TaxTMI 
TaxTMI 
2022 (7) TMI 480
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....CE UNDER SECTION 14A OF THE ACT: 1. On the facts and circumstances of the case and in law, Hon'ble CIT(A) erred in rejecting the plea of the Appellant that Rule 8D is not automatic even when the AO had not recorded any satisfaction before applying Rule 8D of the Income-tax Rules, 1962. 2. The Appellant prays that the order of the CIT (A) disregarding the settled legal position be treated as illegal. WITHOUT PREJUDICE TO GROUND I: GROUND NO. I: DISALLOWANCE of EXPENSES UNDER SECTION 14A OF THE ACT: 3. On the facts and circumstances of the case and in law, Hon'ble CIT(A) erred in rejecting the plea of the Appellant that when the securities are held as stockin-trade, no disallowance can be made u/s. 14A of the Act. 4. The Appellant, therefore, prays that the suo-moto disallowance of Rs. 9,27,255/- be deleted. GROUND NO. III: ORDER MADE ON THE BASIS OF SURMISES AND ASSUMPTIONS IS BAD IN LAW: 1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in disallowing the claim for deduction u/s. 35D of the Act on the assumption that the shares may have been allotted only to se....
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....f the case and in law, the Hon'ble CIT(A) erred in not giving any findings on the additional evidence filed by the Appellant 3 The Appellant prays that the claim for deduction in respect of discount on issue of shares under ESOP be allowed." 04. ITA No. 3236/Mum/2018 is filed by the learned Deputy Commissioner of Income tax 2 (2) (2), Mumbai [ The Ld AO ] against the same order [ AY 2011-12] of the learned CIT (A) raising following grounds of appeal:- "1. Whether on the facts and in the circumstances of the case and in law, learned CIT Appeal was right in directing to delete the disallowances made U/s 14A of the IT Act without appreciating that the disallowance u/s 14A has to be mandatorily calculated as per rule 8D of IT Rules and no discretion is available with the A.O for estimated disallowances? 2. Whether on the facts and in the circumstances of the case and in law, learned CIT Appeal was right in directing to delete the disallowances of brokerage paid on acquisition of investments without appreciating that such expenditure is in the nature of capital expenditure and forms a part of cost of asset?" 05. Assessee is a company engaged in the business o....
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....as correctly recorded the satisfaction for invocation of Rule 8D of The Income Tax Rules, 1962 (the Rules). [2] disallowance under Section 35(D) of the Act of Rs.2,82,80,291/- was confirmed. [3] Not admitting its additional ground of appeal for deduction of discount on issue of shares under the Employees Stock Option Plan (ESOP). [4] Not adjudicating and allowing on ESOP deduction claim based on the additional evidence field by the appellant 011. The first ground of appeal of the learned Assessing Officer and ground nos. 1 and 2 of the appeal of the assessee are with respect to the disallowance under Section 14A of the Act. 012. Assessee has claimed dividend income of Rs.50,76,400/- as exempt under Section 10(34) of the Act. Assessee disallowed a sum of Rs. 9,27,255/- under Section 14A of the Act. Learned Assessing Officer asked assessee to furnish details regarding the disallowance. Assessee submitted that i. It has made investment in equity shares of various companies and holding is those shares in compliance with statutory requirement as part of stock in trade. ii. It has not incurred any expenses in relation to earning of such ....
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....r has recorded his satisfaction for invocation of Rule 8D of the Rules in paragraph 5.3 of the assessment order. He further rejected the contention that on securities held as stock-in-trade, no disallowance can be made for the reason that assessee has offered on its own disallowance under Section 14A of the Act With respect to custodian charges as well as administrative charges. With respect to the interest disallowance, he agreed with the argument of the assessee that in view of more interest free funds available than the amount invested in tax-free income earning securities, o disallowance u/r 8D (2) (i) and (ii) can be made. Therefore, he deleted the disallowance of Rs.3,65,18,979/-. Thus, both the parties aggrieved with the above order 015. The learned Authorized Representative submitted that the learned Assessing Officer has failed to record any satisfaction about the correctness of the disallowance offered by the assessee. He submitted that this is mandatory requirement before the learned Assessing Officer proceeds to invoke Rule 8D for making disallowance. He referred to section 14 A (2) of the Act. For this proposition, he relied on the decision of Hon'ble Supreme Co....
