M/s. Punjab National Bank, New Delhi V. Addl. CIT, New Delhi

ITA 643/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86936 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-03-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: KARAN KHANNA; V K NISCHAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.643/DEL/2013 ASSESSMENT YEAR : 2001-02 PUNJAB NATIONAL BANK, HO ACCOUNTS & TAXATION DEPTT., 5, SANSAD MARG, NEW DELHI. PAN : AAACP0165G VS. ADDL. CIT, RANGE 14, CR BUILDING, NEW DELHI. ITA NO.821/DEL/2013 ASSESSMENT YEAR : 2001-02 DCIT, RANGE 14, CR BUILDING, NEW DELHI. VS. PUNJAB NATIONAL BANK, HO FINANCE DIVISION, 5, SANSAD MARG, NEW DELHI. PAN : AAACP0165G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KARAN KHANNA, ADVOCATE & SHRI V.K. NISCHAL, CA DEPARTMENT BY : SHRI VIKRAM SAHAY, SR. DR DATE OF HEARING : 10.03.2015 DATE OF PRONOUNCEMENT : .03.2015 ITA NOS.643 & 821/DEL/2013 2 ORDER PER R.S. SYAL, AM: THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT( A) ON 30.11.2012 IN RELATION TO THE ASSESSMENT YEAR 2001-02. SINCE BOT H THE APPEALS HAVE AN OVERLAPPING ISSUE OF DISALLOWANCE U/S 14A OF THE IN COME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT), WE ARE, THEREF ORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE CLAIMED AN INCOME OF RS.257.69 CRORE, BEING INTEREST ON TAX FR EE BONDS AND INCOME FROM INFRASTRUCTURE PROJECTS, AS EXEMPT. ORIGINAL ASSESSMENT IN THIS CASE WAS MADE U/S 143(3) OF THE ACT ON 30.12.2003 AND ON E OF THE DISALLOWANCES WAS U/S 14A TO THE TUNE OF RS.152,66, 69,222/-. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO R EDUCED THE DISALLOWANCE TO RS.16.41 CRORE. THE ASSESSEE CHALL ENGED THE ORDER OF THE LD. CIT(A) BEFORE THE TRIBUNAL, WHICH RESTORED THE MATTER FOR TAKING A FRESH DECISION IN THE LIGHT OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. ITA NOS.643 & 821/DEL/2013 3 DCIT REPORTED IN 328 ITR 81 (BOM) . THE AO IN HIS ORDER DATED 23.12.2011 PASSED U/S 143(3) READ WITH SECTION 254 OF THE ACT COMPUTED DISALLOWANCE U/S 14A AS PER RULE 8D(2)(III), THEREB Y MAKING AN ADDITION OF RS.8.68 CRORE. THE LD. CIT(A) RESTRICTED THE DI SALLOWANCE TO 1% OF EXEMPT INCOME, WHICH RESULTED INTO COMPUTATION OF D ISALLOWANCE U/S 14A AT RS.1,64,12,372/-. SINCE THE ASSESSEE HAD AL READY VOLUNTARILY OFFERED A DISALLOWANCE OF RS.3,96,444/- U/S 14A, TH E LD. CIT(A) RESTRICTED THE ADDITION TO RS.1,60,15,928/-, THEREB Y ALLOWING RELIEF OF RS.7,07,84,072/-. BOTH THE SIDES ARE IN APPEAL AGA INST THE VIEW TAKEN BY THE LD. CIT(A) PREJUDICING THEIR INTEREST ACCORDIN GLY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT FOR THE AY 2005-06, BOTH THE ASSESSEE BANK AS WELL AS THE REVENUE PREFERRED APPE ALS BEFORE THE TRIBUNAL. VIDE ORDER DATED 5.4.2013 IN ITA NO.2235 /DEL/2011, ETC., THE TRIBUNAL HAS DELETED THE DISALLOWANCE MADE BY THE A O U/S 14A OVER AND ABOVE THE AMOUNT OFFERED BY THE ASSESSEE SUO MOTU . A COPY OF SUCH ORDER HAS BEEN PLACED ON RECORD. THE ASSESSEE HAD OFFERED A ITA NOS.643 & 821/DEL/2013 4 DISALLOWANCE OF RS.10,31,698/- U/S 14A FOR SUCH YEA R UNDER A SPECIFIC MANNER BY PROPORTIONATING THE EXPENSES, WHICH HAS BEEN APPROVED BY THE TRIBUNAL. THE LD. AR SUBMITTED THAT THE MANNER OF COMPUTATION OF SUO MOTU DISALLOWANCE U/S 14A FOR THE YEAR IN QUESTION AT R S.3.96 LAC IS SIMILAR TO THE ONE IN WHICH IT WAS CALCULATED FOR T HE AY 2005-06. SUCH CONTENTION HAS NOT BEEN CONTROVERTED BY THE LD. DR. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE HAVING BEEN BROUGHT TO O UR NOTICE IN RESPECT OF THE DISALLOWANCE U/S 14A AS MADE FOR THE YEAR UN DER CONSIDERATION AND THAT FOR THE ASSESSMENT YEAR 2005-06, RESPECTFU LLY FOLLOWING THE AFORE STATED TRIBUNAL ORDER, WE UPHOLD THE DISALLOW ANCE U/S 14A AT RS.3,96,444/-, BEING THE AMOUNT SUO MOTU OFFERED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED TO THIS EXTENT AND THAT OF THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.03.201 5. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 11 TH MARCH, 2015. ITA NOS.643 & 821/DEL/2013 5 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.