been decided in assessee's favour. He there....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was considering the question that has arisen under varied circumstances where the shares/stocks were purchased by a company for the purpose of gaining control over the said company or as "stock in trade", though incidentally income is also generated in the form of dividends as well. 9. It was argued before the Hon'ble Apex Court that though incidentally income was also generated in the form of dividends, the dominant intention for purchasing the shares was not to earn the dividend income but to acquire and retain the controlling business in the company in which shares were invested, or for the purpose of trading in the shares as business activity. After considering the entire case law on this aspect in the light of the peculiar facts involved in both the matters, the Hon'ble Apex Court vide paragraph No. 39 and 40 held as follows:- 39) In those cases, where shares are held as stock-intrade, the main purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as 'income' under the head 'profits and gains from business and profession'. What happens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is generated that would be earned by the assessee. In contrast, where the shares are held as stock-intrade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. In the result, the appeals filed by the Revenue challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove. 10. It is, therefore, clear from the above observations of the Hon'ble Apex Court that depending upon the facts of each case, the expenditure incurred in acquiring the shares will have to be apportioned. Hon'ble Apex Court held that the Tribunal and the Hon'ble High Court of Punjab and Haryana arrived at a correct conclusion by setting aside the disallowance under section 14A of the Act in respect of the dividend earned on the shares held as stock in trade, because such shares were held during the business activity of the assessee and it is only by a quirk of fate that when the investee company declared dividend, those shares were held by the assessee, though the assessee has to ultimately trade those shares ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal of assessee is allowed and the ground of appeal of the Revenue is dismissed." 22. Before us, Revenue has not pointed to any distinguishing feature in the facts of the case under consideration and that of earlier years. Further, Revenue has also not placed any material on record to demonstrate that the order of the Tribunal in Assessee's own case cited hereinabove has been set aside/ over ruled or stayed by higher judicial forum. We therefore following the decision of the Co-ordinate bench in assessee's own case dated 09.01.2019 and for similar reasons hold that no disallowance u/s 14A is called for in the present case. We therefore direct the deletion of addition made u/s 14A. Thus the ground of appeal of the assessee is allowed. 23. Ground No.6 is with respect to loss on investment amounting to Rs. 2,71,36,824/-. 24. During the course of assessment proceedings, AO noticed that assessee had claimed deduction of Rs. 2,71,36,824/- being the depreciation/ loss on investments. The assessee was asked to justify the claim of deduction and why the same not be considered to be of notional in nature. Assessee made the submission and further inter alia submitted that it has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve heard both the sides and find that the issue is fully covered by the earlier years' orders right from AY 2001-01 to 2004-05. The learned CIT(A) has only followed the principle laid down by the Apex Court in the case of UCO Bank - 240 ITR 355. In the light of the aforesaid binding decision of the Apex Court, we do not find any infirmity in the order of CIT(A). The same is dismissed. 35. The learned DR could not point out any specific error in the order of the learned CIT(A). He also could not bring any material on record to show that the order of the Tribunal for AY 2005-06 was varied in appeal before any higher authorities. Hence, we find that no good reasons to interfere with the orders of learned CIT(A) which is confirmed..." 27. It is not the case of the revenue also that there is any change of facts involved in the present appeal from those involved in ITA 2873/Del/2007 or ITA No. 3843 and 4241/Del/2010 so that this Tribunal can take a different view. In the absence of any change of facts and circumstances, we find it difficult to take a different view in the assessee's own case for a subsequent year, from the view that was taken consistently quite for a lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmissions and perused the material available on record. The issue in the present case is with respect to disallowance of Rs. 4,70,178/-. From the table of the details of Rs. 4,70,178/- reproduced by the CIT(A) in para 9.3 of the order, it can be seen that it is on inter alia on account of fine by consumer forum, penalty by District Consumer, Payment on account of deposit of cheque pertaining to saving account treated as NRI account etc. Before us, apart from general submissions, no material has been placed by the Learned AR to demonstrate that the payments are on account of technical aberration and are not in the nature of fines. Further, no fallacy in the finding of CIT(A) has been pointed before us. Considering the totality of the aforesaid facts, we find no reason to interfere in the order of CIT(A) and thus the ground of appeal of the assessee is dismissed. 32. Next ground is with respect to disallowance under section 40A(3). 33. AO noted that tax auditor in the tax audit report has pointed to a sum of Rs. 21,657/- being paid in contravention of Section 40A(3) and therefore only 20% of payment needs to be disallowed. He accordingly made the disallowance of 20% of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el 2010 for A.Y 2004-05. 38. This appeal is against the levy of penalty of Rs. 21,99,05,618/- levied u/s 271(1)(c) of the Act. 39. AO in the penalty order dated 29.08.2008 noted that following additions were made by the AO and which were also confirmed by the CIT(A) and the ITAT has dismissed the appeal of the Assessee for want of COD: 1. Infrastructure Project claimed u/s 10(23G) 38,31,28,642 Expenses on exempt income u/s 14A 20,22,37,352 2. Loss on investment 2,71,36,829 3. Disallowance of penalty 4,70,178 4. Payment in Contravention of Section 40A(3) 4,331 Total 61,29,77,332 40. AO in the penalty order thus concluded that assessee had furnished inaccurate particulars of income cited hereinabove and accordingly levied penalty of Rs. 21.99 crores u/s 271(1)(c) of the Act. 41. When the matter was carried before the CIT(A), CIT(A) noted that penalty was leviable in respect of wrong claim made under section 10(23G) stated at Sr. No. 1 of the aforesaid table and on account of penalty mentioned at Sr. No. 3 of the aforesaid table. With respect to other additions stated in the table cited herein above, he....