TMI Blog2022 (4) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT ] held that where assessee s own funds and other non interest bearing funds were more than the investment in tax free securities, no disallowance under section 14A of the Act can be made. We further find that recently Hon'ble Supreme Court in South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT ] held that disallowance under section 14A of the Act would not be warranted where interest free own funds exceeds the investment in tax free securities and in such a case the investment would be presumed to be made out of assessee s own funds. In another decision, the Hon'ble Jurisdictional High Court in Nirved Traders Pvt. Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] held that the disallowance of expenditure in relation to exempt income cannot exceed the exempt income earned by the assessee. We find no infirmity in the impugned order passed by the learned CIT(A) deleting the disallowance made by the Assessing Officer under section 14A r/w rule 8D of the Rules. As a result, ground no.2, raised in Revenue s appeal is dismissed. - ITA No.2175/Mum./2019 - - - Dated:- 19-4-2022 - Shri Prashant Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to set off of brought forward long term capital loss against the long term capital gain on sale of depreciable assets. 6. The brief facts of the case pertaining to this issue as emanating from the record are: During the year under consideration, the assessee, interalia, earned income from long term capital gain on sale of assets. This capital gain was set off against carried forward long term capital loss. During the course of assessment proceedings, it was noticed from the computation of income of the assessee that it has shown income from long term capital gain of ₹ 2,66,47,393. It was further observed from the table of fixed assets submitted by the assessee that the assessee has treated the assets / buildings as a depreciable asset. The assessee was asked to show cause as to why the set off of carried forward long term capital loss against capital gain on sale of depreciable assets be not disallowed, as, such capital gain is in the nature of short term capital gain under section 50 of the Act. In reply, the assessee submitted that the assets / buildings transferred during the year were held for more than 36 months and, therefore, qualify as long term capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order dated 28.12.2018, allowed the appeal filed by the assessee, in respect of this issue, by observing as under: On perusal of the various judgments relied upon the appellant and the contention of the A.O. I agree with the contention of the appellant. The provisions of Section 50 are deeming provisions which provide the method of computation of capital gain and loss for depreciable asset. However, deeming provisions do not change the nature of asset, from long-term to short term and therefore, the benefits available to Long-term Capital Gain will continue to be available to the Short-term Capital Gain determined on account of such deeming provisions including set off of brought forward unabsorbed long term capital loss against long term capital gain. However, in the instant case since one asset at Cochin also sold has been purchased during the Financial Year 2013-14, the same is a Short-term Capital asset and the gain arising on sale of such asset will he Short-term capital gain u/s.50 and will not to be eligible to the benefits of set off of brought forward unabsorbed long term capital loss against such Short-term Gain of ₹ 81,00,000/- and the same will con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted in the bank with effect from 26-10-1965 for the purpose of seniority, pay and pension on account of his past service in the army as Short Service Commissioned Officer. In that context, the Apex Court has held that the legal fiction created for the limited purpose of seniority, pay and pension cannot be extended for other purposes. Applying the ratio of the said Judgment, we are of the opinion, that the fiction created under section 50 is confined to the computation of capital gains only and cannot be extended beyond that 11. We further find that the Hon'ble Supreme Court in V.S. Dempo Pvt. Ltd. (supra) has agreed with the view expressed by the Hon'ble Jurisdictional High Court in the aforesaid case. 12. In another decision, the Hon'ble Jurisdictional High Court in CIT v/s Manali Investment, [2013] 219 Taxman 113 (Bom.) dismissed Revenue s appeal on the following question of law, as proposed for the consideration of the Hon ble Court: - Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that the assessee is entitled to setoff under Section 74 in respect of capital gain arising on transfer of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order dated 28.12.2018, allowed the appeal filed by the assessee on this issue by agreeing with the submissions filed by the assessee and also following the decisions passed by various Courts including the Hon'ble Jurisdictional High Court. Being aggrieved, the Revenue is in appeal before us. 17. During the course of hearing, the learned D.R. vehemently relied on the order passed by the Assessing Officer. 18. On the other hand, the learned Counsel submitted that this issue has been decided in favour of the tax payer by the Hon'ble Jurisdictional High Court in CIT v/s HDFC Bank Ltd., [2014] 366 ITR 505 (Bom.) and Nirved Traders Pvt. Ltd. v/s DCIT, [2020] 421 ITR 142 (Bom.). 19. We have considered the rival submissions and perused the material available on record. We find that the Hon'ble Jurisdictional High Court in HDFC Bank Ltd. (supra) held that where assessee s own funds and other non interest bearing funds were more than the investment in tax free securities, no disallowance under section 14A of the Act can be made. We further find that recently Hon'ble Supreme Court in South Indian Bank Ltd. v/s CIT, [2021] 438 ITR 001 (SC) held that disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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