1 REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 104-109 OF 2015 MAXOPP INVESTMENT LTD. APPELLANT(S) VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI .....RESPONDENT(S) WITH CIVIL APPEAL NO. 1423 OF 2015 CIVIL APPEAL NO. 3267 OF 2013 CIVIL APPEAL NO. 130 OF 2015 CIVIL APPEAL NOS. 110-112 OF 2015 CIVIL APPEAL NO. 1500 OF 2018 (ARISING OUT OF SLP (CIVIL) NO. 19614 OF 2013) CIVIL APPEAL NO. 1508 OF 2018 (ARISING OUT OF SLP (CIVIL) NO. 31417 OF 2016) Signature Not Verified Digitally signed by ASHWANI KUMAR Date: 2018.03.13 17:12:08 IST Reason: CIVIL APPEAL NO. 115 OF 2015 CIVIL APPEAL NO. 8596 OF 2014 2 CIVIL APPEAL NO. 1505 OF 2018 (ARISING OUT OF SLP (CIVIL) NO. 27054 OF 2016) CIVIL APPEAL NOS. 10096 OF 2013 CIVIL APPEAL NO. 123 OF 2015 CIVIL APPEAL NO. 6590 OF 2015 CIVIL APPEAL NO. 1576 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 4024 OF 2018 @ DIARY NO. 39820 OF 2017) CIVIL APPEAL NO. 1579 OF 2018 (ARISING OUT OF SLP (CIVIL) NO. 20475 OF 2017) CIVIL APPEAL NO. 1578 OF 2018 (ARISING OUT OF SLP (CIVIL) NO. 23123 OF 2017) CIVIL APPEAL NO. 18019 OF 2017 CIVIL APPEAL NO. 1580 OF 2018 (ARISING OUT OF SLP (CIVIL) 32405 OF 2017) CIVIL APPEAL NO. 1575 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 4023 OF 2018 @ DIARY NO. 36413 OF 2017) CIVIL APPEAL NO. 2802 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 6746 OF 2018 @ DIARY NO. 1146 OF 2018) CIVIL APPEAL NO. 2791 OF 2018 3 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 6685 OF 2018 @ DIARY NO. 39823 OF 2017) CIVIL APPEAL NO. 2792 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 6686 OF 2018 @ DIARY NO. 41903 OF 2017) CIVIL APPEAL NO. 1577 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 4027 OF 2018 @ DIARY NO. 41890 OF 2017) CIVIL APPEAL NO. 2793 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 6687 OF 2018 @ DIARY NO. 41203 OF 2017) AND CIVIL APPEAL NO. 2794 OF 2018 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 6688 OF 2018 @ DIARY NO. 41922 OF 2017) JUDGMENT A.K. SIKRI, J. Chapter IV of Income Tax Act, 1961 (hereinafter referred to as Act ) contains provisions pertaining to computation of total income . Section 14 which is first provision under this Chapter enumerates five heads of income within which all income are to be classified. Under scheme of Act, certain types of income are exempt from tax and, in this behalf, specific provisions are made stipulating that such incomes would not form part of total income under Act as fortiorari, they are not included under any of heads 4 of income and, therefore, no taxes levied on such exempted incomes. It is in this backdrop, Section 14A of Act clarifies that if any expenditure is incurred in earning that income which does not form part of total income, such expenditure shall also not be allowed as deduction. Though, Section 14A was inserted by Finance Act, 2001, but it was given retrospective effect from April 1, 1962. Original Section was in following terms: Section 14A - For purposes of computing total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by assessee in relation to income which does not form part of total income under this Act. 2) By Finance Act, 2006, aforesaid provision was amended whereby it was renumbered as sub-section (1) and sub-sections (2) and (3) were added thereto. Before that, proviso was also added by amendment vide Finance Act, 2002 which was to operate retrospectively from May 11, 2001. In these batch of appeals, we are not concerned with sub-sections (2), (3) or proviso and it is only interpretation that has to be given to sub-section (1), which arises for consideration. 3) Though, it is clear from plain language of aforesaid provision that no deduction is to be allowed in respect of expenditure incurred by assessee in relation to income which does not form part of total income under Act, effect whereof is that if certain income is earned which is not to be included while computing total income, any 5 expenditure incurred to earn that income is also not allowed as deduction. It is well known that tax is leviable on net income. Net income is arrived at after deducting expenditures incurred in earning that income. Therefore, from gross income, expenditure incurred to earn that income is allowed as deduction and thereafter tax is levied on net income. purpose behind Section 14A of Act, by not permitting deduction of expenditure incurred in relation to income, which does not form part of total income, is to ensure that assessee does not get double benefit. Once particular income itself is not to be included in total income and is exempted from tax, there is no reasonable basis for giving benefit of deduction of expenditure incurred in earning such income. For example, income in form of dividend earned on shares held in company is not taxable. If person takes interest bearing loan from Bank and invests that loan in shares/stocks, dividend earned therefrom is not taxable. Normally, interest paid on loan would be expenditure incurred for earning dividend income. Such interest would not be allowed as deduction as it is expenditure incurred in relation to dividend income which itself is spared from tax net. There is no quarrel upto this extent. 