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2018 (8) TMI 1882 - ITAT KOLKATAAddition u/s. 40(a)(ia) on account of non-deduction of TDS - whether the taxes have been deposited before the due date of filing of income tax return or that the payees have furnished Form 15G/15H to the assessee - HELD THAT:- Grounds of appeal raised by the revenue itself is erroneous for the simple reason that the Ld. CIT(A) has only directed to AO to verify and find whether the taxes have been deposited before the due date of filing of income tax return or that the payees have furnished Form 15G/15H to the assessee. In case, if the assessee has been able to satisfy the AO that the tax has been deposited before the due date of filing of income tax return or that the payee has filed From 15G/15H to the assessee then only such amount shall be deleted from the addition/disallowance made by the AO. The Ld. DR fairly conceded that the CIT(A) had only directed the AO to examine the relevant supporting evidence - we set aside the order of the Ld. CIT(A) and restore the issue back to the file of AO to decide the allowability of the claim of the assessee after examining the relevant supporting evidence - Ground of appeal of revenue is allowed for statistical purposes Addition u/s. 14A read with Rule 8D - HELD THAT:- As decided in HDFC BANK LTD. VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX-2 (3), MUMBAI & OTHERS [2016 (3) TMI 755 - BOMBAY HIGH COURT] since the Bank’s own funds were substantially more than the cost of investments yielding tax free income, no part of the interest paid was liable for disallowance. Also see RASOI LIMITED [2017 (2) TMI 863 - CALCUTTA HIGH COURT]. Merit in the assessee’s alternate contention that no disallowance out of interest paid was warranted because after netting off interest paid against interest received, the assessee had made net interest gain of ₹ 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 [2017 (9) TMI 485 - GUJARAT HIGH COURT] 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). Disallowance under Rule 8D(2)(iii) - qua the assessees engaged in the banking business, the Hon’ble Supreme Court upheld the judgment of the Hon’ble Punjab & Haryana High Court in the case of Pr. CIT Vs State Bank of Patiala [2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT] as per which no disallowance u/s 14A is permissible in terms of Rule 8D in case of assessee engaged in banking business. Respectfully following above qua the assessees engaged in the banking business, the Hon’ble Supreme Court upheld the judgment of the Hon’ble Punjab & Haryana High Court in the case of Pr. CIT Vs State Bank of Patiala [2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT] as per which no disallowance u/s 14A is permissible in terms of Rule 8D in case of assessees engaged in banking business. Respectfully following above we direct the Ld. AO to delete the disallowance made under rule 8D(2)(iii). CIT(A) in directing the AO to re-compute and allow the benefit of unabsorbed losses and depreciation brought forward from earlier years - 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. Section 115JB are not applicable to the assessee Bank
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