M/S UNION BANK OF INDIA,MUMBAI vs. DCIT, CIRCLE-(LTU) 2, MUMBAI

ITA 2038/MUM/2024Status: DisposedITAT Mumbai11 June 2025AY 2021-2240 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

On the issue of disallowance under Section 14A read with Rule 8D for exempt income earned on shares/stocks held as 'stock-in-trade', the Tribunal respectfully followed the decision of a coordinate bench in the assessee's own case. It held that no disallowance is warranted in such circumstances and directed the AO to delete the disallowance. This allowed the assessee's ground and dismissed the revenue's corresponding ground. For the taxability of recovery in respect of bad debts written off, the Tribunal, respectfully following the decision of a coordinate bench, which in turn relied on the Hon'ble Supreme Court in CIT Vs. Citi Bank and the Jurisdictional High Court in HDFC Bank Ltd., held that the AO was not correct in making the disallowance and saw no infirmity in the CIT(A)'s order deleting the disallowance. Regarding the amortisation of premium paid on securities in the HTM category, the Tribunal, respectfully following the coordinate bench's decision which relied on the Hon'ble Bombay High Court in HDFC Bank Ltd., declined to interfere and dismissed the ground. For the disallowance under Section 14A read with Rule 8D in computing book profit, the Tribunal noted that it had held that Section 115JB did not apply, rendering this grievance infructuous. Consequently, the appeal of the revenue was dismissed for AY 2020-21.

What were the facts?

The appeals by the assessee (Union Bank of India) and the revenue (DCIT/ACIT) are against the orders of the NFAC, Delhi, for Assessment Years 2020-21 and 2021-22. The appeals involve common issues. The assessee's appeals are ITA Nos. 2037/MUM/2024 and 2038/MUM/2024, while the revenue's appeals are ITA Nos. 2119/MUM/2024 and 2118/MUM/2024. The Tribunal heard the representatives and perused the records. The primary issues revolve around disallowances made by the Assessing Officer (AO) and subsequent decisions by the CIT(A).

What were the issues?

1. Whether the Tribunal was correct in holding that no disallowance under Section 14A read with Rule 8D of the Income Tax Act, 1961, is warranted where the assessee has earned exempt income on shares/stocks held as 'stock-in-trade'? - Assessee's contention: No disallowance is warranted as tax-free income was earned on shares/bonds held as 'stock-in-trade'. Relied on the Supreme Court decision in Maxopp Investment Pvt. Ltd. and subsequent Tribunal decisions in its own case. - Revenue's contention: Not explicitly recorded, but the AO made the disallowance. 2. Whether the Tribunal was correct in holding that the recovery in respect of bad debts written off, which were not allowed as deduction, is taxable? - Assessee's contention: The issue is covered in its favour by a coordinate bench decision in its own case for AY 2013-14, which followed the Hon'ble Supreme Court in CIT vs. Citi Bank and the Jurisdictional High Court in HDFC Bank Ltd. - Revenue's contention: Relied on the Hon'ble Rajasthan High Court in CIT Vs. Bank of Rajasthan Ltd., which was followed by the AO. 3. Whether the Tribunal was correct in holding that amortisation of premium paid on securities in the Held To Maturity (HTM) category is allowable as a deduction? - Assessee's contention: As per RBI Guidelines, investments in HTM category should be carried at acquisition cost, and premium should be amortized over the remaining period of maturity, which should be allowed as a deduction. Relied on the Hon'ble Bombay High Court in HDFC Bank Ltd. - Revenue's contention: Not explicitly recorded, but the AO disallowed the amortized premium. 4. Whether the disallowance under Section 14A read with Rule 8D in computing book profit is to be deleted? - Assessee's contention: The provisions of Section 115JB did not apply.

Which sections of the Income-tax Act were involved?

Section 14A,Section 36(1)(viia),Section 115JB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(22)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Heard together (4 matters)

ITA No. 2037/MUM/2024
ITA No. 2038/MUM/2024
ITA No. 2119/MUM/2024
ITA No. 2118/MUM/2024

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय न्यायाधिकरण न्यायपीठ, मुंबई IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2037/MUM/2024 (निर्धारण वर्ष / Assessment Year :2020-21) आयकर अपील सं./ITA No. 2038/MUM/2024 (निर्धारण वर्ष / Assessment Year :2021-22)

| Union Bank of India, Finance & Accounts, Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai, Maharashtra- 400021 || v/s. बनाम | DCIT, Circle- (LTU) 2, Mumbai Room No. 421, 4th Floor, Aayakar Bhavan, M. K. Road, Mumbai-400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACU0564G Appellant/अपीलार्थी .. Respondent/प्रतिवादी

आयकर अपील सं./ITA No. 2119/MUM/2024 (निर्धारण वर्ष / Assessment Year :2020-21) आयकर अपील सं./ITA No. 2118/MUM/2024 (निर्धारण वर्ष / Assessment Year :2021-22)

| ACIT, Circle-3(4), Mumbai Room No. 559, 5th Floor, Aayakar Bhavan, M. K. Road, Mumbai-400020 || v/s. बनाम | Union Bank of India, Finance & Accounts, Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai, Maharashtra- 400021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACU0564G Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Page 2 ITA Nos.2037, 2119,

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →