Punjab National Bank, New Delhi vs Assessee

Date of Hearing : 10.03.2015 Date of Pronouncement : .03.2015 ITA Nos.643 & 821/Del/2013

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 both the appeals have an

overlapping issue of disallowance u/s 14A of the Income-tax Act, 1961

(hereinafter also called `the Act'), we are, therefore, proceeding to

dispose them off by this consolidated order.

2. Briefly stated, the facts of the case are that the assessee claimed an

income of Rs.257.69 crore, being interest on tax free 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 one 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 reduced the

disallowance to Rs.16.41 crore. The assessee challenged 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 Hon'ble Bombay High

Court in the case of Godrej & Boyce Manufacturing Company Ltd. Vs. 2 ITA Nos.643 & 821/Del/2013

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), thereby making an addition

of Rs.8.68 crore. The ld. CIT(A) restricted the disallowance to 1% of

exempt income, which resulted into computation of disallowance u/s

14A at Rs.1,64,12,372/-. Since the assessee had already voluntarily

offered a disallowance of Rs.3,96,444/- u/s 14A, the ld. CIT(A)

restricted the addition to Rs.1,60,15,928/-, thereby allowing relief of

Rs.7,07,84,072/-. Both the sides are in appeal against the view taken by

the ld. CIT(A) prejudicing their interest accordingly.

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 appeals 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 AO 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

3 ITA Nos.643 & 821/Del/2013

disallowance of Rs.10,31,698/- u/s 14A for such year 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 Rs.3.96 lac is

similar to the one in which it was calculated for the AY 2005-06. Such

contention has not been controverted by the ld. DR. In the absence of

any distinguishing feature having been brought to our notice in respect

of the disallowance u/s 14A as made for the year under consideration

and that for the assessment year 2005-06, respectfully following the

afore stated Tribunal order, we uphold the disallowance 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 allowed to this extent and

that of the Revenue is dismissed.

The order pronounced in the open court on 11.03.2015.

Sd/- Sd/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 11th March, 2015. 4 ITA Nos.643 & 821/Del/2013

dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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