TMI Blog2021 (8) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... er, needs due elaboration in light of the submissions of the Ld. Counsel of the assessee above. The aspects also need actual verification of assessment records. It is settled law that Ld. CIT(A) needs to pass a speaking order. Hence, we remit this issue to the file of Ld. CIT(A). The Ld.CIT(A) shall elaborate how the mistake can be said to have got merged in the reassessment order giving the jurisdiction u/s 154 with reference to a mistake, which actually occurred much earlier. At what stage, the proposal to correct the error was mooted. CIT(A) shall give the assessee proper opportunity of being heard and also examining the reassessment and other records. Thereafter, he shall pass an order as per law. As regards that assessee pleading on merits. We find that in a proceeding u/s. 154, the merits of the issue cannot be adjudicated. Moreover, in the order of Tribunal referred by assessee in grounds of appeal the matter was remitted to the file of AO. In the result, this appeal filed by the assessee stands allowed for statistical purpose. Disallowances u/s 14A - HELD THAT:- It is apparent that said decision of Hon ble Supreme Court in Maxopp Investment Ltd [ 2018 (3) TMI 805 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in holding that eligible amount u/s 36(1) (viia) is to be restricted to provision made in the books during the current year without appreciating that the deduction is quantified based on total income and rural advances and is to be allowed irrespective of the quantum of provision for bad and doubtful debts made in books. 2.2 Without prejudice to above contention, Id. CIT(A) erred in not considering order of Hon'ble ITAT in appellants own case in ITA 6922/M/2013 for AY 2009-10 and allowing deduction u/s 36(1){viia) based on provision held. 4. Brief facts of the case are as under:- The facts of the case are that in this case the assessee has filed return of income for the year under consideration by declaring loss at ₹ 53,94,54,638/- under normal provision of the Act and income at ₹ 399,54,21,732/- u/s 115JB of the Act. The AO passed the order u/s 143(3) of the Act on 17.03.2008 by determining the total income at ₹ 697,52,82,1307- under normal provisions of the Act and at ₹ 1724,68,93,000/- us 115JB of the Act and allowed deduction u/s 36(1)(viia) of the Act of ₹ 268,51,06,964/- as claimed by the assessee in the return of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their submission have sought to contend that the issue of deduction u/s 36(1)(viia) arose only in the order dated 13.10.2010 and not in the order dated 28.11.2013. In respect of such submissions and contentions of the assessee it is stated that the original order u/s 143(3) was passed on 17.03.2008 and the deduction as claimed by the assessee u/s 36(1)(viia) was allowed to it in the said order. In the consequent appeal filed by the assessee neither any issue relating to deduction u/s 36(1)(viia) was agitated by the appellant nor was adjudicated by the Ld. CIT(A). However, in the order giving effect to the order of Ld. CIT(A) discrepancy crept in wherein deduction u/s 36(1)(viia) was allowed at ₹ 503,04,76,050/- as against the correct amount of ₹ 265,51,06,965/-. It is further the fact of the case that such mistake which crept in continued even in the order passed u/s 143(3) r.w.s. 147 of the Act on 28.11.2013. It is the order which was passed on 28.11.2013 therefore is the last order where the mistake remained and to that extent the earlier order got merged with this order. As such, the earlier orders which were passed by the AO including the order giving effect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the amount of ₹ 503.04 crores was allowed u/s 36(1)(viia). Accordingly, the issue of correct allowance of deduction u/s 36(1)(viia) to the tune of ₹ 268.51 crores was neither under any dispute nor under any challenge in the case of the assessee for the assessment year under consideration. Under these facts and circumstances and the impugned order under appeal being u/s 154 of the Act, the contention of the assesee on merits of allowability of deduction u/s 36(1)(viia) based on eligible amount calculated at 7.5% of the total income and 10% of the aggregate average advances of rural branches, irrespective of the provision made in books is not found to be applicable and acceptable. In view of such facts and circumstances of the case and discussion hereinabove, the contentions and submissions of the assessee are not found to be acceptable and are therefore rejected. 7. Against the above order assessee is in appeal before us. We have heard both the parties and perused the record. The claim here is that section 154 order has been passed beyond the limitation of the period. We note that admittedly there was a mistake in the order passed by the AO on 13/10/2010, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, he shall pass an order as per law. 9. As regards that assessee pleading on merits. We find that in a proceeding u/s. 154, the merits of the issue cannot be adjudicated. Moreover, in the order of Tribunal referred by assessee in grounds of appeal the matter was remitted to the file of AO. 10. In the result, this appeal filed by the assesee stands allowed for statistical purpose. 11. Appeal for AY 2008-09. Grounds of appeal read as under :- On jurisdiction 1.1 The Ld. CIT(A) erred in holding that after decision of Hon'ble Supreme Court in case of Maxopp Investments Ltd. (402 ITR 640), disallowance u/s 14A is automatic in all cases and hence even where disallowance was deleted, on AO being satisfied, based on directions of Hon'ble ITAT, the same constitutes a mistake apparent from records which can be rectified u/s 154. 1.2 The CIT{A) even otherwise failed to appreciate that the disallowance u/s 14A is a highly legal and debatable issue and cannot be a matter of rectification u/s 154 of the Income-tax Act. On Merits 2.1 The Ld.CIT(A) erred in confirming disallowance u/s Rule 8D{iii) on the ground that income from tax free bonds i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in respect of application of Sec.14A. They, in the said decision have clearly held that the argument relating to 'dominant intention' of the assessee would not be relevant for invoking the provisions Sec.14A of the Act. Accordingly the contention of the assessee that the issue is still debatable is not found to be acceptable. 6.3.1 The assessee in their submission on merits have stated that they have interest free funds aggregating to 27289 crores as against their funds employed in the securities on which tax free income was earned at only ₹ 446 crores. Under these facts (subject to the verification by the AO), it is stated that a presumption would come into play that when the investment in tax free assets are less than the interest free funds owned by the assessee, then such investments are to be presumed as if to have been made out of the interest free funds available with the assessee as per the decision of the Bombay High Court in the case of HDFC Bank Ltd. 383 !TR 579. It is seen from the copy of the assessment order that out of the total disallowance made under 14A r.w.r. 8D(2) the AO has made disallowance of ₹ 21,25,09,346 under clause(ii) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared by the investee company that would necessarily be earned by the assessee and the assessee alone, ! find that the appellant, even at the time of investing into the shares, knew that it may generate dividend income as well and as and when such dividend income is generated that would be earned by it. Further, in the facts of the case assessee has not proven that such purchase of equity/securities were purely for the purposes of trading and that it contributed only to their stock in trade. Therefore, I am of the considered opinion that while computing the disallowance u/s.14A read with Rule 8D(2){iii), investment in equity shares should be considered. 6.3.3 The assessee has also placed reliance on the decision of Hon'ble ITAT Delhi in the case of Nice Bombay Transport(P) Ltd. vs. ACIT(OSD), New Delhi in ITA No.1331 of 2012 wherein the Hon'ble ITAT have held where assesee has purchased shares as stock in trade for the purpose of trading and receives dividend, provisions of Sec.14A cannot be invoked. In respect of such decision, it is stated that it is in respect of particular fact of the assessee wherein the assessee was engaged in the business of trading in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X
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