TMI Blog2019 (4) TMI 1782X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular way, as prescribed by the RBI. If we appreciate the facts of this case in the light of the decision of UCO Bank vs. CIT [ 1999 (9) TMI 4 - SUPREME COURT] it is clear that since the assessee has been maintaining its accounts on mercantile system, they are entitled to show his real income by taking into account market value of such investments in arriving at real taxable income. Decided in favour of the assessee Addition on account of contribution made to PAR Employees Pension Fund Trust - HELD THAT:- As decided in own case [ 2019 (1) TMI 689 - ITAT DELHI] similar expenses were allowed in earlier years in the assessments made under section 143 (3) of the Act and the decision of DCIT verses Ranbaxy laboratories Ltd [ 2009 (6) TMI 126 - ITAT DELHI-I] wherein the allowability of expenses towards provision for Pension Fund were held to be allowable expenses and section 43B has no application, is applicable. The fact that the assessee had actually contributed/paid the amount to pension fund makes the case of the assessee even stronger. Addition u/s 14A - CIT-A allowing relief to the assessee under Rule 8D(2)(iii) - HELD THAT:- Insofar as the assessee bank is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the authorities below and have judiciously examined the order of the co-ordinate bench. We find that the contention of the ld. DR has been considered in the earlier years. 6. Ground No. 1 reads as under: On the acts and under the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 241,35,77,927/- on account of loss of revaluation of investment held under IF1M Category. 7. A similar issue was considered by the co-ordinate bench in ITA No. 2469/DEL/2011 vide Ground No. 1 of that appeal. The relevant findings read as under: 26. We have gone through the record and perused the order dated 16/03/2018 in ITA No. 4241/Del/2010 in assessee's own case, wherein after considering the case law on this aspect including the decision of the Hon'ble Apex Court in the case of UCO Bank vs. CIT 240 ITR 355 (SC) and the Master Circular of the RBI on the aspect of valuation of investments applicable to all banks prescribed in case of acquisition cost of securities classified under HTM category and also the order dated 25/10/2011 of a coordinate bench of this Tribunal in assessee's own case for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 2 of that appeal. The relevant findings read as under: 32. We have perused the record and the case law relied upon by both the sides. It is an admitted fact that the assessee being a Nationalized Bank is governed by the Banking Regulation Act, 1949; that they are following mercantile system of accounting both for book keeping purpose as well as for tax purposes; that they have been valuing the stock-intrade (investments) at cost in the balance sheet whereas for the same period of time the appellant has been valuing the very same investment at cost or market value whichever is lower for income tax purposes; that it is an established rule of commercial practice and accountancy that closing stock can be valued at cost or market price, whichever is lower. It could be seen from the record that the question as to the reflection of the investments being stock in trade in the audit report, profit and loss account and the annual report with the question of the value of securities as embedded in the closing stock and the corresponding figure as becoming the opening stock in the subsequent year was adverted to Indian judicial precedents. 33. Further as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered to tax. The entire edifice of the case of revenue is based on the theoretical suspicion of the Ld. assessing officer that inasmuch as the assessee has not been showing in the balance sheet not the reduced value of the scrip but the cost price of the scrip as the value of the scrip, when the securities were sold it is the cost price of the scrip but not the reduced value of the scrip that was taken to estimate the profits and as a consequence of which the less amount has been offered to tax. It is a verifiable fact with reference to the sales of securities, if any, that took place during the year or earlier or subsequent years. Such an exercise has not been undertaken by the learned assessing officer but merely basing on the figures reflected in the balance sheet which was prepared in accordance with the RBI guidelines, learned assessing officer reached a conclusion that there was an escapement of income due to the preparation of the balance sheet in a particular way, as prescribed by the RBI. 36. If we appreciate the facts of this case in the light of the decision of the Hon'ble Apex Court in UCO Bank vs. CIT 240 ITR 355 (SC) it is clear that since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r years to render the binding precedents followed by the Ld. CIT(A) inapplicable to the case on hand. In the absence of any change of facts and circumstances, we find it difficult to take a different view. In these circumstances, while respectfully following the above line of decisions, we dismiss this ground of appeal of the Revenue. 14. Respectfully following the findings of the co-ordinate bench [supra], we dismiss Ground No. 3. 15. Ground No. 4 reads as under: On the facts and in the circumstances of the case, Ld.CIT(A) erred in law in allowing relief to the assessee under Rule 8D(2)(iii) of the Income Tax Rule, 1962 without appreciating the facts of the case and provisions of law. 16. A similar issue was considered by the co-ordinate bench in ITA No. 2469/DEL/2011 vide Ground No. 4 of that appeal. The relevant findings read as under: 8. We have carefully perused the decision in the case of Maxopp Investment Ltd versus CIT (2018) 91 taxman.com 154 (SC) wherein the Hon'ble Apex Court considered two cases wherein the question of predominant intent of investment in shares was pleaded, though on different facts, on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at happens is that, in the process, when the shares are held as 'stock-intrade', 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 which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share and Stock Brokers P Ltd. case. Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be apportioned. 40) We note from the facts in the State Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing them to earn profits. 11. Hon'ble Apex Court made clear distinction of this case from the case of Maxopp investment Ltd where the assessee knew that whenever dividend would be declared by the investee company such dividend would necessarily be earned by the assessee and assessee alone, and it would be in the common knowledge of the assessee that such shares would generate dividend income as well as and when such dividend income is generated that would be earned by the assessee only. Hon'ble Apex Court in unequivocal terms held that in contrast, where the shares are held as stock in trade, this may not be necessarily a situation and the main purpose was to liquidate those shares whenever the share price goes up in order to earn profits. Hon'ble Apex Court, therefore, while rejecting the theory of dominant purpose in making investment in shares- whether it was to acquire and retain controlling interest in the other company or to make profits out of the trading activity in such shares - clearly made a clear distinction between the dividend earned in respect of the shares which were acquired by the assessee in their exercise to acquire and retain the controlli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A), however, held that inasmuch as the ld. AO was not satisfied with the method followed by the assessee bank that they had not correctly calculated the deduction under section 36(1)(viii) of the Act and the Ld. AO was of the view that the assessee bank had claimed profit attributable to eligible business and computed the same on proportionate basis, based on the total fund deployed method, Ld. CIT(A) directed the assessee to furnish the correct computation of eligible deduction under section 36(1)(viii) of the Act before the Ld. AO within 30 days and the AO shall verify the same to grant deduction. 72. We do not find anything illegality or irregularity in this direction given by the Ld. CIT(A). As a matter of fact Ld. CIT(A) treated this claim of the assessee as allowable and remanded matter for the limited purpose of submission of the current computation under section 36(1)(viii) of the Act. We, therefore, uphold the directions of the Ld. CIT(A) and dismiss this ground of appeal. 20. Respectfully following the findings of the co-ordinate bench [supra], we dismiss Ground No. 5. 21. Ground No. 6 reads as under: On the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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