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TMI Blog2018 (6) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... determined without resorting to computation provided in section 14A read with Rule 8D of the Rules. Accordingly, we restore the issue in dispute to the file of the Assessing Officer for deciding in accordance with law after providing adequate opportunity of being heard to the assessee. Not granting TDS credit - Held that:- In the instant case, the assessee has not presented before us details of each TDS amount, credit of which has not been allowed by the Assessing Officer. In view of circumstances, we restore this issue to the file of the Assessing Officer and direct him/her to verify and allow the claim of the TDS in view of our direction above. We also direct the assessee to produce original copies of TDS certificates for verification along with one photocopy of said certificates before the Assessing Officer within 3 months of receipt of this order. The Assessing Officer may verify genuineness of the TDS certificates and allow the credit of the TDS amount accordingly Error in tax computation form - arithmetical error - Held that:- We are agreed with the Ld. counsel that Assessing Officer has committed mistake in transporting amount of profit under section 115 JB of the Act from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the learned AO has erred in considering the "Assessed Book Profit" in "Income Tax Computation Form" of ₹ 1128,29,54,248/- instead of ₹ 1018,69,66,304/-, as computed in the assessment order. The Id CIT(Appeal) has also erred in not adjudicating specifically this ground no.7 of Form No.35 taken before her. 6. That consequential to our aforesaid grounds of appeal, the learned AO has erred in charging interest u/s 234B amounting to ₹ 32,40,33,468/-. 7. That the appellants request be allowed to add, modify and delete any other ground (s) of appeal. 3. Briefly stated facts of the case are that the assessee filed return of income on 28/09/2011, declaring total income of ₹ 529,46,06,162/- under normal provisions of the Income-tax Act, 1961 ( in short the 'Act') and book profit under section 115JB of the Act at ₹ 876,95,00,309/-. The income declared under normal provisions of the Act was subsequently revised on 19/09/2012 at ₹ 527,92,60,912/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and complied with. In the assessment scrutiny proceedings completed under section 143(3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2009-10, restricted the disallowance to ₹ 58.55 lakhs under Rule 8D(2)(iii), and deleted the disallowance of ₹ 630.79 lakhs made under Rule 8D(2)(ii) of the Rules. 4.3 Before us, the Ld. counsel submitted that the Assessing Officer in assessment years 1996-97 and 1997-98 has decided the securities held by the assessee bank as a stock-in-trade for the purpose of Income-tax. Accordingly, he submitted that it stands settled that securities are held by the assessee as a stock in trade and dominant and immediate object behind acquisition of securities was to earn profit on sale of securities at the earliest point of time, which is chargeable to tax under the Act and dividend and tax-free income was received incidentally. The Ld. Counsel submitted that during the year under consideration, the assessee earned profit on sale of securities of ₹ 75.16 crore, which is taxable as business income and earned dividend income of ₹ 4.75 crore, which is incidental to trading of securities and therefore, provisions of section 14A of the Act are not applicable on dividend/tax-free income earned by the assessee. The Ld. counsel submitted that when section 14A is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has only restricted the disallowance under Rule 8D(2)(iii) of the Rules which is computed at the rate of 0.5 % of the value of the assets capable of yielding exempted income, and before us the assessee is aggrieved with said addition only, thus the arguments of own funds utilized in investment are not relevant as addition under Rule 8D(2)(ii) are not in challenge before us in present appeal. The main argument which has been raised before us by the Ld. counsel is that shares/units etc. have been held by the assessee during the year under consideration as 'stock-in-trade' and main purpose of which was to trade those shares and earn profit thereon. The contention of the Ld. counsel is that while hearing the case of State Bank of Patiala alongwith Maxxop of investment limited, Hon'ble Supreme Court has held that when the shares are held as stock in trade with the object of earning taxable profit, no disallowance under section 14A of the Act is required. We do not agree with the above argument of the Ld. counsel. In our opinion the Hon'ble Supreme Court in para 38 and 39 of the decision in the case of Maxxop Investment Limited (supra) has held that wherever both the taxable and non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. It is to be kept in mind that in those cases where shares are held as 'stock-in-trade', it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes immaterial. In fact, it would be a quirk of fate that when the investee company declared dividend, those shares are