$ * IN HIGH COURT OF DELHI AT NEW DELHI 13-14 + ITA 905/2015 COMMISSIONER OF INCOME TAX V ..... Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Junior Standing counsel and Ms. Sri Tanuja N. Advocate. versus M/S PUNJAB NATIONAL BANK ..... Respondent And + ITA 906/2015 COMMISSIONER OF INCOME TAX V ..... Appellant Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Junior Standing counsel and Ms. Sri Tanuja N. Advocate. versus M/S PUNJAB NATIONAL BANK ..... Respondent CORAM: JUSTICE S.MURALIDHAR JUSTICE VIBHU BAKHRU ORDER % 01.12.2015 CM No. 28977 of 2015(exemption) in ITA No. 906 of 2015 1. Allowed, subject to all just exceptions. 2. application is disposed of. ITA Nos. 905 & 906/2015 Page 1 of 5 ITA No. 905 of 2015 & CM No.28976 of 2015(for condonation of delay) ITA No. 906 of 2015 & CM No.28978 of 2015(for condonation of delay) 3. There is inordinate delay of 709 days in re-filing appeals. explanation offered is standard one regarding practice directions issued by this Court for e-filing of appeals. As has already been observed by this Court in several orders, practice directions were issued after consultation with bar and after giving sufficient time for bar to get acquainted with requirements of e-filing. Additionally, Court provided scanning machines at filing counters to enable bar to switch over to system of e-filing without much difficulty. In any event, delay of more than twenty months for curing defects and re-filing appeals does not appear to be justified on any ground. Consequently, Court is not persuaded to condone extraordinary delay of 709 days in re-filing appeals. 4. Nevertheless, appeals have also been examined on merits. 5. These appeals by Revenue under Section 260A of Income Tax Act, 1961 ( Act ) are directed against common order dated 5th April 2013 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 2468/Del/2011 and 2235/Del/2011 for Assessment Year ( AY ) 2005- 06. ITA Nos. 905 & 906/2015 Page 2 of 5 6. question sought to be urged by Revenue is whether ITAT was justified in allowing Assessee s appeal and dismissing Revenue s appeal by deleting 10% disallowance of exempted income as attributable to earning of dividend income by Assessee under Section 14A of Act. 7. brief facts are that Assessee, nationalised bank, filed its return for AY 2005-06, declaring income of Rs.1373,92,47,734. Its return was picked up for scrutiny. Specific to issue of dividend income, Assessee itself deducted sum of Rs.10,31,698 towards expenses attributed to earning of dividend income in terms of Section 14A of Act. In response to questionnaire by AO, Assessee stated that bank had Rs.16266 crores non-interest bearing funds available and out of this, sum of Rs.2505.86 had been invested to acquire tax fee bonds and securities etc. Assessee stated that there was no direct correlation possible to be made between amount spent and earning of dividend income and therefore, no disallowance of expenditure was warranted. AO, nonetheless rejected said plea and made addition of Rs.111,34,84,667. 8. Commissioner of Income Tax (Appeals) [CIT(A)], by order dated 28th February 2011, restricted disallowance to 10% of income earned by adopting reasonable basis . It was noticed that Rule 8D of Income Tax Rules was applicable only from AY 2008-09 onwards. It was further noted that for earlier AYs 2002-03 to 2004-05 similar issue was discussed ITA Nos. 905 & 906/2015 Page 3 of 5 and expenditure attributable was estimated at 10% of exempted income. 9. Aggrieved by order of CIT(A), both Revenue and Assessee filed appeals before ITAT. In impugned order, it has been held by ITAT that there was no finding in present case by AO that suo motu disallowance made by Assessee suffered from any deficiency. 10. It is pointed out by Mr. Sahni, Senior Standing counsel for Revenue that in some of earlier AYs appeals could not be filed by Revenue because of absence of clearance by Committee on Disputes. In some years, matters were remanded to AO for fresh determination of issue but outcome of such proceedings was not known. He pointed out that for at least one AY, Assessee had accepted 10% disallowance of exempted income. 11. However, as far as present proceedings are concerned, Court notes that ITAT has held that details provided by Assessee in regard to suo motu disallowance made by it has not been demonstrated to be erroneous by Revenue. ITAT has, in impugned order, also noted that CIT (A) has recorded following undisputed findings of fact: "(i) AO has not demonstrated about utilization of any borrowed funds and investments in exempt income related assets or instruments. ITA Nos. 905 & 906/2015 Page 4 of 5 (ii) Assessee has more interest free funds than investments in exempt income." 12. In circumstances, Court does not find any substantial question of law arising from impugned order of ITAT. 13. appeals are accordingly dismissed both on ground of extraordinary delay of 709 days in re-filing as well as on merits. S.MURALIDHAR, J VIBHU BAKHRU, J DECEMBER 1, 2015 mg ITA Nos. 905 & 906/2015 Page 5 of 5 Commissioner of Income-tax-V v. M/s Punjab National Bank