Ahmednagar Shahar Sahakari Bank Ltd, Ahmednagar V. Assistant Commissioner of Income-tax, Ahmednagar Circle , Ahmednagar

ITA 76/PUN/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1092 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.76/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year: 2013-14 Ahmednagar Shahar Sahakari Bank Ltd., Shantilal Gandhi Tax Consultant, 1 st Floor, 146, Amber Plaza Stati, Ahmednagar- 414001. PAN : AAABB0323R Vs. ACIT, Ahmednagar Circle, Ahmednagar. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 2, Pune [‘CIT(A)’ for short] dated 24.10.2017 for the assessment year 2013-14. 2. Briefly, the facts of the case are that the appellant is a cooperative bank engaged in banking business. The return of income for the assessment year 2013-14 was filed on 02.10.2013 Assessee by : Shri C. H. Naniwadekar Revenue by : Shri S. P. Walimbe Date of hearing : 23.05.2022 Date of pronouncement : 26.05.2022 ITA No.76/PUN/2018 2 declaring total income of Rs.7,18,86,595/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Ahmednagar Circle, Ahmednagar (‘the Assessing Officer’) vide order dated 30.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.10,83,41,170/-. While doing so, the Assessing Officer made disallowance of Rs.47,96,280/- on account of Broken Period Interest. The Assessing Officer also made addition of Rs.3,16,20,370/- under the provisions of section 14A of the Act, with which, we are concerned. 3. Being aggrieved by the above disallowances, an appeal was filed before the ld. CIT(A), who vide impugned order directed the Assessing Officer to delete the addition made on account of Broken Period Interest of Rs.47,96,280/-. The ld. CIT(A) also directed the Assessing Officer to delete the addition made u/s 14A r.w. Rule 8D(2)(ii) of the Income Tax Rules, 1962 (‘the Rules’), however, failed to deal with the disallowance made under clause (iii) of Rule 8D(2) of the Rules. 4. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us. ITA No.76/PUN/2018 3 5. The ld. AR, Shri C. H. Naniwadekar submitted that while computing the average value of investments, the Assessing Officer had computed monthly average value of investments as provided under the amended Rules w.e.f. 02.06.2016 which are not applicable to the assessment year under consideration. He submitted that the average value of investments as envisaged under clause (iii) of Rule 8D(2) of the Rules should be computed by adopting at 0.5% average value of investments, only opening balance of investments in the beginning of the year and closing balance of investments at the end of the year alone should be taken into consideration. He further submitted that the amount of disallowance under clause (iii) of Rule 8D(2) of the Rules cannot exceed exempt income. 6. On the other hand, ld. Sr. DR expressed no serious objection to the submission made on behalf of the appellant. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the manner of computation of disallowance under clause (iii) of Rule 8D(2) of the Rules. From reading of the assessment order, it is not clear as to how the Assessing Officer had arrived at average value of investments. Even the ld. CIT(A) had not clearly dealt with as to the manner of computation of disallowance under clause (iii) of ITA No.76/PUN/2018 4 Rule 8D(2) of the Rules. Therefore, to meet the interests of justice, we remand the matter to the file of the Assessing Officer to compute the amount of disallowance under clause (iii) of Rule 8D(2) as provided in the Rules during the relevant period. Thus, this issue raised by the assessee stands partly allowed for statistical purposes. 8. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced on this 26 th day of May, 2022. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 26 th May, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-2, Pune. 4. The Pr. CIT-1, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.