4) However, in these appeals, question has arisen under varied circumstances where shares/stocks were purchased of company for purpose of gaining control over said company or as 6 stock-in-trade . However, incidentally income was also generated in form of dividends as well. On this basis, assessees contend that dominant intention for purchasing share was not to earn dividends income but control of business in company in which shares were invested or for purpose of trading in shares as business activity etc. In this backdrop, issue is as to whether expenditure incurred can be treated as expenditure in relation to income i.e. dividend income which does not form part of total income. To put it differently, is dominant or main object would be relevant consideration in determining as to whether expenditure incurred is in relation to dividend income. In most of appeals, including in Civil Appeal Nos. 104-109 of 2015, aforesaid is scenario. Though, in some other cases, there may be little difference in fact situation. However, all these cases pertain to dividend income, whether it was for purpose of investment in order to retain controlling interest in company or in group of companies or dominant purpose was to have it as stock-in-trade. 5) Before we proceed further, we may briefly note facts of Civil Appeal Nos. 104-109 of 2015, for better understanding of issue involved. appellant company is engaged, inter alia, in business of finance, investment and dealing in shares and securities. appellant holds shares/securities in two portfolios, viz. (a) as investment on capital 7 account; and, (b) as trading assets for purpose of acquiring and retaining control over investee group companies, particularly Max India Ltd., widely held quoted public limited company. Any profit/loss arising on sale of shares/securities held as investment is returned as income under head capital gains , whereas profit/loss arising on sale of shares/securities held as trading assets (i.e. held, inter alia, with intention of acquiring, exercising and retaining control over investee group companies) has been regularly offered and assessed to tax as business income under head profits and gains of business or profession . Consistent with aforesaid treatment regularly followed, appellant filed return for previous year relevant to Assessment Year 2002-03, declaring income of Rs.78,90,430/-. No part of interest expenditure of Rs.1,16,21,168/- debited to profit and loss account, to extent relatable to investment in shares of Max India Limited, yielding tax free dividend income, was considered disallowable under Section 14A of Act on ground that shares in said company were acquired for purposes of retaining controlling interest and not with motive of earning dividend. According to appellant, dominant purpose/intention of investment in shares of Max India Ltd. was acquiring/retaining controlling interest therein and not earning dividend and, therefore, dividend of Rs.49,90,860/- earned on shares of 8 Max India Ltd. during relevant previous year was only incidental to holding of such shares. Assessing Officer (AO), while passing assessment order dated August 27, 2004, under Section 143(3) worked out disallowance under Section 14A of Act at Rs.67,74,175/- by apportioning interest expenditure of Rs.1,16,21,168/- in ratio of investment in shares of Max India Ltd. (on which dividend was received) to total amount of unsecured loan. AO, however, restricted disallowance under that Section to Rs.49,90,860/- being amount of dividend received and claimed exempt. 6) In appeal, Commissioner of Income Tax (Appeals) {CIT(A)} vide order dated January 12, 2005 upheld order of AO. appellant herein carried matter in further appeal to Income Tax Appellate Tribunal, New Delhi (for short ITAT ). In view of conflicting decisions of various Benches by ITAT with respect to interpretation of Section 14A of Act, Special Bench was constituted in matter of ITO v. Daga Capital Management (Private) Ltd. 1 appeal of appellant was also tagged and heard by aforesaid Special Bench. 7) Special Bench of ITAT in case of Daga Capital Management (Private) Ltd., dismissing appeal of appellant, 1 312 ITR (AT) 1 9 inter alia, held that investment in shares representing controlling interest did not amount to carrying on of business and, therefore, interest expenditure incurred for acquiring shares in group companies was hit by provisions of Section 14A of Act. Special Bench further held that holding of shares with intention of acquiring/retaining controlling interest would normally be on capital account, i.e. as investment and not as trading assets . For that reason too, Special Bench held that there existed dominant connection between interest paid on loan utilized for acquiring aforesaid shares and earning of dividend income. Consequently, provisions of Section 14A of Act were held to be attracted on facts of case. 8) On interpretation of expression in relation to , majority opinion of Special Bench was that requirement of there being direct and proximate connection between expenditure incurred and exempt income earned could not be read into provision. According to majority view, what is relevant is to work out expenditure in relation to exempt income and not to examine whether expenditure incurred by assessee has resulted into exempt income or taxable income . As per minority view, however, existence of dominant and immediate connection between expenditure incurred and dividend income was condition precedent for invoking provisions of Section 14A of Act. It was accordingly held, as per 10 minority, that mere receipt of dividend income, incidental to holding of shares, in case of dealer in shares, would not be sufficient for invoking provisions of Section 14A of Act. 9) Against aforesaid order of Special Bench, appellant preferred appeal under Section 260A of Act to High Court. High Court of Delhi has, vide impugned judgment dated November 18, 2011, held that expression in relation to appearing in Section 14A of Act was synonymous with in connection with or pertaining to , and, that provisions of that Section apply regardless of intention/motive behind making investment. As consequence, proportionate disallowance of expenditure incurred by assessee is maintained. 