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....g about the voluntary disallowance offered by the assessee of Rs.9,27,255/-. Hon'ble Supreme Court in case of Maxopp Investment Ltd. (supra) in paragraph no. 41 has held that whether the assessee in his return has himself apportioned the disallowance under Section 14A of the Act, the learned Assessing Officer needs to record his satisfaction having record the accounts of the assessee and that why it is not correct. That means learned Assessing Officer has to give reasons with regard to the accounts of the assessee about incorrectness of the claim of the assessee. The Supreme Court also held that while recording such satisfaction, the nature of loans and the nature of investment need to be examined by the learned Assessing Officer. Further, Hon'ble Bombay High Court following the aforesaid judgment of the Hon'ble Supreme Court in Bombay Stock Exchange Ltd. (supra) in Paragraph no. 9 has also categorically held that the learned Assessing Officer must first record a conclusion that having regard to the account of the assessee he has not satisfied with the disallowance offered by the assessee. In paragraph no. 11, it further held that no satisfaction with the disallowance o....
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....at when the shares are sold during the year, the assessee applies profit and loss on sale of investment as trading profit, therefore; no disallowance is warranted when the shares are sold during the year. 021. Assessee contested the above disallowance before the learned CIT (A), who categorically noted that the learned Assessing Officer has confused himself due to the treatment of securities as per books of account and as per Banking Regulation Act. Therefore, he held that when a particular security has been treated as stock-in-trade and profit or loss has been offered as business income, all the expenses incidental to the earning of such income has to be allowed as deduction as revenue expenditure. The learned Assessing Officer is aggrieved with the same. 022. Learned Departmental Representative vehemently supported the order of the learned Assessing Officer. 023. Learned Authorised Representative supported the order of the learned Commissioner of Income Tax (Appeals). He further supported the order of the learned CIT(A) relying on the decisions of CIT vs. Nawan shahar co-operative Bank of India 289 ITR 6, CIT vs. DLF Universal Ltd 317 ITR 197 of Hon'ble Delhi High Co....
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....e shows that Assessee Company has raised Rs. 1,033.87 crores during the Financial Year through Qualified Institution Placement (QIP) in which it placed its share capital with Qualified Institutional Buyers [QIB]. For this purpose, it incurred expenditure of Rs. 14,14,01,453/- on account of payment to lead managers, local consultants, and auditors. The assessee claimed Rs. 2,82,80,291/- being 1/5th of such expenditure as deduction u/s 35D of The Act. This is the first year of such claim with respect to this issue of shares. Assessee submitted that said expenses are in connection with the issue of "public subscription" of shares of the assessee. 027. Learned Assessing Officer examined the claim and held that since the issue of shares to Qualified Institutional Buyers, does not tantamount to "issue of shares to public" and therefore, expenditure incurred is not covered under Section 35D of the Act. Hence, he disallowed the same. 028. Assessee aggrieved with the same and preferred the appeal before the learned CIT (A). Assessee submitted that the provisions of Section 35D of the Act are complied with. It further stated that Qualified Institutional Buyers are "public" and therefor....
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....blic subscription of shares" or not. Allotment of shares to QIB can be permitted on "Private Placement basis "or also in "Public Issue". 033. We find that issue is decided in favour of the assessee in assessee"s own case for Assessment Year 2010-11 in ITA NO. 3497/Mum/2018 dated 14 July 2020 so far the issue was whether QIB is "Public" or not . The co-ordinate Bench in that case considered whether the allottees Qualified Institutional Buyers is " public" or not. The coordinate Bench following the decision of ITAT in Deccan Chronicle Holdings Ltd. (supra) hold that QIB is " Public" so deduction under Section 35D of the Act is allowable. It held as under:- "6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. The appellant is a banking company. It filed its revised return of income for the AY 2010-11 on March 30, 2012 declaring total income at Rs. 7,90,10,18,157/-. As mentioned earlier, the question involved in this appeal is whether QIB can be regarded as "public" and whether the offer made to them can be regarded as "offer made to public" for the purpose of section 35D of th....
