TMI Blog2016 (2) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... and same was subject to fringe benefit tax. Similar issue was considered by the Co-ordinate Bench in the case of M/s. Bharat Overseas Bank [ 2013 (2) TMI 881 - ITAT CHENNAI] wherein held that provision of contribution to the approved superannuation fund was not subject to charging of FBT. Accordingly, we direct the Assessing Officer to delete the addition. - Decided in favour of assessee. Disallowance u/s 14 r.w.s. Rule 8D - HELD THAT:- In the present case, the assessee has not admitted any expenditure to earn the exempt income. Further, it was the submission of the assessee that the assessee bank has enormous own funds as well as interest free funds for purchasing tax exempt securities [shares and mutual funds]. Be as it may, but some expenditure in the form of travel, telephone, postage, stationery and manpower might have been involved in earning the exempt income. Moreover, we are of the opinion that the investments would have definitely involved certain administrative and establishment works have to be undertaken which entails definite costs. Hence, the contention of the assessee that no expenses have been incurred to earn the exempt income is not acceptable. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the business of providing long-term finances, can be carried out even without these activities such as consultancy, legal service, appraisal, etc., in leasing there is no finance and hence lease rental is not income from providing long-term finance. Other interests and financial charges are not shown to be out of providing long-term finance and hence not eligible for deduction under section 36(1)(viii). We set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to decide the issue afresh - Ground raised by the assessee is allowed for statistical purposes. - I.T.A. Nos. 1638, 1639 & 1640/Mds/2014, I.T.A. Nos. 1707, 1708, 1709, 1710, 1711, 1869 & 1734/Mds/2014 - - - Dated:- 29-2-2016 - Shri Chandra Poojari, Accountant Member AND Shri Duvvuru RL Reddy, Judicial Member For the Appellant : Shri Quadir Hoseyn, Advocate For the Respondent : Shri R. Mohan, CIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: These appeals by the assessee and Revenue are directed against the different orders of the Commissioner of Income Tax (Appeals) I, Coimbatore dated 15.06.2015 for the assessment years stated ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our interference. Thus, the ground raised by the assessee is dismissed. I.T.A. No. 1639/Mds/2014 6. The first ground raised in the appeal of the assessee for the assessment year 2006-07 is with regard to reopening of assessment. At the time of hearing, the ld. Counsel for the assessee has submitted that the ground raised by the assessee on reopening of assessment is not pressed and made endorsement in the grounds of appeal. Accordingly, the ground raised by the assessee is dismissed as not pressed . 7. The next effective ground raised in the appeal of the assessee is with regard to confirmation of addition made towards Fringe Benefit Tax contribution made to superannuation Fund of ₹.8.27 crores. The assessee bank filed its return of income for the assessment year 2006-07 on 29.11.2006 declaring FBT value of ₹. 2,87,06,054/-, and the same was processed under section 115WE(1) dated 20.09.2007. Another rectification order was passed on 26.08.2008. The assessee bank's case was reopened by issue of notice under section 115WH dated 30.03.2011 and served on the assessee on 04.04.2011. In the order dated 22.02.2012 under section 115 WG r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 115WB(2)(E) of the Act. We have gone through the order of the Coordinate Bench of the Tribunal in the case of TTK Health Care Ltd. v. DCIT in I.T.A. No. 1589/Mds/2014 for the assessment year 2006-07 dated 05.01.2016, wherein, by following the order of the Tribunal in the case of ACIT v. Bharat Overseas Bank Ltd.(supra), the Tribunal has held as under: 7. We heard the rival submissions of both the parties, perused the materials on record and orders of the lower authorities and judicial citation referred by the ld. Authorised Representative. The assessee company has made a provision for contribution to superannuation fund and the same was paid in the next Financial year. There is no dispute about the provision and the payment and there is no escapement of value and same was subject to fringe benefit tax. Similar issue was considered by the Co-ordinate Bench in the case of M/s. Bharat Overseas Bank (supra) wherein held that provision of contribution to the approved superannuation fund was not subject to charging of FBT Accordingly, we direct the Assessing Officer to delete the addition. 12. In view of the specific findings in the case of ACIT v. Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares, on which dividend income arises, are held as stock-intrade. We do not think that the purpose for which the shares are purchased and held would in any manner impact the applicability of section 14A, which gets attracted on incurring the expenditure in relation to a tax-exempt income, as dividend income. It may impact the head of the income under which the income arising there-from would stand to be assessed, i.e., were it to be taxable, but nothing more. The same is irrelevant as section 14A is independent of the head of the income under which the tax exempt income would be otherwise liable to tax. In fact, dividend income has been specifically provided under the statute for being assessable u/s.56, so that the fact that it arises in respect of shares held as stock-in-trade, i.e., as a part of the business income, and as such there is under the circumstances not even a change in the head of income, as would generally be the case, would be of no consequence. Succinctly put, section 14A would come into play irrespective of the head of income (on account of it arising qua a trading asset), under which the income not forming part of the total income would be otherwise liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning exempt income. Rule 8D is applicable from the assessment year 2008-09 onwards in view of the decision of the Hon ble Mumbai High Court in the case of Godrej Boyce Mfg. Co. Ltd. v. DCIT 328 ITR 81, the disallowance should be made based on the prescribed method quantified by the Act. In the present case, the assessment year under consideration is 2009-10 and therefore, instead of quantifying the disallowance under section 14A r.w. Rule 8D, the Assessing Officer has made disallowance to the tune of 2% of the exempted income under section 14A read with Rule 8D is found to be incorrect since the law has prescribed a method for quantifying the disallowance, the same cannot be overlooked. 18. In the present case, the assessee has not admitted any expenditure to earn the exempt income. Further, it was the submission of the assessee that the assessee bank has enormous own funds as well as interest free funds for purchasing tax exempt securities [shares and mutual funds]. Be as it may, but some expenditure in the form of travel, telephone, postage, stationery and manpower might have been involved in earning the exempt income. Moreover, we are of the opinion that the investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis would be around ₹.41,81,667 on the average NPA addition for the last quarter at the average rate of 10% as shown in the annual return. Thus the Assessing Officer has made an addition u/s 43D at ₹.41,81,667. Since the Authorised Representative of the appellant has neither filed any details of NPAs which are more than 90 days old which are bad and doubtful debt as stipulated under Rules 6EA r.w.s Sec. 43D before the Assessing Officer nor before the undersigned, the disallowance made by the Assessing Officer need to be confirmed as no details are available as mentioned above. The disallowance made by the Assessing Officer on account of Interest on NPAs is confirmed. 21. We have heard rival contentions and gone through the orders of authorities below. Based on the details furnished by the assessee, the Assessing Officer worked out the accrued interest and made addition under section 43D of the Act to the tune of ₹.41,81,667/-. The ld. CIT(A) has observed that since the AR of the assessee could not furnish any details of type of NPAs which are more than 90 days of old NPAs but are not bad and doubtful debts under Rule 6EA r.w.s. 43D as the NPAs being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Assessing Officer. 24. We have considered the rival contentions and perused the orders of authorities below. The assessee has claimed benefit of deduction under section 36(1)(viii) of the Act for the first time in the assessment year 2009- 10. This reserve is to be apportioned from the net profit along with other reserves and it is a below the line operation , i.e., after arriving net profit and at the time of apportioning the balance of profit to various reserves. The Assessing Officer has observed that the assessee has not segregated this amount from the general reserve in 2009. Though the assessee has claimed deduction, the required special reserve was not created and found in the balance sheet of the assessee as on 31.03.2009, but in the year 2010, it had created ₹.10 crores reserve by withdrawing the same from the general reserve. Since the assessee has not created the special reserve in the financial year 2008-09 relevant to the assessment year 2009-10, the deduction claimed by the assessee under section 36(1)(viii) of the Act was disallowed and the ld. CIT(A) confirmed the disallowance made on this account. Admittedly, though the assessee has for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to decide the issue afresh in accordance with law keeping in view of the ratio laid down by the Bangalore Benches of the Tribunal in the case of ACIT v. Corporation Bank in I.T.A. No.1264(Bang)2013 dated 11.03.2015 after allowing opportunity of hearing to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes. I.T.A.Nos.1707 to 1711, 1869 1734/Mds/2014 [Revenue s Appeals] 27. In all the appeals filed by the Revenue for the assessment years 1998-99,2002-03, 2004-05, 2006-07, 2009-10, 1991-92 and 2001-02, with regard to the issues remitted back to the file of the Assessing Officer as allowed for statistical purposes by the ld. CIT(A), the Revenue has challenged that the ld. CIT(A) can only confirm, reduce, enhance or annul the assessment in view of the powers as per section 252 of the Act. Before us, the ld. DR has submitted that with effect from 01.06.2001 vide Finance Act, 2001, the power of ld. CIT(A) in setting aside the assessment and refer the case back to the Assessing Officer for making fresh assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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