10) It would be pertinent to point out at this stage that Punjab and Haryana High Court in recent judgment in case of Principal Commissioner of Income Tax v. State Bank of Patiala2 has taken view which runs contrary to aforesaid view taken by Delhi High Court. Punjab and Haryana High Court followed, with approval, judgment of High Court of Karnataka in CCI Ltd. v. Joint Commissioner of Income Tax, Udupi Range 3 Revenue has filed appeals challenging correctness of aforesaid decisions. Thus, in view of conflict of opinions of various High Courts, these batch of 2 (2017) 391 ITR 218 (P&H) 3 (2012) 206 Taxman 563 11 appeals are by those assessees who were lost before High Court and by Income Tax Department against judgments of High Court where view taken is favourable to assessee and against Revenue. 11) Before adverting to discussions on these judgments, let us go through relevant statutory provisions, as that would enable us to appreciate ratio of these cases more appropriately. Since focus of discussion is Section 14A of Act, we reproduce Section 14A in its entirety hereinbelow: Expenditure incurred in relation to income not includible in total income. 14A. (1) For purposes of computing total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by assessee in relation to income which does not form part of total income under this Act. (2) Assessing Officer shall determine amount of expenditure incurred in relation to such income which does not form part of total income under this Act in accordance with such method as may be prescribed, if Assessing Officer, having regard to accounts of assessee, is not satisfied with correctness of claim of assessee in respect of such expenditure in relation to income which does not form part of total income under this Act. (3) provisions of sub-section (2) shall also apply in relation to case where assessee claims that no expenditure has been incurred by him in relation to income which does not form part of total income under this Act : Provided that nothing contained in this section shall empower Assessing Officer either to reassess under section 147 or pass order enhancing assessment or reducing refund already made or otherwise increasing liability of assessee under section 154, for any 12 assessment year beginning on or before 1st day of April, 2001. 12) Sub-section (2) of Section 14A deals with proportionality as it empowers AO to extricate that amount of expenditure which is incurred in relation to such income which does not form part of total income under Act. However, this is to be done in accordance with such method as may be prescribed. This prescription is provided by delegated legislation, in form of Rule 8D of Income Tax Rules, 1962 (for short Rules ) which Rule was inserted w.e.f. March 24, 2008 vide Income Tax (Fifth Amendment) Rules, 2008 4. We, thus, reproduce Rule 8D hereunder: Method for determining amount of expenditure in relation to income not includible in total income. 8D.(1) Where Assessing Officer, having regard to accounts of assessee of previous year, is not satisfied with (a) correctness of claim of expenditure made by assessee; or (b) claim made by assessee that no expenditure has been incurred, in relation to income which does not form part of total income under Act for such previous year, he shall determine amount of expenditure in relation to such income in accordance with provisions of sub-rule (2). (2) expenditure in relation to income which does not form part of total income shall be aggregate of following amounts, namely: 4 In Civil Appeal No. 2165 of 2012 (Commissioner of Income Tax, Mumbai v. M/s. Essar Teleholdings Ltd. through its Manager pronounced on January 31, 2018, this Court has held that Rule 8D is prospective in nature. 13 (i) amount of expenditure directly relating to income which does not form part of total income; (ii) in case where assessee has incurred expenditure by way of interest during previous year which is not directly attributable to any particular income or receipt, amount computed in accordance with following formula, namely: Where = amount of expenditure by way of interest other than amount of interest included in clause (i) incurred during previous year; B = average of value of investment, income from which does not or shall not form part of total income, as appearing in balance sheet of assessee, on first day and last day of previous year; C = average of total assets as appearing in balance sheet of assessee, on first day and last day of previous year; (iii) amount equal to one-half per cent of average of value of investment, income from which does not or shall not form part of total income, as appearing in balance sheet of assessee, on first day and last day of previous year. (3) For purposes of this rule, total assets shall mean, total assets as appearing in balance sheet excluding increase on account of revaluation of assets but including decrease on account of revaluation of assets. 