TMI Blog2023 (6) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be considered as business income. In the case of PCIT v. Punjab National Bank [ 2022 (6) TMI 85 - DELHI HIGH COURT] had also considered an identical issue and by considering the decision in the case of Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT] held that provisions of Sec. 14A of the Act, will not apply on profits from shares where held as stock in trade and not as investments. The sum and substance of ratio laid down by the Hon ble Supreme Court and the Hon ble High Courts are that in case of banking companies were shares securities are held as stock in trade, dividend income is considered as business income, and consequently, provisions of Sec. 14A of the Act, cannot be applied. We direct the AO to delete additions made towards disallowance of proportionate expenses relatable to exempt income for all assessment years. - ITA Nos. 902, 903, 905 And 907/Chny/2010, ITA Nos. 930 And 931/Chny/2011 - - - Dated:- 9-6-2023 - Shri Manjunatha. G, Accountant Member And Shri Manomohan Das, Judicial Member For the Appellant : Mr.S.Ananthan, CA And Ms.R.Lalitha, CA For the Respondent : Mr. AR.V.Sreenivasan, Addl.CIT ORDER PER BENCH: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT (Appeals) did not go through the facts of the case but came to a conclusion that the appellant failed to establish the existence of these assets. This is not correct. (For the Asst Year 1996-97, the then CIT (Appeals) remitted some issues to assessing officer, including depreciation on leased assets of M/s Rajender Steels Ltd and M/s Aruna Textiles Exports Ltd.) III (i) Pension payments to Bank employees was one of the issue in Bi partite settlement. Pension payment starts after employees retired from active service. The Pension Fund was registered at the office of Chief Commissioner of Income tax, Chennai. Agreement signed by all the parties (ie) Bank, Employees ISA in January 1998. CBDT was requested to grant exemption from rule 89. The exemption was given to Nationalized Banks in 1996. The application filed by the Private Sector Banks were kept pending by CBDT up to August 2003. In August 2003 the CBDT refused to give exemption to rule 89. The appellant Bank purchased Annuity from October 2003. (ii) Since exemption application was pending up to August 2003, the Bank started paying pension directly to pensioners. (iii) Pension scheme is appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Bank directly. This is actual payment. So there is no violation. (vii) This pension payment was made wholly and exclusively for the purpose of business. Paying pension to employees is expenditure for business purposes. The retired employees are also equal to existing employees. They are also Associate members of the Union/Association. The payment was not made for personal or private purposes. On these grounds the CIT(A) had erred in disallowing the claim with the ruling mat the pension payments were not made to any approved pension fund. IV (i) The Commissioner of Income tax of Appeal, Trichy failed to see that Software expenses are of revenue expenditure as per Income tax appellate Tribunal order dated 14-07-2006 (ITA No.1137/Mds/2003 for AY 94-95). (ii) The life of the software cannot be determined. The software can become also Obsolete at any time. It is only programme/instruction written by programmers in computer language. V. CIT(Appeals) erred in confirming disallowance of Rs. 2,40,000/- on account of expenses incurred to increase authorized capital, which is one of the fundamental component of business. This amount is paid to Government Statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Hon ble Madras High Court. 4. The Ld.Counsel for the assessee, Mr.S.Ananthan, CA, submitted that the issue involved in all six appeals are disallowance of expenditure relatable to exempt income and is covered by the decision of ITAT Chennai Benches in the assessee s own case for AYs 2013-14 reported in 2021 (11) TMI 568 - ITAT Chennai, where the Tribunal by following the decision of the Hon ble Supreme Court in the case of South Indian Bank Ltd. v. CIT reported in [2021] 438 ITR 1 (SC) held that provisions of Sec. 14A of the Act r.w.r.8D of the IT Rules, 1962, is not applicable in the case of banking companies, where the exempt income has been offered as business income. Therefore, he submitted that the additions made by the AO towards estimated disallowance of expenditure relates to exempt income needs to be deleted. 5. The Ld.DR, Mr. AR.V.Sreenivasan, Addl.CIT, referring to the decision of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT, reported in [2018] 91 taxman.com 154 (SC), more particularly, Para Nos.38-41 of the said judgment, submitted that the Hon ble Supreme Court clearly held that even if in a case of investments held as stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's own case for 2012-13 in ITA No.54/CHNY/2018, where it has been held that no disallowance u/s.14A is permissible in terms of Rule 8D where the assessee is engaged in banking business He submitted that in a recent decision in the case of South Indian Bank Ltd., vs. CIT, Supreme Court in Civil Appeal No.9606 of 2011, vide order dated 09.09.2021 held that in the case of banking companies, Section 14A is not applicable. 12.2 The ld.DR on the other hand supporting order of the CIT(A) submitted that the exempt income is earned, disallowance contemplated u/s.14A triggers and the AO shall compute such disallowance by invoking Rule 8D of IT Rules, 1962 and thus, there is no error in the reasons given by the authorities below to sustain addition made towards disallowance u/s.14A and their orders should be upheld. 12.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Admittedly, the issue is covered in favour of the assessee by the decision of ITAT in assessee's own case for assessment year 2012-13, where under identical set of facts, the Tribunal by following certain judicial precedents including the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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