Pr. Commissioner of Income Tax -7, Delhi v. M/S Punjab and Sind Bank

1. This is an application moved on behalf of the appellant/revenue, seeking condonation of delay in re-filing the appeal. 1.[1] According to the appellant/revenue, there is a delay of 370 days in refiling the appeal.

2. Mr Sumit Lalchandani, learned counsel, who appears on behalf of the respondent/assessee, says that he does not oppose the prayer made in the application.

3. Accordingly, the prayer made in the application is allowed.

4. The application is disposed of, in the aforesaid terms.

5. This appeal concerns Assessment Year (AY) 2013-14.

6. Via the instant appeal, the appellant/revenue seeks to assail the order dated 12.07.2021, passed by the Income Tax Appellate Tribunal [in short, “Tribunal”] in ITA No. 781/Del/2018 and ITA No. 1208/Del/2018.

7. A perusal of the appeal shows that the following questions of law have been proposed by the appellant/revenue:

Hon’ble ITAT as well as the Ld. CIT[A] has erred in deleting the disallowance of Rs. 187,35,15,770/- made by the AO out of the contribution to Punjab & Sind Bank Employee’s Pension Fund Trust since the above contribution were neither the ordinary annual contribution nor the initial contribution of the pension fund?

Hon’ble ITAT as well as the Ld. CIT[A] has erred in deleting the disallowance of Rs. 13,63,83,000/- made by the AO u/s 14A read with under Rule 8D(2)(ii) and 8D(2)(iii), as the assessee had made investment and the provisions of section 14A are applicable in the case?”

8. Mr Puneet Rai, learned senior standing counsel, who appears on behalf of appellant/revenue, fairly informs us that insofar as proposed questions A&B are concerned, they are covered by the decision of the coordinate bench of this court dated 18.09.2017, passed in ITA NO. 737/2017, titled Principal Commissioner of Income Tax-07 vs Punjab & Sind Bank.

9. Likewise, insofar as proposed question „C‟ is concerned, Mr Rai informs us that it is covered by the decision of another coordinate bench of this court dated 16.10.2019, passed in ITA No. 904/2019 & 906/2019, titled Pr. Commissioner of Income Tax-7 vs M/s Punjab and Sind Bank.

10. We may note that insofar as the proposed question „C‟ is concerned, it is also covered by the decision dated 09.09.2021, rendered by the Supreme Court in Civil Appeal no. 9606 of 2011, titled South Indian Bank vs. Commissioner of Income Tax. 10.[1] The relevant observation made in paragraph 25 of the abovementioned judgement is extracted hereafter: “Proceeding now to another aspect, it is seen that the Central Board of Direct Taxes (CBDT) had issued the Circular no. 18 of 2015 dated 2-11-2015, which had analyzed and then explained that all shares and securities held by a bank which are not bought to maintain Statutory Liquidity Ratio (SLR) are its stockin-trade and not investments and income arising out of those is attributable, to business of banking. This Circular came to be issued in the aftermath of CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007] 160 Taxman 48/289 ITR 6 (SC), wherein this Court had held that investments made by a banking concern is part of their banking business. Hence the income earned through such investments would fall under the head Profits and Gains of business. The Punjab and Haryana High Court, in the case of Pr CIT v. State Bank of Patiala [2017] 88 taxmann.com 667/393 ITR 476 (Punj. & Har.), while advertising to the CBDT Circular, concluded correctly that shares and securities held by a bank are stock-in-trade, and all income received on such shares and securities must be considered to be business income. That is why section 14A would not be attracted to such income”.

11. We may note that there appears to be no dispute that subject shares were held as stock in trade by the respondent/assessee. 11.[1] Therefore, in any event, recourse to Section 14A could not have been taken which is concerned with investments.