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TMI Blog2024 (8) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 243 - KARNATAKA HIGH COURT] decision of Hon ble Delhi High Court in case of Punjab National Bank [ 2022 (6) TMI 85 - DELHI HIGH COURT] . Respectfully following the view taken by decisions supra, we allow this ground raised by assessee and hold that these were not made by assessee in order to fall within the ambit of Rule 8D (iii) of Income tax Rules 1963. Decided in favour of assessee. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Appellant : Shri S. Ananthan, CA For the Respondent : Shri Subramanian .S, JCIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal arises out of order dated 04.10.2023 passed by NFAC, Delhi for A.Y. 2013-14 on following grounds of appeal: 1. The order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1,14,49,500/- u/s 14A by invoking Rule 8D(2)(iii). 2.3 In the second round of appeal by the assessee before Ld.CIT(A), the disallowance made by the Ld.AO was upheld. In the impugned order, the Ld.CIT(A) held that disallowance u/s 14A r.w.r. 8D(2)(iii) can be made even if the securities are held as stock-in-trade. 2.4 Aggrieved by this order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. We have perused the submissions advanced by both sides in the light of records placed before us. 3. In our opinion, this issue is res integra as it has been considered by Hon ble Supreme Court in case of Maxopp Investments vs. CIT reported in (2018) 91 taxmann.com 154. The Ld.DR relied on the order by this Tribunal in assessee s own case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he head 'profits and gains of business and profession'. The Board also went to the extent of saying that this would not be limited only to cooperative societies/Banks claiming deduction under Section 80P(2)(a)(i) of the Act but would also be applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 38. From this, Punjab and Haryana High Court pointed out that this circular carves out a distinction between 'stock-in- trade' and 'investment' and provides that if the motive behind purchase and sale of shares is to earn profit, then the same would be treated as trading profit and if the object is to derive income by way of dividend then the profit would be said to have accrued from investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and 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 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught in by Hon ble Supreme Court in para 40 of Maxopp Investments vs. CIT (supra) to be considered in totality. The ratio decidendi in para 40 of the decision has to be understood in respect of the facts judged therein. Hon ble Supreme Court in para 40 deals with facts of the State Bank of Patiala where the assessee therein had held certain shares as stock in trade . Hon'ble Supreme Court in para 40 rendered a clear finding in respect of banking institutions that hold shares as stock in trade that may or may not yield dividend income. Present assessee before us is also a Bank, where shares were held as stock-in-trade and therefore it becomes business activity of assessee as observed by Hon ble Supreme Court. In our opinion specific obse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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