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2023 (6) TMI 480 - AT - Income TaxDisallowance u/s 14A - profits from shares where held as stock in trade and not as investments - disallowance of expenditure towards exempted income - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of ITAT, Chennai Benches in the assessee’s own case for AY 2013-14 [2020 (3) TMI 713 - ITAT CHENNAI] where the Tribunal by following the decision in the case of South Indian Bank Ltd [2021 (9) TMI 566 - SUPREME COURT] held that shares & securities held by the bank or guarantor and income received for such shares & securities must be considered as business income, and consequently, provisions of Sec. 14A of the Act, would not be attracted to such income. In the case of M/s.Canara Bank [2023 (1) TMI 243 - KARNATAKA HIGH COURT] had considered an identical issue and by following the decision in the case of South Indian Bank Ltd.[2021 (9) TMI 566 - SUPREME COURT] held that provisions of Sec. 14A of the Act, are not applicable in case of banking companies, where dividend income has to be considered as business income. In the case of PCIT v. Punjab National Bank [2022 (6) TMI 85 - DELHI HIGH COURT] had also considered an identical issue and by considering the decision in the case of Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT] held that provisions of Sec. 14A of the Act, will not apply on profits from shares where held as stock in trade and not as investments. The sum and substance of ratio laid down by the Hon’ble Supreme Court and the Hon’ble High Courts are that in case of banking companies were shares & securities are held as stock in trade, dividend income is considered as business income, and consequently, provisions of Sec. 14A of the Act, cannot be applied. We direct the AO to delete additions made towards disallowance of proportionate expenses relatable to exempt income for all assessment years.
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