2022 (1) TMI 287 - AT - Income Tax

Disallowance of depreciation on securities - HELD THAT - We find that identical issue arose before the Co-ordinate Bench of Tribunal in assessee s own case for A.Y. 2013-14 2021 (7) TMI 622 - ITAT DELHI and the Coordinate Bench of Tribunal, by following the order in assessee s own case for A.Y. 2011-12 2012-13 2019 (1) TMI 1654 - ITAT DELHI , deleted the addition. Disallowance of contribution to Punjab Sind Bank Employees Pension Fund Trust under Section 36(1)(iv) - HELD THAT - We find that identical issue arose before the Co-ordinate Bench of Tribunal in assessee s own case for A.Y. 2013-14 2021 (7) TMI 622 - ITAT DELHI and the Coordinate Bench of Tribunal, by following the order in assessee s own case for A.Y. 2011-12 2012-13 2019 (1) TMI 1654 - ITAT DELHI , deleted the addition. Disallowance u/s 14A r.w.r. 8D - HELD THAT - We find that identical issue arose before the Co-ordinate Bench of Tribunal in assessee s own case for A.Y. 2013-14 2021 (7) TMI 622 - ITAT DELHI and the Coordinate Bench of Tribunal, by following the order in assessee s own case for A.Y. 2011-12 2012-13 2019 (1) TMI 1654 - ITAT DELHI , deleted the addition. as held ejecting the theory of dominant purpose in making investment in shares whether it was to acquire and retain controlling interest in the other company or to make profits out of the trading activity in such shares - clearly made a clear distinction between the dividend earned in respect of the shares which were acquired by the assessee in their exercise to acquire and retain the controlling interest in the investee company, and the shares that were purchased for the purpose of liquidating those shares whenever the share price goes up, in order to earn profits. It is, therefore, clear that though not the dominant purpose of acquiring the shares is a relevant for the purpose of invoking the provisions under section 14 A of the Act, the shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company - no illegality or irregularity in the Ld. CIT(A) deleting the addition made by the Ld. AO under rule 8D (2) (ii) - Revenue appeal dismissed.

Summary

Issues Involved:
1. Disallowance of depreciation on securities.
2. Disallowance of contribution to P&S Bank Employees Pension Fund Trust under Section 36(1)(iv) of the Income-tax Act, 1961.
3. Disallowance under Section 14A of the Income-tax Act, 1961.

Detailed Analysis:

1. Disallowance of Depreciation on Securities:
The Assessing Officer (AO) disallowed the depreciation claimed by the assessee on securities amounting to ?372,70,70,520/-. The AO's rationale was that the investments were not shown as 'Stock-in-Trade' and the resultant profits were not adjusted for depreciation in subsequent years. The CIT(A) deleted the addition, referencing previous favorable decisions in the assessee's own case for earlier years. The Tribunal, following its earlier decisions in the assessee's case, upheld the CIT(A)'s order, noting that the Revenue did not provide any distinguishing facts or higher judicial overturns.

2. Disallowance of Contribution to P&S Bank Employees Pension Fund Trust:
The AO disallowed ?85,05,92,380/- contributed to the P&S Bank Employees Pension Fund Trust, arguing it exceeded the permissible limit under Section 36(1)(iv) read with Rule 87 & 88. The CIT(A) deleted the addition, citing earlier favorable decisions in the assessee's own case. The Tribunal upheld the CIT(A)'s order, noting that the Revenue did not point out any distinguishing features or higher judicial overturns.

3. Disallowance under Section 14A:
The AO disallowed ?20,49,20,000/- under Section 14A, related to expenses attributable to exempt income, and added this amount to compute book profit under Section 115JB. The CIT(A) upheld the disallowance to the extent of ?132.03 lakhs under Rule 8D(2)(iii) but deleted ?1917.17 lakhs under Rule 8D(2)(ii). The Tribunal, referencing its earlier decisions in the assessee's case and the Supreme Court's ruling in Maxopp Investment Ltd. vs. CIT, upheld the CIT(A)'s order. The Tribunal noted no distinguishing facts or higher judicial overturns provided by the Revenue.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions of the disallowances on depreciation of securities, contributions to the pension fund, and expenses under Section 14A, citing consistency with earlier decisions and lack of contrary evidence from the Revenue.