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TMI Blog2023 (12) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... upon several judicial precedents of the co-ordinate Benches. No contrary decision was produced before us. Therefore, we uphold the order of the CIT (A).when the refund is due to the assessee, the amount refunded has to be adjusted towards interest payment to assessee first and the balance any shall be adjusted towards tax - Decided in favour of assessee. - Shri Prashant Maharishi, AM And Shri Narender Kumar Choudhry, JM For the Assessee : Mr. C Naresh CA For the Revenue : Shri Sanjay Deshmukh CIT DR and Shri P D Chougule, Addl. CIT ORDER PER PRASHANT MAHARISHI, AM: 01. ITA No. 1228/Mum/2023, is preferred by the learned Assessing Officer being Asst. Commissioner of Income-tax, Circle 1(1), Mumbai [ ld AO ] and ITA no 1094/M/2023 is filed bank of India [ Assessee] against the appellate order passed by the National Faceless Appeal Centre (NFAC), Delhi, for A.Y. 2011-12 on 15th February, 2023, wherein the appeal filed by the assessee against the order passed under Section 143(3) read with section 254 of the Income-tax Act, 1961 (the Act), passed by the learned Assessing Officer on 26th March, 2019, was partly allowed. Both the parties are aggrieved and ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consequent order on 26th March, 2019. He noted that the assessee has earned exempt income of ₹18,07,69,806/- and disallowed the equivalent amount under Section 14A read with Rule 8D of the Rules. The assessee argued before him that assessee is a bank and securities are held as stock-in-trade and therefore, disallowance under Section 14A of the Act is not warranted. Several other arguments were also raised. However, same were rejected. Ld AO made disallowance of Rs 597626012/- reduced therefrom disallowance restricted to exempt income of Rs 180769806/-. 06. The assessee also contended that assessee has not been granted interest under Section 244A of the Act on the refund remaining unpaid, which included the interest element but has not been paid. The learned Assessing Officer computed the refund and interest, however, while computing the refund has first adjusted the refunds already granted against the interest under Section 244A of the Act and thereafter interest under Section 244A of the Act was calculated on the balance sum. Thus, he did not calculate the interest under Section 244A of the Act already due up to the dates of the grant of the refund. 07. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own case which has been contested by the co-ordinate Bench on 28th June, 2013. He submits that provisions of Section 14A of the Act, the co-ordinate Bench has held that if the shares are held as stock-in-trade no disallowance can be made. He submits that the ground no.1 of the appeal is covered. 013. With respect to the ground no.2, he submits that the learned CIT (A) has relied upon the several decisions of the co-ordinate Bench which are not disputed. 014. The ld DR in rejoinder to disallowance u/s 14A of the Act submitted that if the view is taken that in case of a bank if investments are held to be stock in trade, then exempt income earned from that stock in trade does not invite disallowance u/s 14A of the Act is fallacious. He submits that law cannot be read in manner, which makes the section unworkable. He further submits that in case of individual who is dealer in stocks and hold it as stock in trade then also the disallowance cannot be made u/s 14 A of the Act if the above proposition is accepted. He submits that it is neither the intention of the law and nor the purport of the decision of Honourable Supreme court in Maxopp s case. He reffred to para no 30 onwards of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld in Walfort Share Stock Brokers (P.) Ltd., relevant passage whereof is already reproduced above, for the sake of continuity of discussion, we would like to quote the following few lines therefrom. 015. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that on the issue of applicability of Section 14A of the Act, the co-ordinate Bench had decided the issue that when the assessee is holding investment as stock-in-trade, no disallowance under Section 14A of the Act can be made. The co-ordinate Bench decided the issue for A.Y. 2012-13, relying on the decision of PCIT Vs. Punjab National Bank reported in 140 taxmann.com 131, where in it has been held that where the assessee bank is holding investment as stock-in-trade no disallowance under Section 14A of the Act can be made. Honourabel high court held so as under :- 15. The Appellant in the present appeal has also challenged the deletion of the disallowance under rule 8D(2)(ii) of Rs. 17,48,97,348/-. The said disallowance was deleted by the CIT (Appeals) vide order dated 28th June, 2017. The CIT (Appeals) noted that this issue was also covered by the order of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 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 by the investee-company that would necessarily be earned by the assessee and the assessee alone. Therefore, even at the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes up in order to earn profits. In the result, the appeals filed by the Revenue challenging the judgment of the Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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