13) With aforesaid statutory scheme in mind, we traverse through judgments of Delhi High Court in Maxopp Investment Ltd. and that of Punjab and Haryana High Court in State Bank of Patiala. JUDGMENT OF DELHI HIGH COURT IN MAXOPP INVESTMENT LTD. 14) Three questions fell for consideration before High Court. For 14 purpose of these appeals, it is only question No. 1 which is relevant, and formulation thereof by High Court was as under: 1. Whether expenditure (including interest paid on funds borrowed) in respect of investment in shares of operating companies for acquiring and retaining controlling interest therein is hit by section 14A of Income tax Act, 1961 inasmuch as dividend received on such shares does not form part of total income? 15) On facts, it was noted that assessee company is in business of finance, investment and was dealing in shares and securities. assessee held shares and securities, partly as investments on capital account and partly as trading assets for purpose of acquiring and retaining control over its group companies, primarily Max India Ltd. As per assessee, any profit resulting on sale of shares held as trading assets was duly offered to tax as business income of assessee. During previous year relevant to assessment year 2002-03, assessee incurred total interest expenditure of Rs. 1,61,21,168/-, which was claimed as business expenditure under section 36(1)(iii) of Income Tax Act, 1961 (hereinafter referred to as said act ). According to assessee, expenditure claimed was not hit by section 14A of Act, on ground that although borrowed funds were partly utilised for investment in shares held as trading assets, such investment was made with intention to acquire and retain controlling interest in aforesaid company and that receipt of dividend thereon was merely incidental. 15 High Court then took note of legislative history of Section 14A of Act and Rule 8D of Rules. Thereafter, Court went on to discuss law which stood prior to insertion of Section 14A. Taking note of certain judgments, High Court observed that prior to insertion of Section 14A in Act, law was that when assessee had composite and indivisible business, which had elements of both taxable and non-taxable income, entire expenditure in respect of said business was deductible and, in such case, principle of apportionment of expenditure relating to non-taxable income did not apply. However, where business was divisible, principle of apportionment of expenditure was applicable and expenditure apportioned to exempt income or income not exigible to tax, was not allowable as deduction. High Court, then, took cognizance of legislative intent and objective behind insertion of Section 14A by referring to Memorandum Explaining Provisions of Finance Bill, 2001. It also reproduced passages from few judgments of this Court. Since, for purpose of present case, it is necessary to keep in mind objectives behind this provision, we reproduce that part of discussion hereunder: Objective behind insertion of section 14A 15. object behind insertion of section 14A in said Act is apparent from Memorandum explaining provisions of Finance Bill 2001 which is to following effect:- 16 Certain incomes are not includable while computing total income as these are exempt under various provisions of Act. There have been cases where deductions have been claimed in respect of such exempt income. This in effect means that tax incentive given by way of exemptions to certain categories of income is being used to reduce also tax payable on non-exempt income by debiting expenses incurred to earn exempt income against taxable income. This is against basic principles of taxation whereby only net income, i.e., gross income minus expenditure is taxed. On same analogy, exemption is also in respect of net income. Expenses incurred can be allowed only to extent they are relatable to earning of taxable income. It is proposed to insert new section 14A so as to clarify intention of Legislature since inception of Income-tax Act, 1961, that no deduction shall be made in respect of any expenditure incurred by assessee in relation to income which does not form part of total income under Income-tax Act. proposed amendment will take effect retrospectively from April 1, 1962 and will accordingly, apply in relation to assessment year 1962-63 and subsequent assessment years. 16. As observed by Supreme Court in case of CIT v. Walfort Share and Stock Brokers P Ltd: 326 ITR 1 (SC), insertion of section 14 with retrospective effect reflects serious attempt on part of Parliament not to allow deduction in respect of any expenditure incurred by assessee in relation to income, which does not form part of total income under said act against taxable income. Supreme Court further observed as under:- .. In other words, section 14 clarifies that expenses incurred can be allowed only to extent that they are relatable to earning of taxable income. In many cases nature of expenses incurred by assessee may be relatable partly to exempt income and partly to taxable income. In absence of section 14A, expenditure incurred in respect of exempt income was being claimed against taxable income. mandate of section 14A is clear. It desires to curb practice to claim deduction of expenses incurred in 17 relation to exempt income against taxable income and at same time avail of tax incentive by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income ..Expenses allowed can only be in respect of earning taxable income. This is purport of section 14A. In section 14A, first phrase is for purposes of computing total income under this Chapter which makes it clear that various heads of income as prescribed in Chapter IV would fall within section 14A. next phrase is, in relation to income which does not form part of total income under Act . It means that if income does not form part of total income, then related expenditure is outside ambit of applicability of section 