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2019 (3) TMI 1261 - AT - Income TaxDisallowance u/s. 14A r.w.r. 8D towards expenditure incurred in relation to income not includible in total income - HELD THAT - As decided in assessee s own case it is very clear that the assessment for the assessment year 2010-2011 onwards, the disallowance u/s 14A should be made under Rule 8D by the A.O. In the impugned assessment year, i.e., 2009-2010, the CIT(A) has rightly upheld the order of the A.O. - decided against assessee. Disallowance of deduction of special reserve u/s. 36(1)(viii) - assessee had not advanced any loan as long term finance for development of housing in India, industrial or agricultural development or development of infrastructure facility in India - CIT(A) allowed deduction u/s. 36(1)(viii) of the Act for the income generated from advancing loans to industrial or agricultural development and development of infrastructure facility in India and upheld the action of the Assessing Officer in so far as the disallowance of the claim of the assessee for advances given for development of housing is concerned u/s. 36(1)(viii) - HELD THAT - Being a Banking Company, it is clear that the assessee is a Specified entity within Clause (iii) of Explanation (a) to Section 36(1)(viii). Amendment provided the deduction to National Housing Bank. But the amendment also substituted the previous words with words Development of Housing which has to be interpreted in its plain dictionary meaning in absence of any definition given. We cannot read into law anything that is not specifically provided therein. Construction/purchase of individual houses does not tantamount to Housing Development. Hence, we uphold the action of the lower authorities in so far as the disallowance of the claim of the assessee for advances/loans given for Development of Housing is concerned. No deduction shall be allowed to assessee u/s 36(1)(viii) for the amount claimed by assessee in respect of advances/loans given for individual houses. Deduction u/s 36(1)(viii) computation - as per DR assessee had not advance any loan for such purposes - HELD THAT - No infirmity in the order of the CIT(A) in granting relief to the assessee u/s. 36(1)(viii) of the Act with regard to providing long term finance for industrial or agricultural development or development of infrastructure facility in India and the same is confirmed. Interest contemplated under Sections 234A, 234B and 234C is mandatory in nature. In view of the fact that the appellate authorities have considered the matter based on the judgment of the Supreme Court ANJUM MH GHASWALA AND OTHERS 2001 (10) TMI 4 - SUPREME COURT , this issue is also answered against the appellant Addition on account of depreciation claimed on Held to Maturity category investments - HELD THAT - As decided in assessee s own case held that the depreciation on investment which are Held to Maturity and forming part of stock-in-trade is entitled to claim the same as a deduction. - decided against revenue
Issues Involved
1. Disallowance under Section 14A read with Rule 8D. 2. Disallowance of deduction under Section 36(1)(viii). 3. Addition of interest charged under Section 234B. 4. Deletion of addition on account of depreciation claimed on 'Held to Maturity' (HTM) category investments. Detailed Analysis 1. Disallowance under Section 14A read with Rule 8D The first issue in the assessee’s appeal concerns the disallowance of ?10,10,99,840/- under Section 14A read with Rule 8D for expenditure incurred in relation to income not includible in total income. The Tribunal referred to a similar issue in the assessee’s own case, where the Hon’ble jurisdictional High Court had ruled that the disallowance under Section 14A should be made under Rule 8D from the assessment year 2010-2011 onwards. The Tribunal upheld the CIT(A)’s order, which followed this precedent, and dismissed the assessee’s appeal on this ground. 2. Disallowance of deduction under Section 36(1)(viii) The next common ground in both the assessee’s and Revenue’s appeals pertains to the disallowance of a deduction of ?10,79,80,515/- (later revised to ?9,53,09,753/-) under Section 36(1)(viii). The Assessing Officer had disallowed the deduction, stating that the assessee had not advanced any loans for long-term finance for development of housing, industrial or agricultural development, or infrastructure in India. The CIT(A) allowed the deduction for loans related to industrial or agricultural development and infrastructure, but upheld the disallowance for loans related to housing development, interpreting that construction/purchase of individual houses does not constitute housing development. The Tribunal upheld the CIT(A)’s decision, confirming that the assessee is not entitled to a deduction for advances given for individual houses under Section 36(1)(viii). 3. Addition of interest charged under Section 234B The assessee’s appeal also included a ground regarding the addition of interest charged under Section 234B. The CIT(A) upheld the AO’s view, following the jurisdictional High Court’s decision in the assessee’s own case for the assessment year 2005-2006, which held that the charging of interest under Section 234B is mandatory. The Tribunal, following this precedent, dismissed the assessee’s appeal on this ground. 4. Deletion of addition on account of depreciation claimed on 'Held to Maturity' (HTM) category investments The Revenue’s appeal addressed the deletion of an addition of ?1,16,00,57,121/- on account of depreciation claimed on HTM category investments. The Tribunal referred to its earlier decision in the assessee’s own case, where it was held that securities classified as HTM and treated as stock-in-trade are subject to valuation at cost or market price, whichever is lower, and the resultant depreciation/appreciation is to be considered for taxation. The Tribunal upheld the CIT(A)’s order, which followed this precedent, and dismissed the Revenue’s appeal on this ground. Conclusion Both the appeal filed by the assessee and the appeal filed by the Revenue were dismissed. The Tribunal upheld the CIT(A)’s orders on all grounds, following the precedents set by the jurisdictional High Court and earlier Tribunal decisions in the assessee’s own case. The detailed analysis confirms the application of relevant sections and rules, ensuring the decisions align with established legal interpretations and precedents.
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