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2020 (6) TMI 310 - AT - Income TaxDisallowance of depreciation in respect of assets given on lease - assets given on lease under its equipment leasing business - HELD THAT:- As relying on assessee's own case [2019 (6) TMI 1123 - ITAT MUMBAI] even in cases of “financial leases’, the depreciation allowance contemplated under Section 32(1) of the Act is allowable to the lessor. It has not been shown by the Ld. CIT-DR that any of such precedents in assessee’s own case has been altered by any higher authority. Therefore, so far as this aspect of the matter is concerned, we do not find any hesitation in directing the Assessing Officer to allow the claim of depreciation on lease of assets where it involves “financial lease’. - Decided in favour of assessee. Disallowing the expenditure claimed under Section 36(1)(iii) - HELD THAT:- As relying on assessee's own case [2019 (6) TMI 1123 - ITAT MUMBAI] IDBI General Regulations, 1994 prescribe for making investments in securities of Central and State Governments, we do not find any reason to uphold the stand of the income-tax authorities that such investments are not in the course of assessee’s business. In fact, there is an apparent contradiction in the stand of the assessing authority inasmuch as the interest yielded by such investments is assessed as ‘business income’ whereas the interest expenditure attributable to such investments has been sought to be treated as a non-business expenditure. Considering the aforesaid, we deem it fit and proper to set-aside the order of CIT(A) on this aspect and direct the Assessing Officer to allow the claim made by the assessee. - Decided in favour of assessee. Correct head of income - Profit on sale of shares of joint stock companies - Business income or capital gain - HELD THAT:- Relying on assessee’s own case [2019 (6) TMI 1123 - ITAT MUMBAI] we direct the Assessing Officer to treat the profit on sale of investment as capital gains. Thus, assessee succeeds on this ground. Exemption under Section 10(23G) of the Act in respect of income from infrastructure business - HELD THAT:- Relying on assessee’s own case [2019 (6) TMI 1123 - ITAT MUMBAI] we direct the A.O. to allow the deduction on gross basis, of cource after deducting the direct expenses attributable to earning such income. In the result, the assessee also succeeded on this ground. Disallowance of staff welfare expenses u/s. 40A(9) - HELD THAT:- In the present case, we find merit in the arguments of the ld. AR that these were written back in the computation of income and actual expenses were claimed under Section 37(1) - As relying on M/S. STATE BANK OF INDIA [2019 (6) TMI 1183 - BOMBAY HIGH COURT] set aside the order of CIT(A) and direct the Assessing Officer to allow the expenditure. - Decided against revenue. Claim of exemption u/s 10(33) - HELD THAT:- In this case clearly the assessee’s own funds are far more than the investments in shares and securities and, therefore, it can be presumed that the investments in shares and securities is made out of own and interest free funds available with the assessee. As relying on HDFC BANK LTD. [2014 (8) TMI 119 - BOMBAY HIGH COURT] set aside the order of CIT(A) on this issue and direct the Assessing Officer to delete the disallowance. Since we have allowed the relief to the assessee on the plea that own funds are more than amount of investments, therefore, the other pleas raised by the assessee need not be adjudicated. Taxing the interest on sticky loans as per Section 43D - HELD THAT:- In the present case, income has accrued in earlier year and, according to the assessee, since assessee was not liable for taxation in the earlier years, therefore, it was not offered to tax. Undisputedly, income has accrued in the earlier years and since the provisions of Section 43D of the Act does not have any retrospective application, hence income prior to 1.4.1991 cannot be taxed. We find merit in the contentions of the assessee on this issue. Moreover, the case of assessee is squarely covered by the decision of Hon'ble Supreme Court of India in the case of State Bank of Travancore [1986 (1) TMI 1 - SUPREME COURT] accordingly we direct the Assessing Officer to delete the addition on this count by setting aside the order of CIT(A). Disallowance of of dividend income under Section 80M - HELD THAT:- Respectfully following the decision of our co-ordinate bench in the assessee’s own case [2019 (6) TMI 1123 - ITAT MUMBAI] the Assessing Officer is directed to restrict the disallowance under Section 80M of the Act to 1% of the dividend income. Thus, assessee succeeds on this ground of appeal as stated above. Disallowance of claim of bad debt by AO u/s 36(1)(vii) - as per AO said debt has not become bad and accordingly, he added the same to the income of assessee - HELD THAT:- Appellant’s claim of bad debt was as per provisions of the Act, since the appellant was in the business of money lending. The appellant explained the circumstances for which the debts became unrecoverable and the debts were actually written off in the books of accounts. Moreover, whenever such written off debts were realized in future, the same were offered as income u/s. 41(4) of the Act. Therefore, the A.O was not justified in disallowing appellant’s claim. Case followed TRF. LTD. VERSUS COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT]. MAT applicability u/s 115JB - HELD THAT:- Since the assessee is a banking company the provisions of section 115JB was not applicable to a banking company, hence no income is assessable u/s.115JB. Interest paid u/s 201(1A) on TDS on payment by assessee - HELD THAT:- Perusing the material on record, we find that the CIT(A) has allowed the appeal of assessee following the decision of Hon'ble Karnataka High Court in the case of CIT vs. Oriental Insurance Company Ltd. [2008 (10) TMI 230 - KARNATAKA HIGH COURT]wherein it has been treated as in the nature of interest and hence admissible. However, we find that the jurisdictional High Court in the case of Ferro Alloys Corporation Ltd. vs CIT [1991 (12) TMI 39 - BOMBAY HIGH COURT] has decided the issue against the assessee. We, therefore, respectfully following the decision of the jurisdictional High Court in the case of Ferro Alloys Corporation Ltd. (supra), reverse the order of CIT(A). Accordingly, the ground raised by the Revenue is allowed. Deduction u/s 36(1)(viii) of the Act on account of special reserve - CIT(A) allowed the deduction - HELD THAT:- After hearing both the parties and perusing the material on record, we observe that the CIT(A) has passed a very reasoned and speaking order by sending back the issue to the file of Assessing Officer with the direction to take into account the reserve of ₹ 50 crores created by the appellant as the Assessing Officer has committed mistake in this regard. Accordingly, we do n Grant deduction under Section 36(1)(viia) - HELD THAT:- Issue has cropped up following the decision of the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. [2012 (2) TMI 262 - SUPREME COURT] that deduction under Section 36(1)(vii) and 36(1)(viia) of the Act are independent and assessee is entitled for both of them. Accordingly, we find merit in the legal contention of the assessee that assessee should be allowed deduction under Section 36(1)(viia) of the Act and are inclined to admit the additional ground raised by the assessee. However, the facts qua the said allowance needs to be examined at the level of the Assessing Officer as the Assessing Officer has not examined this issue in the assessment proceedings. Disallowance under Section 14A r.w.r. 8D - HELD THAT:- Since we have already decided this issue in para 26 of this order wherein we have held that assessee’s own funds was far more than the investments in shares and securities and, therefore, the investments in shares and securities were made out of own funds available with the assessee and deleted the disallowance, our finding in the said para would apply to these three years also on the issue of disallowance under Section 14A of the Act. Accordingly, the Assessing Officer is directed to delete the addition and assessee succeeds on this ground of appeal.
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