14A.. (Emphasis supplied) 17. Supreme Court also clearly held that in case of income like dividend income which does not form part of total income, any expenditure/deduction relatable to such (exempt or non-taxable) income, even if it is of nature specified in sections 15 to 59 of said Act, cannot be allowed against any other income which is includable in total income. exact words used by Supreme Court are as under:- Further, section 14 specifies five heads of income which are chargeable to tax. In order to be chargeable, income has to be brought under one of five heads. Sections 15 to 59 lay down rules for computing income for purpose of chargeability to tax under those heads. Sections 15 to 59 quantify total income chargeable to tax. permissible deductions enumerated in sections 15 to 59 are now to be allowed only with reference to income which is brought under one of above heads and is chargeable to tax. If income like dividend income is not part of total income, expenditure/deduction though of nature specified in sections 15 to 59 but related to income not forming part of total income could not be allowed against other income includable in total income for purpose of chargeability to tax. theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under 18 section 14 A. (emphasis supplied) 16) High Court then undertook exercise of analysing provisions of Section 14A of Act and, in process, examined contours and scope of expressions in relation to and expenditure incurred occurring therein. High Court pointed out that contention of assessees, in this behalf, was that word incurred must be taken literally in sense that expenditure must have actually taken place. Moreover, expenditure must also have taken place in relation to income which does not form part of total income. Further, expression in relation to implies that there must be direct and proximate connection with subject matter. In other words, only that actual expenditure which is made directly and for object of earning exempt income (in present appeals - dividend income) could be disallowed under section 14A of Act. If dominant and main objective of spending was not earning of exempt income then, expenditure could not be disallowed under section 14A of Act provided it was otherwise allowable under sections 15 to 59 of said Act. High Court, however, did not agree with aforesaid propositions advanced by learned counsel for assessees which according to it was mired by several difficulties. Distinguishing case law cited by assessees where expression in relation to was interpreted by this Court, as not applicable in present context, 19 High Court, instead, referred to judgment in case of Doypack Systems Pvt. Ltd. v. Union of India5 wherein this Court has held that expressions pertaining to , in relation to and arising out of used in deeming provisions, are used in expansive sense. It also referred to judgment of this Court in CIT v. Walfort Share and Stock Brokers P Ltd.6 wherein this Court has held that basic principle of taxation is to tax net income, i.e., gross income minus expenditure and on same analogy exemption is also in respect of net income. In other words, where gross income would not form part of total income, it's associated or related expenditure would also not be permitted to be debited against other taxable income. 17) Likewise, explaining meaning of expenditure incurred , High Court agreed that this expression would mean incurring of actual expenditure and not to some imagined expenditure. At same time, observed High Court, actual expenditure that is in contemplation under section 14A(1) of said Act is actual expenditure in relation to or in connection with or pertaining to exempt income. corollary to this is that if no expenditure is incurred in relation to exempt income, no disallowance can be made under section 14A of said Act. On basis of aforesaid discussion, High Court answered question formulated by it in affirmative. 5 (1988) 2 SCC 299 6 (2010) 326 ITR 1 (SC) 20 JUDGMENT OF PUNJAB AND HARYANA HIGH COURT IN STATE BANK OF PATIALA 18) This case arose in context where exempt income in form of dividend was earned by Bank from securities held by it as its stock in trade. assessee filed its return declaring income of about Rs.670 crores which was selected for scrutiny. return showed dividend income exempt under section 10(34) and (35) of about Rs.11.07 crores and net interest income exempt under section 10(15)(iv) (h) of about Rs.1.12 crores. total exempt income claimed in return was, therefore, Rs.12,19,78,015/-. assessee while claiming exemption contended that investment in shares, bonds, etc. constituted its stock-in-trade; that investment had not been made only for earning tax free income; that tax free income was only incidental to assessee s main business of sale and purchase of securities and, therefore, no expenditure had been incurred for earning such exempt income; expenditure would have remained same even if no dividend or interest income had been earned by assessee from said securities and that no expenditure on proportionate basis could be allocated against exempt income. assessee also contended that in any event it had acquired securities from its own funds and, therefore, section 14A was not applicable. AO restricted disallowance to amount which was claimed as exempt income by 21 applying formula contained in Rule 8D holding that Section 14A would be applicable. CIT(A) issued notice of enhancement under Section 251 of Act and held that in view of Section 14A of Act, assessee was not to be allowed any deduction in respect of income