2019 (4) TMI 1782 - AT - Income Tax

Loss of revaluation of investment held under IF1M Category - HELD THAT - As decided in own case 2019 (1) TMI 689 - ITAT DELHI wherein after considering the case law on this aspect including the decision of the Hon ble Apex Court in the case of UCO Bank vs. CIT 1999 (9) TMI 4 - SUPREME COURT and the Master Circular of the RBI on the aspect of valuation of investments applicable to all banks prescribed in case of acquisition cost of securities classified under HTM category. Depreciation on shifting of securities from AFS/IIFT category to HMT Category - HELD THAT - As decided in own case 2019 (1) TMI 689 - ITAT DELHI It is a verifiable fact with reference to the sales of securities, if any, that took place during the year or earlier or subsequent years. Such an exercise has not been undertaken by the learned assessing officer but merely basing on the figures reflected in the balance sheet which was prepared in accordance with the RBI guidelines, AO reached a conclusion that there was an escapement of income due to the preparation of the balance sheet in a particular way, as prescribed by the RBI. If we appreciate the facts of this case in the light of the decision of UCO Bank vs. CIT 1999 (9) TMI 4 - SUPREME COURT it is clear that since the assessee has been maintaining its accounts on mercantile system, they are entitled to show his real income by taking into account market value of such investments in arriving at real taxable income. Decided in favour of the assessee Addition on account of contribution made to PAR Employees Pension Fund Trust - HELD THAT - As decided in own case 2019 (1) TMI 689 - ITAT DELHI similar expenses were allowed in earlier years in the assessments made under section 143 (3) of the Act and the decision of DCIT verses Ranbaxy laboratories Ltd 2009 (6) TMI 126 - ITAT DELHI-I wherein the allowability of 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. Addition u/s 14A - CIT-A allowing relief to the assessee under Rule 8D(2)(iii) - HELD THAT - Insofar as the assessee bank is concerned section 14A of the Act has no application in view of the above law laid down by the Hon'ble Apex Court in the case of Maxopp investments Ltd 2018 (3) TMI 805 - SUPREME COURT - We, therefore, while respectfully following the above decision, hold that no addition in case of the assessee under section 14-A is sustainable. Hence, ground of appeal of assessee is allowed and the ground of appeal of the Revenue is dismissed. Disallowance u/s 36(l)(viii) - eligible deduction under section 36(1)(viii) - HELD THAT - As a matter of fact Ld. CIT(A) treated this claim of the assessee as allowable and remanded matter for the limited purpose of submission of the current computation under section 36(1)(viii) of the Act. We, therefore, uphold the directions of the Ld. CIT(A) and dismiss this ground of appeal. Addition on account of goodwill - HELD THAT - As decided in own case 2019 (1) TMI 689 - ITAT DELHI CIT(A) noted that it is only a consequential claim during this year also and in view of the fact that his predecessors held the issue in favour of the assessee consistently for all these years, while following the same, we direct the Ld. AO to allow deposition on WDV of the block goodwill for this year also.

Summary

Issues Involved:
1. Deletion of addition on account of loss of revaluation of investment held under IF1M Category.
2. Deletion of addition on account of depreciation on shifting of securities from AFS/IIFT category to HMT Category.
3. Deletion of addition on account of contribution made to PAR Employees Pension Fund Trust.
4. Allowance of relief under Rule 8D(2)(iii) of the Income Tax Rules, 1962.
5. Deletion of disallowance under section 36(1)(viii) of the Income Tax Act.
6. Deletion of addition on account of goodwill.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Loss of Revaluation of Investment Held Under IF1M Category:
The first issue pertains to the deletion of an addition of ?241,35,77,927/- on account of loss of revaluation of investment held under IF1M Category. The Tribunal referenced a similar issue addressed in ITA No. 2469/DEL/2011, where the Tribunal upheld the decision of the CIT(A) based on the principles laid down by the Apex Court in UCO Bank vs. CIT 240 ITR 355 (SC). The Tribunal found no merit in the Revenue's appeal and dismissed Ground No. 1.

2. Deletion of Addition on Account of Depreciation on Shifting of Securities from AFS/IIFT Category to HMT Category:
The second issue involves the deletion of an addition of ?2,33,19,69,576/- made by the assessing officer on account of depreciation on shifting of securities from AFS/IIFT category to HMT Category. The Tribunal referred to its earlier decision in ITA No. 2469/DEL/2011, where it was held that the assessee, a Nationalized Bank, follows the mercantile system of accounting and values investments at cost or market value, whichever is lower. The Tribunal found no change in facts and upheld the CIT(A)'s decision, dismissing Ground No. 2.

3. Deletion of Addition on Account of Contribution Made to PAR Employees Pension Fund Trust:
The third issue concerns the deletion of an addition of ?6,57,29,00,000/- on account of contribution made to PAR Employees Pension Fund Trust. The Tribunal referenced its decision in ITA No. 2469/DEL/2011, where it was held that similar expenses were allowed in earlier years and that section 43B had no application. The Tribunal found no difference in facts and upheld the CIT(A)'s decision, dismissing Ground No. 3.

4. Allowance of Relief Under Rule 8D(2)(iii) of the Income Tax Rules, 1962:
The fourth issue pertains to the relief allowed under Rule 8D(2)(iii) of the Income Tax Rules, 1962. The Tribunal referred to the decision in Maxopp Investment Ltd vs. CIT (2018) 91 taxman.com 154 (SC), which distinguished between shares held as stock-in-trade and shares held for acquiring controlling interest. The Tribunal found that section 14A had no application in the assessee's case and dismissed Ground No. 4.

5. Deletion of Disallowance Under Section 36(1)(viii) of the Income Tax Act:
The fifth issue involves the deletion of a disallowance of ?1,33,68,01,000/- under section 36(1)(viii). The Tribunal referenced its decision in ITA No. 4722/DEL/2012, where it upheld the CIT(A)'s direction for the assessee to furnish the correct computation of eligible deduction under section 36(1)(viii). The Tribunal found no irregularity in the CIT(A)'s direction and dismissed Ground No. 5.

6. Deletion of Addition on Account of Goodwill:
The sixth issue pertains to the deletion of an addition of ?1,08,99,093/- on account of goodwill. The Tribunal referenced its decision in ITA No. 2469/DEL/2011, where it upheld the CIT(A)'s decision to allow depreciation on goodwill acquired through amalgamation. The Tribunal found no reason to deviate from the earlier decision and dismissed Ground No. 6.

Conclusion:
In conclusion, the Tribunal dismissed the appeal of the revenue in ITA No. 1810/DEL/2016, upholding the CIT(A)'s decisions on all grounds. The order was pronounced in the open court on 08.04.2019.