TMI Blog2017 (2) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable certainty, although, the actual quantification may not be possible. In the case in hand also as per the agreement and the policy, the wage revision was certain and it could have been reasonably estimated also. Hence, the provision made by the assessee towards wage revision was allowable - Decided in favour of assessee Disallowance u/s 14 A - HELD THAT:- As decided in assessee's own case we find that facts and circumstances of the case in the present year are similar except that learned counsel of the assessee has submitted that several more decisions have come which have upheld the view that disallowance under section 14 A is not required when the investment is held as stock in trade. In our considered opinion we should follow the doctrine of stare decisis. Accordingly following the same directions as above we remit this issue to the file of the assessing officer. Assessing officer is directed to consider the issue in light of the directions as above after giving the assessee adequate opportunity of being heard. Assessee is at liberty to canvas further case laws as it deems appropriate. Exclusion of income of foreign branches situated in countries where there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lks that were being-held between the Indian Banks Association (IBA) and various Employee Unions. ii) The Ld. CIT(A) failed to appreciate that once liability for an expenditure which is contractual in nature is foisted on appellant the same is allowable as deduction though the same could be quantified based on reasonable estimate only. Reliance is placed on the decision of Jurisdictional ITAT Mumbai in TATA Communications Ltd. V JCIT (ITA 3062/Mum/2003 dated 05-12-2012) and other decisions. iii) The Ld. CIT (A) erred in confirming the disallowance u/s 14A computed as per rule 8D at ₹ 85.90 crore on a tax free income of ₹ 58.43 crore over looking fact that the appellant had himself quantified the disallowance at ₹ 7.94 crore being 05% of average investments earning tax free income. The CIT (A) should have appreciated as all the assets from which the tax free income has been earned are stock in trade as held in the case of CCI Ltd (250 CTR 291). iv) Without prejudice to the above contention, even if is to be applied, the disallowance can only be nil since the appellant does not hold any investment the income from which does not or shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in favour of the assessee by this tribunals decision in assessee's own case for earlier assessment year. Per Contra Ld. DR, did not dispute the submission of the Ld. Counsel of the assessee. 5. Up on careful consideration we find that this tribunal in assessee's own case in ITA number 4619 and 4873/M/2012 for assessment year 2008-09 has adjudicated identical issue as under; Ground Nos.3.1 3.2 relate to the disallowance of provision towards liability arising on account of wage revision payable to employees. According to the assessee the provision made for excess payment of wages payable to the employees was towards the ascertained liability. It was submitted that after every five years, charges are revised as per the policy and agreement reached with the unions. Therefore, the wage revision for the year under consideration was must and certain. However, the negotiation was going on with the union and the agreement was signed with the union oil only. The Ld. CIT(A), however, rejected the claim oil ground that it was a contingent liability. He held that no agreement was signed by the assessee during the year under consideration, hence the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable. However, in our client s case there are sufficient own funds by way of Share Capital of ₹ 365.52 crores, Reserve Surplus of ₹ 12514.19 Crores and demand deposit of ₹ 11696 crores. These funds are sufficient to invest in investments, income of which is exempt amounting to ₹ 14451.22 Crores. Our client, therefore has disallowed 0.5% of investments u/s. 14A of the I.T. Act, 1961 of ₹ 7,94,39,436/-. 10. However the assessing officer was not convinced. He proceeded to make disallowance under section 14 A as per the provisions of rule 8D.. and made disallowance of ₹ 85,90,80,262. 11. Upon assessee's appeal learned CIT-A inter-alia noted that in the preceding assessment year learned CIT-A has, affirmed the disallowance. Referring to several case laws learned CIT-A affirmed the disallowance. Against above order assessee is in appeal before us. 12. We have heard both the counsel and perused the records. Ld. Counsel of the assessee submitted that the investments in this case held by the bank are actuality its stock in trade. Hence referring to several case laws he submitted that in such cases no disallowance under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 14A of the Income Tax Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having regard to the accounts of the assessee. Sub section (2) does not ipso facto enable the Assessing Officer to apply the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect such expenditure is correct. The satisfaction of the Assessing Officer must be arrival at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and recording of reasons by the Assessing Officer in the event th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ltd. (supra), CIT vs. HDFC Bank Ltd. (supra) and in the case of India Advantage Securities Ltd. (supra). Needless to say, the AO will give proper opportunity to the assessee to present its case and furnish working/computation etc. and then to decide the case in accordance with law. 14. We find that facts and circumstances of the case in the present year are similar except that learned counsel of the assessee has submitted that several more decisions have come which have upheld the view that disallowance under section 14 A is not required when the investment is held as stock in trade. In our considered opinion we should follow the doctrine of stare decisis. Accordingly following the same directions as above we remit this issue to the file of the assessing officer. Assessing officer is directed to consider the issue in light of the directions as above after giving the assessee adequate opportunity of being heard. Assessee is at liberty to canvas further case laws as it deems appropriate. 15. Apropos ground number (vi) of assessee s appeal. 16. On this issue Ld. Counsel of the assessee fairly agreed that this issue is covered against is the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28'h August, 2008, issued by the Central Government The conclusion arrived by the Tribunal after discussing various aspects are as under:- i) The ratio of all the judgements rendered by the Hon'ble High Courts, as discussed herein above and confirmed by the Hon ble Supreme Court specifically in the case of Turquoise Investment, on the interpretation of the expression may be taxed'; that once the tax is payable or paid in the country of source, then country of residence is denied of the right to levy tax on such income or the said income cannot be included in return of income filed in India, would no longer apply after the insertion of provision of sub-section(3) of section 90 w.e.f 1st April, 2004, i.e., assessment year 2004-05. The said provision as conferred upon the Central Government a power to issue notification, assigning meaning to the terms used in the DTAA, which has neither been defined under the Act nor in the agreement provided that such a meaning should not be inconsistent with the provisions of the Act or agreement. In pursuance of such a statutory empowerment, Central Govt has issued a notification on 26n August, 2008, dearly specifying tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er taxed have been paid by the Branches in the other contracting States i.e., the source country, credit of such taxes shall be given. v) Respectfully following the aforesaid decision in the case of the same appellant and from the jurisdictional bench of ITAT and upholding the rule of judicial discipline, it is held that the income of the foreign branches is to be taxed in India and as per the notification, the income that is to be included in the total income is such income of foreign branch that was taxed in that foreign country. The relief of tax will be allowed based on the tax paid in the foreign country. 22. Against the above decision of the Ld. CIT-A the grievance of revenue is that ITAT had held that income of all the foreign branches shall also be taxable in India and credit to taxes if any paid by the branches in the foreign country would be allowed. However, the Ld. CIT-A has held that only that income of foreign branches is to be included in the total income if the same was taxed in the foreign country. Ld. DR, has submitted that this is not at all as per the decision of the ITAT referred by the LD. CIT-A in his order. 23. Per contra Ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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