which is not chargeable to tax. Therefore, he disallowed entire expenditure claimed instead of restricting disallowance to amount which was claimed as exempt income as done by AO. ITAT set aside order of AO as well as CIT(A). It referred to CBDT Circular No.18/2015 dated 02.11.2015 which states that income arising from investment of banking concern is attributable to business of banking which falls under head Profits and gains of business and profession . circular states that shares and stock held by bank are stock-in-trade and not investment . Referring to certain judgments (which we will also refer to) and earlier orders of Tribunal, it was held that if shares are held as stock-in-trade and not as investment even disallowance under rule 8D would be nil as rule 8D(2)(i) would be confined to direct expenses for earning tax exempt income. In aforesaid factual backdrop, in appeal filed by Revenue, High Court noted that following substantial question of law arose for consideration: Whether in facts and circumstances of case, Hon ble ITAT is right in law in deleting addition made on account of disallowance under section 14A of Income Tax Act, 1961? 22 19) In its analysis, High Court accepted contention of counsel for assessee that assessee is engaged in purchase and sale of shares as trader with object of earning profit and not with view to earn interest or dividend. assessee does not have investment portfolio. securities constitute assessee s stock-in-trade. Department, in fact, rightly accepted, as matter of fact, that dividend and interest earned was from securities that constituted assessee s stock-in-trade. same is, in any event, established. assessee carried on business of sale and purchase of securities. It was supported by Circular No.18, dated November 02, 2015, issued by CBDT, which reads as under:- Subject: Interest from Non-SLR securities of Banks Reg. It has been brought to notice of Board that in case of Banks, field officers are taking view that, expenses relatable to investment in non-SLR securities need to be disallowed u/s 57(i) of Act as interest on non-SLR securities is income from other sources. 2. Clause (id) of sub-section (1) of Section 56 of Act provides that income by way of interest on securities shall be chargeable to income-tax under head Income from Other Sources , if, income is not chargeable to income-tax under head Profits and Gains of Business and Profession . 3. matter has been examined in light of judicial decisions on this issue. In case of CIT Vs Nawanshahar Central Cooperative Bank Ltd. [2007] 160TAXMAN 48(SC), Apex Court held that investments made by banking concern are part of business of banking. Therefore, income arising from such investments is attributable to business of banking falling under head Profits and Gains of Business and Profession . 23 3.2 Even though abovementioned decision was in context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i) of Act, principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 4. In light of Supreme Court s decision in matter, issue is well settled. Accordingly, Board has decided that no appeals may henceforth be filed on this ground by officers of Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to notice of all concerned. (emphasis supplied) 20) High Court pointed out that Circular carves out distinction between stock-in-trade and investment and provides that if motive behind purchase and sale of shares is to earn profit then same would be treated as trading profit and if object is to derive income by way of dividend then profit would be said to have accrued from investment. If assessee is found to have treated shares and securities as stock-in-trade, income arising therefrom would be business income. loss would be business loss. Thus, assessee may have two portfolios, namely, investment portfolio and trading portfolio. In case of former, securities are to be treated as capital assets and in latter as trading assets. 21) Further, as banking institution, assessee was also statutorily required to place part of its funds in approved securities, as held in 24 CIT v. Nawanshahar Central Co-operative Bank Ltd. 7. Since, shares, bonds, debentures purchased by assessees constituted its stock-in-trade, provisions of Section 14A were not applicable. Here, Court noted distinction between stock-in-trade and investment and made following observations: 17. Under section 14A, expenditure can be disallowed only if it is incurred by assessee in relation to income exempt from tax. dividend or interest from assessee s stock-in-trade i.e. securities was exempt from tax in view of sections 10(15)(iv)(h),(34) and (35). This was incidental to its business of banking. business income on account of assessee trading in securities is assessable under head Profits and gains of business and profession . expenditure incurred in relation to stock-in-trade arising as result of investment in shares and debentures is deductible under sections 28 to 37. There is distinction between stock-in-trade and investment. object of earning profit from trading in securities is different from object of earning income, such as, dividend and interest arising therefrom. object of trading in securities does not constitute activity of investment where object is to earn dividend or interest. 22) High Court then discussed in detail judgment in Walfort Share and Stock Brokers P Ltd. which related to dividend stripping. After explaining objective behind Section 14A of Act (which is already noted above), this Court in facts of that case, had held that payback does not constitute expenditure incurred in terms of Section 14A as it does not impact profit and loss account. This expenditure, in fact, is payout. 