S. Jayaraman ORDER
S. Jayaraman, Member (A)
1. The Cross Appeals filed by the Assessee and Revenue are directed against the common order passed by the Commissioner of Income Tax (Appeals)-1, in ITA No. 59/CIT(A)-1/TRY/2015-16 dated 31.10.2017 for the assessment year 2012-13. Therefore, we heard both the appeals together and dispose them by this common order.
2. The Karur Vysya Bank Ltd., the assessee, is a banking company in private sector carrying on the business of banking. For the assessment year 2012-13, it filed its return of income on 29.09.2012 admitting the total income of Rs. 461.22 crores. Thereafter, the assessee filed two revised returns viz., on 07.02.2013 with a total income of Rs. 490.07 crores and on 26.03.2014 admitting re-revised total income of Rs. 481.23 crores. The Assessing Officer completed the assessment u/s. 143(3) on 31.03.2015 making various additions/disallowances. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The Ld. CIT(A) partly allowed the appeal. Aggrieved against certain issues on which dismissal and enhancement were made and on certain issues wherein the Ld. CIT(A) has not decided the issue the assessee filed the above appeal. Similarly, aggrieved against those issues where the Ld. CIT(A) allowed the appeal, the Revenue filed its above cross appeal.
3. The Ld. AR submitted that since the securities of the assessee's bank are held as stock in trade, the Ld. CIT(A) erred in disallowing and also enhancing the disallowance made u/s. 14A to Rs. 47,78,765/-, without appreciating the fact that no disallowance can be made u/s. 14A when the assessee has not incurred any expenditure for earning tax free income. The Ld. CIT(A) also erred in disallowing the sum u/s. 14A without recording the finding that the assessee bank had actually incurred expenditure in earning the tax free income. Further, the Ld. AR submitted that the AO has not recorded due satisfaction for invoking the jurisdiction u/s. 14A. In this regard, the Ld. AR relied on the orders of this tribunal in its own case in 2017 (4) TMI 566-ITAT Chennai, 72 ITR (Trib) 26 (Chennai) (2019) and decision rendered in the case of Corporation Bank in ITA No. 1352/B/2013 dated 11.03.2015 for assessment year 2011-12. Further, the Ld. AR relied on the Calcutta ITAT decision in the case of ACIT vs. UCO Bank in ITA No. 1615/Kol/2016 & CO 51/Kol/2018 dated 21.08.2018 for ay 2012-13 and the Delhi ITAT decision in the case of Punjab National Bank vs. CIT, Rnage-14, New Delhi in (2019) (1) TMI 689-ITAT Delhi and ITA Nos. 4253 & 2236/Del/2011, ITA Nos. 1788 & 4722/Del/2012; ITA Nos. 2406/Del/2013; ITA Nos. 2469/Del/2014; ITA Nos. 2469/Del/2011; ITA No. 4718/Del/2012 and ITA Nos. 2966/Del/2013 dated 09.01.2019, wherein the respective benches, applying the Apex Court decision in Maxopp Investment Ltd., and Pr. CIT vs. State Bank of Patiala etc., held that no disallowance u/s. 14A is permissible in terms of Rule 8D in case of assessee's engaged in banking business.
4. Per contra, the Ld. DR submitted that the Ld. CIT(A) distinguished the decision of the ITAT on the following grounds. As per the balance sheet as on 31.03.2012, the total investment held by the bank was 10,506.09 crores. The average value of investment according to Rule 8D(2)(iii) was 90.12 crores. In the assessee's case tax free income of Rs. 0.92 crores and investments have also yielded taxable income of Rs. 715.32 crores. Since, the treasury department of the assessee's bank is managing this investments, which is yielding both taxable and non-taxable income, the CIT(A) requi........