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....apital or revenue in nature. Tested against these broad legal principles, I am of the opinion that there is considerable force in the arguments of the appellant-company that the expenditure claimed by it clearly falls in the revenue field. These guidelines were impliedly approved by the hon'ble Supreme Court, in view of the fact that the special leave petition filed against this decision was dismissed. There is also merit in the argument of the appellant-company that the facts of its case are distinguishable from those in the case of Brooke Bond, for the detailed reasons submitted by it, and therefore its claim cannot be denied by relying on that decision. It was further claimed that though the entire expenditure was allowable in one year under section 37, the same was treated as deferred revenue expenditure and claimed over five years, starting from the assessment year 2007-08. The concept of deferred revenue expenditure is now legally recognised by various judicial authorities and in fact, this was upheld even in the case of the appellant by my predecessor, while deciding the appeal for assessment year 2006-07. In view of the above facts, I hold that the expenditure of Rs. 2,....
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....for the disclosure requirements for the share holding pattern of a listed company. As can be seen therefrom, there are only two categories of shareholders- "promoter/promoter group" and "public". For the definition of these terms in Clause 35, reference is made to Clause 40A of the Listing Agreement. As can be seen therefrom, Mutual Funds/Financial Institutions which are QIBs are classified under "public shareholding". The terms are defined in Clause 40A of the SEBI Listing Agreement. Further, the listing agreement takes us to Securities Contracts (Regulation) Rules, 1957 (in short "SCRR"). Also Rule 19(2)(b) and Rule 19A of the SCRR provide that companies are required to maintain minimum public shareholding of 25% in case of first time listing and in case of continuous listing agreement respectively. In this context, we may refer to section 2(d) of SCRR defining the term "public". It (public) is defined to mean any person other than the promoter, promoter group, subsidiaries and associates of the company. Thus any person other than these four qualify to be considered as public. As can be seen from the list of QIBs to whom shares are issued, the shares are not issued to any of the ....
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....on and not otherwise, onus lies on assessee. Ld AO may examine the same; if shares are issued in "Public Subscription", deduction may be allowed. 036. Accordingly, ground no. 3 and 4 of the appeal of assessee are allowed with above directions. 037. Ground no. 6 of the appeal is with respect to nonadmission of additional ground of appeal vis-a-vis allowance of deduction of discount on issue of shares under the Stock Option Plan. 038. Before the learned CIT (A), vide letter dated 8th December, 2017, assessee raised an additional ground that he is entitled to deduction of Rs. 143,24,22,420/- being the discount on issue of shares under the ESOP computed as difference between the fair market value of shares on the date on which the ESOP were exercised by the eligible employees and issue price of shares. 039. The fact shows that assessee introduced the ESOP in accordance with the provisions of Securities Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999. Assessee submitted that the issue is squarely covered in favour of the assessee by the Special Bench decision of Biocon Ltd. VS. DCIT [2013] 35 taxman. com 335 (Banga....
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....(SC). In view of this, he submitted that the learned CIT (A) has erred in not admitting the additional ground of appeal and thereafter refusing allowance of deduction of discount on issue of shares under ESOP. 042. The learned Departmental Representative vehemently supported the order of the learned CIT (A) in not admitting the additional ground of appeal. He submitted that additional ground of appeal could only be admitted in accordance with the provisions of Section 250 (5) of the Act, which has been dealt with by the learned CIT (A). Therefore, it has not been correctly admitted. The learned Departmental Representative further submitted in addition to that assessee has failed to raise this ground before the learned Assessing Officer and it is an admitted fact that for four assessment years i.e. AYs 2011-12 to 2014-15, assessee never claimed this deduction in the original return of income or even in the revised return. It was also not claimed before the learned Assessing Officer during scrutiny assessment proceedings and all these claims have been raised first time in December 2017 as fresh claims before the learned CIT (A) as additional grounds. It was stated that inexplicabl....
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....Vs. DCIT [1998] 67 ITD 397 (Mumbai) and the decision of Hon'ble Bombay High Court in Ultratech Cement Ltd. (Supra). 043. The learned Departmental Representative further contested that assessee has filed detailed Paper Book on the issue of deductibility of ESOP clearly shows that the material available for allowing the claim is not available "on record" before the learned Assessing Officer. He therefore submitted that, if the material was available before the learned Assessing Officer and facts were on record before the learned Assessing Officer there would not have been any need of filing such a Paper Book. 044. The learned Departmental Representative on merit submitted that piece of expenditure is contingent, notional and capital in nature. For this proposition, he relied on the order of the co-ordinate Bench in cases of Medha Servo Drivers Ltd. Vs. DCIT dated 01.02.2011 in ITA No. 1189 & 1190/Hyd/2009, DCIT vs. Blow Plast Ltd in ITA No. 512/Mum/2009 dated 26th Nov, 2010, Mahindra & Mahindra Vs. DCIT in ITA No. 8597/Mum/2010 and M/s VIP Industries Ltd vs. DCIT in ITA no. 7242/Mum/2018. He also relied on the decision of Hon'ble Supreme Court in case of EMCO KCP Ltd. V....
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....ng the remand report of the learned Assessing Officer and rejoinder of the assessee did not admit the additional ground. The learned CIT (A) referred to the provisions of Section 250(5) of the Act. The learned CIT (A) held that the ground could be admitted if the omission to raise such ground is not willful or unreasonable. According to the learned CIT (A) when the assessee filed its appeal it was filed with due application of mind and same was signed by Managing Director. When the audited accounts were finalized, the Board of Directors of the assessee stated it to be a capital expenditure even at the time of the filing of the return, the assessee did not claim the same therefore, filing of the return, the assessment proceedings, the appellant proceedings to the extent of filing of appeal which with due application of mind and therefore, as the omission to raise additional ground was a conscious decision considering all the facts and therefore, same is not admissible. The learned CIT (A) relied on the decision of Hon'ble Bombay High Court in case of Ultratech Cement Ltd. (supra). 048. The learned CIT (A) also invoked the provisions of Section 46A of the Act and stated that t....
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....elf was of the belief that the impugned expenditure is capital expenditure therefore to that time the assessee was also having a view that this expenditure is not allowable to the assessee. Therefore, in claiming such expenditure, in the original return of income and now raising an additional ground cannot be said to be willful. Assessee is duty bound to file its return of income with proper due diligence, taking plausible stand about taxability of its income, Otherwise, there are severe consequences of penalties. After the assessee has same judicial precedents in its favour rendered by the courts and tribunals. Later on based on that any claim is made by raising additional ground of appeal, It cannot be said to be not a bona fide action of assessee. Assessee cannot be prevented to do so. No malafide can be attributed on part of the assessee in raising these additional grounds. Hence, according to us, it passes the test of section 250(5) of the Act. Therefore, we hold that raising the additional ground by the assessee is not willful and unreasonable failure. The ld CIT (A) ought to have admitted the same. 051. The second issue that arises is that fresh claims can be raised befor....
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.... on these facts, Hon'ble High Court following the decision of Hon'ble Supreme Court Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC), National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85 (SC) held that where on the pure question of law arises from facts which are already on record then there is no reason why appellate authority should not considered the question of law, so as it determine the correct tax liability of assessee in accordance with law. However, where necessary evidences, which are required to be examined for the claim of the assessee, are not recorded then the additional ground could be raised and admitted if assessee satisfies the appellate authority that such claim could not be made for good and sufficient reasons. Therefore, there could be two situations first, where the facts are on record and second, whether the facts are not on record. 053. If the facts are not on record, even then the additional ground can be raised if assessee proves that such ground could not be raised before the lower authorities for good and sufficient reasons. Such is the mandate of ....
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....p to March 31, 2006 and March 31, 2007 respectively. YBL ESOP (JESOP IV), a sub scheme of YBL ESOP and YBL JESOP V, a sub scheme of YBL JESOP V/ PESOP II are also administered by the Board Remuneration Committee of the Bank and are in force for employees joining the Bank from time to time. Under the above Plans, vesting takes place at the end of three years from the grant date for 50% of the options granted and at the end of five years for the balance. Options under all these plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise. 18. Notes forming part of the Accounts for the year ended March 31, 20110 (Continued) 18.7 Disclosures as required by Accounting Standards (Continued) 18.7.7 ESOP disclosures (Continued) YBL ESOP (PESOP 1), a sub scheme of YBL ESOP, YBL PESOP II and YBL PESOP II 2010, sub schemes of YBL JESOP V/ PESOP II are Performance Stock Option Plans and are also administered by the Board Remuneration Committee of the Bank. Under YBL ESOP (PESOP I) vesting takes place at the end of each year from the grant date f....
