TMI Blog2015 (12) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... UPS at 60% instead of 80% claimed by the assessee - Held that:- the appellant is entitled to depreciation @ 60% by treating the UPS under the category of computer. Since the Ld. CIT (A) has followed the decision of the Tribunal, we do not find it necessary to interfere with his order. Disallowance made U/s.14A read with Rule 8D - Held that:- The whole purpose of enactment of Section.14A of the Act is to disallow certain expenses which are attributable to exempt income. The assessee bank due to various statutory requirements and commercial reasons is bound to make investments in securities and equity shares etc., which earn dividend that, are exempt from income. For making such investments obviously the financial wizards employed by the assessee company has to make tremendous exercise to determine as to what securities /equity shares etc., has to be purchased by the assessee to optimize the economical functioning of the assessee. This incurs cost. A portion of this cost has to be apportioned towards the factor of exempt income whether it is earned during the year or otherwise. For determining such apportionment of cost, Income Tax Rules are framed which we find in Rule-8D. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Ganesan, JM And A. Mohan Alankamony, AM For the Appellant : Mr Milind Madhukar Bhusari, CIT-DR For the Respondent : Mr C Naresh, Adv ORDER Per A. Mohan Alankamony, Accountant Member These appeals are filed by the Revenue and Assessee, aggrieved by the separate order of the Learned Commissioner of Income Tax(A)-I, Chennai in ITA No.549/10-11/A-1 ITA No.605/11-12/A-1 both order dated 21.07.2014 passed under Sec.143(3) read with section 147 Sec. 250 of the Act for the assessment years 2005-06 2006-07 respectively. 2. The concised grounds raised in all these appeals are listed here-in-below for adjudication. 2.A Assessee's Appeal : Common ground in both the assessee's appeals for the A.Ys 2005-06 2006-07) (i) Ld. CIT(A) erred in confirming reassessment proceedings u/s.147 of the Act, which was upheld by the CIT(Appeals) since the issues on which reopening had been initiated was examined by the Ld. CIT under Section.263 of the Act and the proceedings were dropped. For A.Y 2005-06 (ii) Ld. CIT(A) erred in confirming the disallowance of provision for wage arrears to staff of ₹ 3,50,35,000/- on the ground that the provision m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Ld. CIT (A). ASSESSEE'S APPEAL. 4. Ground No. (i) - Validity of reassessment proceedings u/s.147(for the A.Ys 2005-06 2006-07):- Ld. A.R. argued before us stating that the grounds on which reopening proceedings were initiated were originally examined by the CIT U/s.263 of the Act and after considering the explanations rendered by the assessee the Ld.CIT had dropped the proceedings initiated U/s.263 of the Act. It was therefore argued that on the same grounds reopening U/s.147 is erroneous. Reliance was placed on the decision of ITAT Kolkata in the case of ACIT Vs. Bothra Shipping Services reported in (2015) (1) TMI 742 where it was held that, when an issue has been examined and held in favour of assessee in the proceedings U/s.263, the same cannot be subject matter of reopening U/s.147 of the Act. On the other hand the Ld. D.R relied on the order of Ld. CIT(A) who had upheld the validity of reopening discussing the issue in detail. After hearing both sides and perusing the materials on record, we find that the Ld. CIT (A) had judiciously considered the issue and held the matter against the assessee because reopening was within a period of four years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee bank had made investments in tax free bonds to the tune of ₹ 45.47 crores. The Ld. Assessing Officer invoked the provisions of Section 14A read with Rule 8D of I.T.Rules and added ₹ 24,27,875/- to the income of the assessee. On appeal, the Ld. CIT (A) confirmed the order of the Ld. Assessing Officer. 7.2 Before us, Ld. A.R. submitted that the Chennai bench of the Tribunal in the case of IOB in ITA No.1949/Mds./2010 dated 18.6.2014 held that the provisions of section 14A cannot be invoked where securities are held in stock in trade. It was further submitted that, since the appellant holds all its securities as stock in trade, the decision of the Tribunal will hold good in the case of the assessee and accordingly disallowance U/s.14A is not warranted. Ld. D.R on the other hand argued in support of the orders of the Revenue. 7.3 After hearing both the sides and perusing the material on record and the case cited by the Ld. A.R, we find that on the earlier occasion the Tribunal in the case of IOB (supra) has held the issue in favour of the assessee by following the decision of the case CIT Vs. Vegetable Products Ltd reported in 88 ITR 192 , because there we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Tribunal in the case IOB Vs. ACIT in ITA No.98/Mds./2010 dated 5th March 2013 wherein it was held that the provisions of section 115JB are not applicable to the case of the assessee bank. While doing so, the Tribunal had placed reliance in the decision of Hyderabad Bench of the Tribunal in the case SBI Vs. DCIT in ITA No.578/Hyd./2010 dated 07.09.2012. The relevant portion of that order is reproduced herein below for reference:- 13. The provisions of section 115JB will be applicable to all companies. However, it is contended that Section.115JB will be applicable only where the assessee is required to show profit loss account in accordance with schedule VI of companies Act. As the banks are required to prepare balance sheet and P L A/c in accordance with the Banking Regulation Act, provision of 115JB cannot be applied to the banks. In the case of Maharashtra State Electricity Board Vs. JCIT (82 ITD 422) it was held that provisions of book profit cannot be applied to Electricity Companies. Banking Companies and Companies engaged in generation and supply of electricity do not have to prepare their accounts in accordance with parts II and III of Sch. Vi of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure and hence, brokerage paid for acquiring these investments has to be added to the cost of the investments. On appeal, the Ld. CIT (A) held the issue in favour of the assessee by holding that the investments constitute stock in trade following the decision of the jurisdictional Madras High Court in the case of Kauru Vyas Bank Ltd Tax case No.2139 of 2008. Before us, the Ld. A.R. also relied in the decision of the Supreme Court in the case of UCO Bank reported in 240 ITR 355 which was in favour of the assessee. On the other hand the Ld. D.R relied on the orders of the Ld. Assessing Officer. 9.2 We have heard both the parties and carefully perused the materials available on record. Before us, the nature of investments as to whether the investment made amounts to capital expenditure or revenue expenditure is not explained by both the parties. Moreover the decision cited by the Ld. CIT (A) and the assessee were not brought to the notice of Ld. Assessing Officer therefore in the interest of justice we remit back the matter to the file of Ld. Assessing Officer for denovo consideration and to pass appropriate order as per law and merit and after duly examining the decisions cite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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