held by the assessee, though the assessee has to ultimately trade those shares by selling them to earn profits. The situation here is, therefore, different from the case like Maxopp Investment Ltd. where the assessee would continue to hold those shares as it wants to retain control over the investee company. In that case, whenever dividend is declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. counsel of the assessee submitted that this ground is consequential to ground No.1 and hence, no separate submission was required on this issue. On the contrary, the Ld. DR submitted that issue may be decided in accordance with law. 5.3 We have heard the rival submissions and perused the relevant material on record. The controversy raised in this ground is whether the disallowance, which has been computed for the purpose of section 14A of the Act can be imported to the provisions of section 115JB of the Act, without any clear mention in the said provisions. We find that this controversy has been resolved by the Tribunal Special Bench in the case of Vireet Investment Private Limited, reported in 165 ITD 0027 (Delhi), wherein it is held that that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962. 5.4 In view of the above decision of the Tribunal, we are of the opinion that addition under clause (f) of Explanation 1 to section 115JB of the Act need to be determined without resorting to computation provided in section 14A read with Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax deducted by the dedcutor in case of that taxpayer. At the time of deduction of tax at source, the deductor issues TDS certificate to the deductee also. Against the tax determined by the Income Tax Department, credit of tax paid is given on the basis of the form No.26AS. As far as the amount of tax deducted at source is concerned, it reflects in form No.26AS, when the deductor deposit the TDS amount in the government account and file its quarterly TDS returns. So, if TDS return has not been filed by the deductor, said amount will not reflect in the form No. 26AS of the deductee taxpayer. In our opinion, in such cases, not allowing the TDS credit by the Income Tax Department is not justified. If the assessee produce TDS certificate issued to it by the deductors, then the Assessing Officer can verify the fact of genuineness of those TDS certificates and then allow the credit to the assessee. We do not find any reason, as why the Assessing Officer will wait till said amount reflects in form No.26AS and then only allow the credit. For any inaction on the part of the deductor in late deposit of TDS or late filing of TDS return, the dedcutee should not be allowed to suffer. In the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to ₹ 3,09,170/-. It is therefore prayed that necessary relief may be granted against aforesaid wrong charging of interest u/s 234C." 7.2 The DR submitted that issue may be restored to the file of the Assessing Officer for verification and computation of interest under 234C of the Act in accordance with law. 7.3 We have heard the rival submission and perused the relevant material on record. The issue in dispute involved is dependent on amount of TDS credit. The issue TDS credit has already been restored by us to the file of the Assessing Officer while adjudicating ground No. 2 of the appeal. Accordingly, we restore this issue also to the file of the Assessing Officer for computing interest under section 234C of the Act after allowing TDS credit, in accordance with law. It is needless to mention that the assessee shall be afforded an opportunity of being heard on the issue in dispute. The Ground No. 4 of the appeal is accordingly allowed for statistical purposes. 8. In ground No. 5, the assessee has raised an error in tax computation form. 8.1 The Ld. counsel submitted that in assessment order under section 143(3) of the Act, the book profit has been assessed at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-speaking order which is against principle of natural justice. 4. That on the facts & circumstances of the case and provisions of the law, the learned Assessing Officer has erred in charging interest u/s 234B of ₹ 9,09,07,800/- for 24 months instead of 23 months. The Id CIT(Appeal) has also erred in not adjudicating specifically this ground no.7 of Form No.35 taken before her. 5. That on the facts & circumstances of the case and provisions of the law, the learned Assessing Officer has erred in charging interest u/s 234C of ₹ 4,76,778/-. The Id CIT(Appeal) has also erred in not adjudicating specifically this ground no.8 of Form No.35 taken before her. 6. That on the facts & circumstances of the case and provisions of the law, the learned Assessing Officer has erred in charging interest u/s 234D of ₹ 1,33,14,185/- for 3 months instead of 2 months. The Id CIT(Appeal) has also erred in not adjudicating specifically this ground no.9 of Form No.35 taken before her. 7. That consequential to our aforesaid grounds of appeal, the learned AO has erred in charging interest u/s 234B, 234C & 234D amounting to ₹ 9,09,07,800/-, ₹ 4,76,778/- and ₹ 1,33 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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