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....ESOP IV YBL PESOP-I UBL PESOP-II JESOP V PESOP II 2010 Risk free interest rate 6.54% ~6.81% 6.73% ~7.45% 7.27% ~8.23% 7.48% ~8.55% 5.98% ~8.51% 4.96% ~8.51% 5.20% ~8.55% 5.83% ~7.49% Expected life 6.5 yrs to 7.5 yrs 6.5 yrs to 7.5 yrs 6.5 yrs to 7.5 yrs 4.5 yrs to 7.5 yrs 1.5 yrs to 6 yrs 1.5 yrs to 4.5 yrs 4.5 yrs to 7.5 yrs 4.5 yrs to 7.5 yrs Expected volatility 50.58% 35.97% ~49.92% 35.82% ~41.74% 39.94% ~64.92% 40.74% ~82.76% 61.31% ~82.76% 54.63% ~82.76% 39.75% 63.71% Expected dividends 1.44% 1.13% ~1.23% 1.13% 1.13% ~1.5% 1.13% ~1.5% 1.5% 1.5% 1.5% The price of the underlying share in market at the time of option grant (Rs.) Not listed 96.51 105.78 176.48 166.59 123.62 233.03 270.61 In computing the above information, certain estimates and assumptions have been made by the Management which have been relied upon by the auditors." 055. In present case before us, we find assessee has disclosed the preliminary facts with respect to the employee"s stock option scheme in its annual accounts. The details with respect to each o....
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....en. Accordingly, alternative claim of the assessee is restored back to the file of the learned AO. Accordingly, ground number 6 of the appeal is partly allowed. 057. In the Result, appeal filed by the assessee in ITA number 3498/M/2018 for assessment year 2011 - 12 is partly allowed and appeal of the learned assessing officer in ITA number 3236/M/2018 for the same assessment year is dismissed. Assessment year 2012 - 13 ITA numbers 3499/M/2018 (by assessee) and ITA number 3237/M/2018 (by AO) 058. For assessment year 2012 - 13 cross appeals are filed before us against the order passed by the Commissioner of income tax (Appeals) - 5, Mumbai dated 31/1/2018 059. ITA numbers 3499/M/2018 , assessee has raised following grounds of appeal:- Ground NO I : setting aside the ground to the file of the AO 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in effectively setting aside the ground of appeal numbers III, IX and XI to the file of the AO, which is beyond the powers conferred u/s 251 of the act 2. the appellant prays that it be held that the order of the CIT (A) is void ab initio and/or otherwise bad in l....
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.... 40 (a) (I)/(ia) of the act 2. the appellants paid that the AO be directed to allow the expenses in connection with the QIP GROUND no VII the valuation of securities held as stock in trade 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in directing the AO to verify book entries as regards the system of accounting followed in valuation methodology adopted while following the deduction for loss on year and revaluation of securities GROUND NO VIII :- setting aside to the AO the issue of allowance of brokerage paid on HTM securities 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in directing the AO to verify the by fortification of securities Under different categories when all the details were available on record and no further verification was required GROUND No IX :-disallowance of brokerage paid on acquisition of HTM investments 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in not following his own order in appellant"s case for assessment year 2011 - 12 2. on the facts and circumstances of th....
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....ment year 2013 - 14 2. the appellant prays that the AO be directed to allow bad debts in assessment year 2013 - 14 on higher side by reducing the opening balance of provision for bad and doubtful debts for assessment year 2013 - 14 GROUND No XIII non-admission of additional ground of appeal 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in rejecting the additional ground raised by the appellant, in respect of discount on issue of shares Under the employee stock option plan (ESOP) without appreciating the fact that the appellant authorities can admit and adjudicate the additional film raised by the assessee during the course of appellate proceedings 2. the appellant prays that the claim for deduction in respect of discount on issue of shares Under the ESOP be allowed GROUND no XIV deduction of discount on issue of shares under the employee stock option plan {ESOP] 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in not allowing the claim for deduction in respect of discount on issue of shares Under the ESOP amounting to Rs. 107,39,69,980/- 2. o....
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....irecting to delete BPI without considering the decision of the honourable Supreme Court in the case of Vijaya bank Ltd versus additional Commissioner of income tax (1991) 187 ITR 547 (SC) wherein it is held that the BPI is a part of capital outlay for acquisition of securities and hence not an allowable deduction 7. whether on the facts and circumstances of the case and in law, the learned CIT (A) was right in directing to delete premium amortised without appreciating the fact that the HTM category of securities are held as investment i.e. a capital asset and hence amortisation of premium paid on such securities will form part of cost of acquisition of HTM securities and hence not an allowable deduction 062. Brief facts of the case shows that the assessment order was passed u/s 143 (3) of the income tax act 1961 on 31/3/2015 by the learned assessing officer assessing the total income of the assessee at Rs. 17,156,743,620/- against the returned income filed by the assessee on 29/9/2012 which was subsequently revised on 30/3/2014 at Rs. 15,557,206,530/- . The learned assessing officer made the following disallowances i. disallowance u/s 14 A of Rs. 120,603,405/- ....
