THE SONEPAT URBAN CO-OPERATIVE BANK LTD.,SONEPAT vs. ACIT, SONEPAT CIRCLE, SONEPAT

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ITA 4105/DEL/2018Status: DisposedITAT Delhi24 July 2019AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the investment made by the assessee is presumed to be out of interest-free funds available with the bank. Following a coordinate bench decision and Punjab & Haryana High Court precedents, the addition was deleted.

What were the facts?

The assessee, a cooperative bank, filed its return of income for AY 2009-10. The Assessing Officer made an addition of Rs. 20,60,619/- under Section 14A read with Rule 8D. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the disallowance under Section 14A read with Rule 8D is sustainable when the assessee has sufficient interest-free funds to make the investments.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCH: ‘Friday’ NEW DELHI

Before: SHRI PRAMOD KUMAR & SHRI K. NARASIMHA CHARY

For Respondent: Ms Rinku Singh, Sr. DR
Hearing: 19.7.2019

PER K. NARASIMHA CHARY, JM Aggrieved by the order dated 2.4.2018 passed by the Commissioner of Income-tax (Appeals) Rohtak {“CIT(A)} for the Asstt. Year 2009-10 in Appeal No.433/16-17, assessee preferred this appeal.

2.

Brief facts of the case are that the assessee is a cooperative bank and has been engaged in the business of banking. For the Asstt. Year 2009-10, they have filed their return of income on 25.9.2010 declaring taxable income of Rs.2,31,74,310/-. Assessment u/s 143(3)/148 was completed by order dated 26.9.2016 making an addition of Rs.20,60,619/- u/s 14A read with Rule 8D of the Income-tax Act, 1961 (“the Act”).

1.

3. Assessee preferred appeal before the CIT(A), who by order dated 2.4.2018 dismissed the same confirming the addition. Hence, assessee preferred this appeal.

3.

Today the assessee sought early hearing of the matter stating that in assessee’s own case for the year 2010-11 under similar set of facts and circumstances, a coordinate bench of this Tribunal in vide order dated 28.2.2019 decided the issue in favour of the assessee and the present case in hand is fully covered by the said decision. We heard the learned DR also, who does not dispute the issue being covered by the order of the Tribunal in Asstt. Year 2010-11.

4.

We have perused the record in the light of the order dated 28.2.2019 in ITA No.3023/Del.2015 and find that a coordinate bench of this Tribunal while dealing with similar set of facts and circumstances and relying upon the judgment of the Hon’ble Punjab & Harayana High Court in the case of CIT vs Hero Cycles, (2010) 189 Taxman 50 and CIT vs Max India (2016) 388 ITR 81 (P&H), recorded a finding of fact that a presumption would arise that investment would be out of the interest free funds generated or available with the company and there are sufficient funds to made the investment. Similar is the plea and case in this matter also.

5.

We, therefore, while respectfully following the decision of a coordinate bench of this Tribunal in assessee’s own case in which is in accordance with the binding precedent of the Punjab & Haryana High Court in the case of CIT vs Max India (supra), find it difficult to sustain the addition. We accordingly delete the same.

6.

In the result, appeal of the assessee is allowed.

Order pronounced in the Open Court on July, 2019.

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