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TMI Blog2021 (7) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 85,98,000/- to book profit under MAT (section 115JB) in respect of exempted income. 3. That on the facts & circumstances of the case and provisions of the law, the learned Assessing Officer has erred in not granting the TDS credit of Rs. 2,06,817/-. The Id CIT(Appeal) has also erred in not fully appreciating and adjudicating this issue in light of our submissions made before him resulting into passing of non-speaking order which is against principle of natural justice. 4. That the appellants request be allowed to add, modify and delete any other ground (s) of appeal 4. The grievance of the revenue read as under :- 1) On the facts and under the circumstances of the case, the Ld.CIT (A) erred in law and facts in deleting the addition of Rs. 17,63,07,641/- made by the AO in respect of depreciation on securities. 2) On the facts and under the circumstances of the case, the Ld.CIT (A) erred in law and facts in deleting disallowance of Rs. 1,87,35,15,770/- made by the AO out of contribution to P & S Bank employees Pension Fund Trust. 3) On the facts and under the circumstances of the case, the Ld.CIT(A) erred in law and facts in deleting the disallowance of Rs. 1277.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares held as trading assets were duly offered to tax as business income of the assessee. In the case of State Bank of Patiala the assessee has exempt income in the form of dividend was earned by the bank from securities held by as stock in trade. The Hon'ble Supreme Court was considering the question that has arisen under varied circumstances where the shares/stocks were purchased by a company for the purpose of gaining control over the said company or as "stock in trade", though incidentally income is also generated in the form of dividends as well. 24. It was argued before the Hon'ble Apex Court that though incidentally income was also generated in the form of dividends, the dominant intention for purchasing the shares was not to earn the dividend income but to acquire and retain the controlling business in the company in which shares were invested, or for the purpose of trading in the shares as business activity. 25. After considering the entire case law on this aspect in the light of the peculiar facts involved in both the matters, the Hon'ble Apex Court vide paragraph No. 39 and 40 held as follows:- 39) In those cases, where shares are held as stock-in-trade, the main pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the assessee alone. Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-intrade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. In the result, the appeals filed by the Revenue challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified hereinabove." 26. It is, therefore, clear from the above observations of the Hon'ble Apex Court that depending upon the facts of each case, the expenditure incurred in acquiring the shares will have to be apportioned. Hon'ble Apex Court held that the tribunal and the Hon'ble High Court of Punjab and Haryana arrived at a correct conclusion by setting aside the disallowance under section 14 A of the Act in respect of the dividend earned on the shares held as stock in trade, because such shares were held during the business activity of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under :- "5. Insofar as the disallowance of expenditure under Section 14A is concerned, the ITAT has relied upon the decision of the Supreme Court Maxopp Investment Ltd vs. CIT (2018), 402ITR 640 (SC). The decision of the Supreme Court reads as follows: "48. 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 14-A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts and in law, in our view, no question of law arises for consideration in the present appeal. Accordingly, present appeals stand dismissed." 9. As no distinguishing decision has been brought to our notice by the DR, respectfully following the decision of this Tribunal as upheld by the Hon'ble High Court (supra) we direct the AO to delete the disallowance made u/s. 14A r.w.r. 8D of the Act. Accordingly the ground No.1 and 2 of assessee's appeal are allowed and ground No.3 of revenue's appeal is dismissed. 10. The other grievance of the assessee relates to the nongranting of the TDS credit. We find that the CIT(A) has issued appropriate directions. We accordingly direct the AO to allow the credit as per provisions of the law after verification. 11. Ground No.3 is allowed for statistical purpose. 12. Coming to the other grounds of revenue's appeal in ITA No.1208/Del/2018 ground No.1 relates to the deletion of the addition of Rs. 176307641/- made by the AO in respect of depreciation on securities. 13. We find that an identical issue was considered by this Tribunal in assessee's own case in A.Y.2011-12 and 2012-13 (supra). The relevant findings of the Tribunal read as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit on sale of securities will be lower due to the nonattachment of cost of securities with deregulated appreciation claimed, but simultaneously at the second stage of the said transaction, claim of depreciation on securities for the year is also reduced to the extent of a community depreciation claimed earlier and resultantly the profit for the year is worked out correctly after taking into account both the folds of the transaction collectively. 11. On a careful consideration of the matter we are of the considered opinion that it is not the case of the Ld. Assessing officer that in this particular year in respect of any particular security such a thing had happened. It is not the case of the Ld. Assessing officer that with reference to any particular scrip there was depreciation and the loss was claimed in the earlier years as deduction but without showing the reduced value of the scrip as the opening value of the stock, on the sale of the scrip, the cost price but not the reduced price was taken as the cost of acquisition and thereby any less amount was offered to tax. The entire edifice of the case of revenue is based on the theoretical suspicion of the Ld. Assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) found that on similar issue in the Assessment year 2009-10, the issue was decided in of the assessee wherein it was held that similar expenses were allowed in the earlier assessments made under section 143(3) of the Act and the decision of Delhi ITAT in the case of DCIT vs Ranbaxy Laboratories Ltd (2009) 124 TTJ (Delhi) 771 wherein the 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. Following the above orders, Ld. CIT(A)held that the addition his score has to be deleted. 18. We do not find any difference in the facts of the case from their earlier years to render the binding precedents followed by the Ld. CIT(A) inapplicable to the case in hand. In the absence of any change of facts and circumstances, we find it difficult to take a different view. In these circumstances, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal." 17. Respectfully following the decision of the coordinate Bench ground No.2 is dismissed. 18. Ground No.4 and 5 take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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