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....enditure. With respect to the indirect expenditure, it identified several head of expenditure and also applied percentage thereon and disallowed Rs. 109238/- as indirect expenditure. With respect to the percentage, it employed the number of deals in the financial year compared to the number of deals pertaining to the equity. Accordingly it disallowed a sum of Rs. 233,399/-. The assessee raised several other legal arguments. The learned assessing officer rejected the contentions of the assessee and held that the provisions of rule 8D are mandatory accordingly, he worked out the disallowance according to that rule and computed the total disallowance of Rs. 120,836,804. After reducing the disallowance already offered by the assessee of Rs. 233,399/-, the net disallowance of Rs. 120,603,405/- was made. Assessee challenged the disallowance before the learned CIT - A who set-aside the issue back to the file of the learned assessing officer directing the AO to follow the direction contained in the order of the ITAT for assessment year 2008 - 09. Therefore, the assessee is aggrieved with that order. 067. Before us the learned authorised representative has challenged that the AO has fail....
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....lowance shows that during the year assessee has raised 1033.87 crores in the financial year 2009 - 10 a qualified institutional placement by issue of share capital. Assessee has incurred an expenditure aggregating to Rs. 14,14,01,453/- on account of fees of lead managers and auditors et cetera accordingly the assessee has claimed deduction u/s 35D of the act of Rs 2 82,80,291/- being 1/5 of the total amount of the expenditure incurred u/s 35D of the act. Assessing Officer was of the view that expenditure if incurred in respect to the issue for public subscription is allowable. According to the AO, the shares are only allotted to QIP and therefore it is not a public issue of shares and therefore the deduction is not allowable. Assessee preferred an appeal before the learned CIT - A who held that the expenditure incurred by the assessee is not in connection with the issue for public subscription of shares and therefore the deduction as rightly been disallowed. 071. The assessee has come up in appeal before us stating that disallowance of deduction is already covered in favour of the assessee by the assessee"s own case for assessment year 2010 - 11 in ITA number 3497/M/2018. He fur....
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....as claimed the deduction of the sum. Assessee submitted that according to the guidelines of the reserve bank of India the assessee is required to value each of the investment in different buckets and the amount of losses arising on this valuation. It relied on several judicial precedents also. The assessee submitted that out of the above provision are sum Of Rs 2,99,74,000 was a provision for investment relating to the equity shares on prudent basis. The learned assessing officer held that the guidelines issued by the reserve bank of India are not determinative to grant any deduction to the assessee Under the income tax act. Therefore, the entire depreciation provided in the books of Rs. 160,152,000 was disallowed. The assessee preferred an appeal before the learned CIT - A. The learned CIT - A in paragraph number 6.3 wherein he held that the treatment given by the learned assessing officer with respect to the assets/investments available for sale and held for trading are treated as stock in trade however the investment held to maturity category are treated by the AO as a capital asset. At page number 60, the learned CIT appeal has given a categorical finding that all the three typ....
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....re held for trading then the brokerage expenses relating to that should be disallowed. Accordingly, he confirmed the disallowance of Rs. 384,405/- subject to verification by the learned assessing officer. 078. Assessee is aggrieved with that order and is submitting that that the issue is covered in favour of the assessee by the decision of honourable Supreme Court in 289 ITR 6, honourable Delhi High Court in 378 ITR 197 and Delhi benches of ITA T in 82 taxmann.com 251. It is further stated that it is also covered in view of circular number 18/2015 dated 2/11/2015. 079. The learned departmental representative vehemently supported the orders of the lower authorities. 080. We have carefully considered the rival contention and perused the orders of the lower authorities. Identical in this issue has been decided by the learned CIT - A wild deciding the appeal of the assessee for assessment year 2011 - 12 in favour of the assessee however for deciding the appeal of the assessee for assessment year 2012 - 13 he has taken a diametrically opposite view. When the above view was challenged for assessment year 2011 - 12 before the coordinate bench, we have upheld the order of the lear....
