TMI Blog2018 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been paid and to disallow in the year of provision. We accordingly set aside Ground No. 3 back to Ld.AO with a direction to disallow the claim, in the year of provision and to allow claim in the year of payment. Ld. AO is directed not to levy any interest and penalty in the year of disallowance - ITA No. 1519/Del/2016, ITA No. 7106/Del/2017 - - - Dated:- 28-11-2018 - Smt. Beena A Pillai, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Sh. S. Krishnan, C.A. And Sh. Raj Kumar, Adv. For the Department : Smt. Sulekha Verma, CIT, D.R. ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present quantum appeal by assessee and penalty appeal by revenue has been filed against order dated 28/01/16 and 09/10/17 respectively passed by Ld.CIT (A)-7, New Delhi for Assessment Year (A.Y.) 2012-13 on following grounds of appeal: ITA No. 1519/Del/2016 1. That the order is against the law and facts of the case. 2. That on the facts and circumstances of the case and provisions of the law, the Ld.CIT(A) was not justified in sustaining the action of A.O. in disallowing an expenditure of ₹ 19,44,14,224/-to have been made u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come under various heads. Thus assessee was using its administrative, managerial and infrastructural setup for earning income, which does not form part of total income under the Act. He thus rejected claim of assessee regarding expenditure in relation to income which does not form part of total income, and made addition amounting to ₹ 2,33,38,36,335/-. 2.2 . Another issue observed by Ld.AO was in respect of deduction for provision of leave encashment amounting to ₹ 1,65,26,00,000/-. Ld.AO was of the opinion that provision was not claimed as expenditure, as per section 43B (f) of the Act and hence assessee was not entitled to any deduction to that extent. 3. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld.CIT (A) who allowed claim of assessee under section 14 A read with Rule 8D(ii) but confirmed disallowance under Rule 8D(iii). As regards disallowance under section 36(1)(vii) of the Act, the same was confirmed by following decision of his predecessor for preceding Assessment Years. 4. Aggrieved by order of Ld. CIT (A), assessee is in appeal before us now. 5. Ground No. 1 is general in nature therefore do not require any adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd then the profit would be said to have accrued from investment. To this extent, the High Court may be correct. At the same time, we do not agree with the test of dominant intention applied by the Punjab and Haryana High Court, which we have already discarded. In that event, the question is as to on what basis those cases are to be decided where the shares of other companies are purchased by the assessees as 'stock-in-trade' and not as investment We proceed to discuss this aspect hereinafter. 39. In those cases, where shares are held as stock-in-trade, the main purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as 'income' under the head 'profits and gains from business and profession'. What happens is that, in the process, when the shares are held as 'stock-in-trade', certain dividend is also earned, though incidentally, which is also an income. However, by virtue of Section 10 (34) of the Act, this dividend income is not to be included in the total income and is exempt from tax. This triggers the applicability of Section 14A of the Act wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove. 6.2. On the contrary Ld.Sr.DR placed reliance upon the orders passed by authorities below and following decisions: Godrej and Boyce manufacturing Co Ltd vs. DCIT reported in (2017) 81 Taxmann.com 111 (SC); India Bulls financial services Ltd vs. DCIT reported in (2016) 76 Taxmann.com 268 (Del); Punjab tractors Ltd vs. CIT reported in (2017) 78 Taxmann.com 65 (P H). 7. We have perused the submissions advanced by both sides in the light of records placed before us. 8. It is observed that decisions relied upon by Ld.Sr.DR has been passed prior to decision of Hon ble Supreme Court in the case of Maxopp Investment vs CIT (supra). Further Hon ble Supreme Court in the case of Maxopp Investment vs CIT (supra), has rendered a clear finding in respect of banking institutions which is peculiar. Present assessee before us is also a Bank, where shares were held as stock-in-trade and therefore it becomes business activity of assessee. In our opinion specific observation Hon ble Supreme Court in the case of Maxopp Investment vs CIT (supra), reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a direction to disallow the claim, in the year of provision and to allow claim in the year of payment. Ld. AO is directed not to levy any interest and penalty in the year of disallowance. 12.1. Accordingly this ground is allowed for statistical purposes. 13. In the result appeal filed by assessee stands allowed. ITA No.7106/Del/2017 14 . Brief facts of case are as under. Assessee filed its return of income for A.Y. 2012-13 on 28.09.2012 declaring total income at ₹ 67,35,50,78,613/- which was subsequently revised to ₹ 66,44,85,39,460/-. Order u/s 143(3) was passed on 11.3.2015, assessing income at ₹ 81,34,90,00,209/- by making various additions/disallowances. 14.1. Ld.CIT(A) partly allowed appeal vide order dated 28.01.2016 and restricted disallowance to ₹ 19,44,14,224/- u/s 14A of the Act. 14.2. Subsequently penalty order u/s 271(1)(c ) was passed on 27.03.2017 on the said disallowance, levying penalty of ₹ 6,30,77,695/-. 15. Aggrieved by penalty order, assessee filed appeal before Ld.CIT(A) who allowed appeal of assessee. 16. Aggrieved by order of Ld.CIT(A), Revenue is in appeal before us now. 17. Ld.Sr. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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