23) According to High Court, what is to be disallowed is 7 (2007) 289 ITR 6 (SC) 25 expenditure incurred to earn exempt income. words in relation to in Section 14A must be construed accordingly. Applying that principle to facts at hand, High Court concluded as under: Now, dividend and interest are income. question then is whether assessee can be said to have incurred any expenditure at all or any part of said expenditure in respect of exempt income viz. dividend and interest that arose out of securities that constituted assessee s stock-in-trade. answer must be in negative. purpose of purchase of said securities was not to earn income arising therefrom, namely, dividend and interest, but to earn profits from trading in i.e. purchasing and selling same. It is axiomatic, therefore, that entire expenditure including administrative costs was incurred for purchase and sale of stock-in-trade and, therefore, towards earning business income from trading activity of purchasing and selling securities. Irrespective of whether securities yielded any income arising therefrom, such as, dividend or interest, no expenditure was incurred in relation to same. 24) We may also note here that High Court referred to judgment of Karnataka High Court in CCI Ltd. case and concurred therewith. This judgment in CCI Ltd. is, however, very short judgment which records submission of counsel for parties very briefly and thereafter entire discussion is contained in para 5 that reads as under: 5. When no expenditure is incurred by assessee in earning dividend income, no notional expenditure could be deducted from said income. It is not case of assessee retaining any shares so as to have benefit of dividend. 63% of shares, which were purchased, are sold and income derived therefrom is offered to tax as business income. remaining 37% of shares are retained. It has remained unsold with assessee. It is those unsold shares have yielded dividend, for which, assessee has not incurred any expenditure at all. Though dividend income is 26 exempted from payment of tax, if any expenditure is incurred in earning said income, said expenditure also cannot be deducted. But in this case, when assessee has not retained shares with intention of earning dividend income and dividend income is incidental to his business of sale of shares, which remained unsold by assessee, it cannot be said that expenditure incurred in acquiring shares has to be apportioned to extent of dividend income and that should be disallowed from deductions. In that view of matter, approach of authorities is not in conformity with statutory provisions contained under Act. Therefore, impugned orders are not sustainable and require to be set aside. 25) At this stage, it will also be useful to refer judgment of Calcutta High Court in Commissioner of Income Tax v. G.K.K. Capital Markets (P.) Ltd.8 which has also agreed with view taken by Karnataka High Court. In that case, assessee was engaged in business of share trading. In computation of income, assessee claimed long-term capital gains as exempt income and declared expenditure disallowable against it under Section 14A of Act. AO treated long-term capital gains as business income. Appellate Tribunal found that assessee did not have any investment and all shares were held as stock-in-trade as was evident from orders of lower authorities. On those facts it held that once assessee had kept shares as stock-in-trade, Rule 8D of Rules would not apply. On questions whether Appellate Tribunal was justified in deleting disallowance under Section 14A computed in accordance with Rule 8D 8 (2017) 392 ITR 196 (Cal) 27 and in holding investments as shares stock-in-trade, High Court held that AO had accepted correctness of disallowable expenditure offered by assessee on its claim of amount as long-term capital gains. He had not allowed claim itself treating amount as business income to thereafter disallow offered expenditure. According to High Court, since finding of fact was recorded by AO regarding exempt income claimed being treated as business income and shares held by assessee having been treated as stock-in-trade, there could not have been disallowance of expenditure under Section 14A of Act and that provision had no application. 26) It would be pertinent to mention that earlier judgment of same High Court in case of Dhanuka and Sons v. CIT9 was cited by Revenue. However, this judgment was distinguished on ground that, in that case, there was no dispute that part of income of assessee from its business was from dividend whereas assessee was unable to produce any material before authorities below showing source from which such shares were acquired. For better understanding, it would be necessary to note discussion in case of Dhanuka and Sons, which was reproduced by High Court in G.K.K. Capital Markets (P.) Ltd. Para 6 to para 9 of Dhanuka and 9 (2011) 339 ITR 319 (Cal) 28 Sons read as under: 6. Mr. Sarkar, learned advocate appearing on behalf of revenue, has, on other hand, supported order passed by Tribunal and has contended that assessee itself having failed to produce material in support of its contention, Assessing Officer rightly assessed deductible income on proportionate basis. Mr. Sarkar submits that same is in conformity with Rule 8D of Income tax Rule and thus, we should not interfere with order passed by Tribunal. 