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....issed the claim of the assessee holding that deduction u/s 36 (1) (viia) can be granted only if assessee had rural branches and these rural branches had given advances. He held that the details regarding list of rural branches and the quantum of advances given and the relevant income tax rules remains unverified. He therefore directed the learned assessing officer to verify that assessee had rural branches within the meaning of it u/s 36 (1) (viia) of the act then the deduction allowable will be computed. Therefore, he rejected the claim of the assessee. Before him and assessee also made an alternative claim which was also rejected? Therefore, assessee is in appeal before us. 083. The learned authorised representative submitted that the reasons for which the learned CIT - A has rejected the claim of the assessee is squarely covered in favour of the assessee by the decision of several coordinate benches. He referred to the decision of Sadhna sahkari bank Limited versus ACIT hundred and 18 taxman.com 526, Bhagini Nivedita sahkari bank Limited versus DCIT 174 ITD 303,Kodangullar account cooperative Bank Ltd versus ACIT 160 ITD 132 and DCIT versus ING Vasya bank Ltd 149 ITD 611. ....
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....nt to representation to the Government that the existing ceiling in this regard i.e. 10% of the total income or 2% of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. Accordingly, by the Amending Act, the deduction presently available under cl. (viia) of sub-s. (1) of s. 36 of the IT Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% (as it existed originally, now it is 10%) of the aggregate average advances made by rural branches of the banks concerned. This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) a further deduction upto 5% of their total income in respect of provision for bad and doubtful debts. The further deduction of 5% of total income was available to banks which did not have rural branches. 36. Therefore after 1.4.1987, scheduled or non-scheduled banks having rural branches were allowed deduction., (a) upto 2% (now 10%) of the aggregate average advances made by such branches and (b) Schedu....
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....umber 14 of the appeal is with respect to the non-admission of additional ground of appeal by the learned CIT - capital with respect to the deduction of employee stock option plan discount. 089. Both the parties confirm that this issue is identical to the appeal of the assessee for assessment year 2011 - 12. We have carefully considered the rival contention and find that the issue involved in this appeal ground is exactly the same as it was in appeal of the assessee for assessment year 2011 - 12 where the learned CIT - A refuse to admit the additional ground of appeal. In that appeal, we have held that the learned CIT - A was incorrect in not admitting the additional ground of appeal. Therefore, for similar reasons we hold that the learned CIT - A was incorrect in not admitting the additional ground of appeal. In the result ground, number 13 of the appeal is allowed. 090. Ground number 14 is with respect to the allowability of the deduction. This ground is also identical to the appeal of the assessee for assessment year 2011 - 12 where we have sent the issue back to the file of the learned assessing officer to grant the deduction of employee stock option plan discount to the ....
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.... concerned, we find that an identical question of law was framed and answered in favour of the Assessee by this Court in its judgement dated 4-7-2014 in Income Tax Appeal No.1079 of 2012, CIT-2 v. Lord Krishna Bank Ltd. (now merged with HDFC Bank Ltd.). Mr Suresh Kumar fairly stated that question (C) reproduced above is covered by the said order. In view thereof, we are of the view that even question (C) does not raise any substantial question of law that requires an answer from us. 097. In view of this, ground number 2, 3 and 7 of the appeal of the AO are dismissed. 098. Ground number 4 is with respect to the disallowance of brokerage paid on acquisition of investments holding it to be a capital expenditure. We also find that this issue is also covered in favour of the assessee by our own decision in case of the assessee for assessment year 2011 - 12. The facts of the issue remains the similar and therefore we do not have any reason to deviate from the same. Accordingly, we dismiss ground number 4 of the appeal of the AO. 099. Ground number 5 and 6 with relation to the broken period interest allowable as a deduction. The learned authorised representative stated that the h....
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....ive appeals and find that they are identical to the grounds raised by them in their respective appeals for assessment year 2012 - 13. Therefore, our decision, in absence of any change in the facts and circumstances of the case pointed out before us, also remains the same. However, for clarity we decide the issue by stating the respective grounds in the respective appeals. 0106. The fact shows that assessee filed return of income on 28/9/2013, revised date on 31/3/2015 at Rs. 2,321,424,380/-. It was assessed u/s 143 (3) of the act by the order dated 29/2/2016 at Rs. 23,152,411,580/-. Most of the disallowances/additions were made by the learned assessing officer based on earlier assessment order. Such disallowances are as Under:- i. disallowances u/s 14 A as per rule 8D 23,03,88,000/- ii. disallowance u/s 35D Rs. 28,280,291 iii. disallowances of brokerage paid on acquisition of investments Rs. 2,580,751/- iv. denial of deduction u/s 36 (1) (viia) of the act Rs. 128,33,49,717/- v. disallowance of broken period interest on held to maturity securities 101,71,26,692/- vi. Disallowance of amortization of premium on securities which ....
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....id deduction claimed. 6) Whether on the facts and in the circumstances of the case and in law, the learned CIT (A) was right in directing to allow deduction u/s 36 (1) (vii) after verification of provisions for bad and doubtful debt accounts of the earlier assessment years and examine claim of allowability of deduction u/s 36 (1) (vii) of the IT act without appreciating the fact that the assessee has not actually return of the bad debts as irrecoverable as also the requirement of Section 36 (2) of the IT act not satisfied and hence not entitled for the said deduction claimed 7) whether on the facts and in the circumstances of the case and in law, the learned CIT (A) was right in directing to delete broken period interest without appreciating the fact that the held to maturity category of securities are long-term securities held till maturity and forming part of investment and not stock in trade hence broken period interest on HTM securities is a capital outlay and hence not an allowable deduction. 8) Whether on the facts and in the circumstances of the case and in law, learned CIT (A) was right in directing to delete broken period interest without conside....
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....(A) erred in disallowing the claim for deduction u/s 35D of the act on the assumptions that the shares may have been allotted only to selected QIPs 2. the appellant prays that an order made on surmises and presumption is bad in law and void ab initio GROUND No V : disallowance of deduction claimed u/s 35D on expenses incurred in connection with the qualified institutional placement [ QIP] 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in confirming the disallowance of deduction of Rs. 28,280,291/- claimed u/s 35D in respect of expenses incurred in connection with the QIP on the alleged ground that the issue of shares to QIP does not amount to public subscription and such capital expenses are not eligible for deduction u/s 35D of the act 2. the appellant prays that the AO be directed to allow Rs. 2,82,80,291/- as a deduction u/s 35D of the act GROUND no VI :-disallowance of QIP expenses by invoking Section 40 (a) (i)/(ia) of the act 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in disallowing the expenses in connection with QIP on the ground that the....
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....ural and urban advances. 3. the appellant prays that the claim for deduction u/s 36 (1)(viia) of the act amounting to Rs. 128,33,49,717/- be allowed Ground No XI alternatively on higher deduction u/s 36 (1) (vii) in subsequent year 1. on the facts and circumstances of the case and in law the honourable CIT (A) erred in directing the AO to verify the claim u/s 36 (1) (vii) of the act, based on the accounting entries and provisions made in the books, when all the details were available on record 2. the appellant prays that the claim for deduction u/s 36 (1) (vii) of the act be allowed Ground number XII alternatively on deduction u/s 36 (1) (vii) set-aside 1. on the facts and circumstances of the case and in law, the honourable CIT (A) erred in setting aside to the AO the alternatively that since the appellant was not allow deduction u/s 36 (1) (viia) in assessment year 2012 - 13 bad debts written off in the current financial year or to be allowed without adjusting the opening balance of provisions of bad and doubtful debts u/s 36 (1) (viia). 2. The appellant prays that the AO be directed to allow bad debts written of u/s ....
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.... that the claim for deduction in respect of discount on issue of shares Under ESOP be allowed 0110. Now we first deal with the appeal of the assessee. 0111. Ground number 1 is general in nature, no arguments advanced, hence, dismissed. 0112. Ground number 2, 3 and 4 are on the issue of disallowance u/s 14 A of the act. These are identical to similar grounds in assessee"s appeal for assessment year 2012 - 13, which we have allowed, for similar reasons, we allow this grounds. 0113. Ground number 5 is with respect to disallowance u/s 35D, is similar to ground in appeal of the assessee for assessment year 2011 - 12 and 2012 - 13, which we have set-aside to the file of the learned assessing officer with a direction to the assessee to show whether the allotment was made in a public subscription of shares or private subscription, for similar directions ground number 5 and 6 are set-aside to the file of AO. 0114. Ground number 7 is with respect to the disallowance of brokerage paid on held to maturity securities and ground number 8 is also related to the same, both these grounds, are identical to ground is in appeal of the assessee for assessment year 2011 - 12 and 2012 - 13....