7. After hearing learned counsel appearing for parties and after going through materials on record and decisions cited by Mr. Khaitan, we find that Supreme Court in cases of CIT v. Maharastra Sugar Mills Ltd. [1971] 82 ITR 452 and Rajasthan State Warehousing Corpn. v. CIT [2000] 242 ITR 450/109 Taxman 145 having held that where there is one indivisible business giving rise to taxable income as well as exempt income, entire expenditure incurred in relation to that business would have to be allowed even if part of income earned from business is exempt from tax, section 14A of Act was enacted to overcome those judicial pronouncements. object of section 14A of Act is to disallow direct and indirect expenditure incurred in relation to income which does not form part of total income. 8. In case before us, there is no dispute that part of income of assessee from its business is from dividend which is exempt from tax whereas assessee was unable to produce any material before authorities below showing source from which such shares were acquired. Mr. Khaitan strenuously contended before us that for last few years before relevant previous year, no new share has been acquired and thus, loan that was taken and for which interest is payable by assessee was not for acquisition of those old shares and, therefore, authorities below erred in law in giving benefit of proportionate deduction. 9. In our opinion, mere fact that those shares were old ones and not acquired recently is immaterial. It is for assessee to show source of acquisition of those shares by production of materials that those were acquired from funds available in hands of assessee at relevant point of time without taking benefit of any loan. If those shares were purchased from amount taken in loan, even for instance, five or ten years ago, it is for assessee to show by production of documentary evidence that such loaned 29 amount had already been paid back and for relevant assessment year, no interest is payable by assessee for acquiring those old shares. In absence of any such materials placed by assessee, in our opinion, authorities below rightly held that proportionate amount should be disallowed having regard to total income and income from exempt source. In absence of any material disclosing source of acquisition of shares which is within special knowledge of assessee, assessing authority took most reasonable approach in assessment. 27) We have already stated as to how two divergent opinions have emerged from different High Courts and respective reasons in support of these conflicting outcome. Obviously, assessees are banking upon reasons which prevailed with High Courts that have taken view which are favourable to assessees and Revenue is relying upon reasoning given by Delhi High Court as well as Calcutta High Court in Dhanuka and Sons case. Therefore, it may not be necessary to give detailed narrative of arguments which were advanced by various counsel appearing for assessees as well as counsel for Revenue. brief resume of their submissions would serve purpose. 28) Insofar as assessees are concerned, their arguments are recapitulated in brief hereinbelow: (i) holding of investment in group companies representing controlling interest, amounts to carrying on business, as held in various cases. (ii) Notwithstanding that dividend income is assessable under 30 head income from other sources , in view of mandatory prescription in Section 56 of Act, nature of dividend income has to be ascertained on facts of case. Where dividend is earned on shares held as stock-in-trade/shares purchased for acquiring/retaining controlling interest, dividend income is in nature of business income. (iii) Interest paid on loans borrowed for acquiring shares representing controlling interest in investee company is allowable business expenditure in terms of Section 36(1)(iii) of Act, since acquiring controlling interest in companies and managing, administering, financing and rehabilitating such companies are for business and/or professional purposes and not for earned dividend. (iv) Conversely, interest paid on funds borrowed for investment in shares representing controlling interest does not represent expenditure incurred for earning dividend income and is not allowable under Section 57(iii) of Act (prior to introduction of Section 14A). 29) Basing their case on aforesaid principles, it was argued that when shares were acquired, as part of promoter holding, for purpose of acquiring controlling interest in company, dominant object is to keep control over management of company and not to earn dividend from investment in shares. Whether dividend is 31 declared/earned or not is immaterial and, in either case, assessee would not liquidate shares in investee companies. Therefore, no expenditure was made in relation to income i.e. dividend income and, therefore, Section 14A would not be attracted. In this hue, it was submitted that Section 14A was to be accorded plain and grammatical interpretation meaning thereby mandating and requiring direct and proximate nexus/link between expenditure actually incurred and earning of exempt income. It was also argued that even if contextual/purposive interpretation is to be given, that also called for direct and proximate connection between expenditure incurred and earning of dividend. According to learned counsel appearing for assessees, legislative intention behind inserting Section 14A in this statute was to exclude both, viz. receipts which are exempt under provisions of Act as well as expenditure actually incurred in relation thereto from entering into computation of assessable income, so as to remove double benefit to assessee (i) in form of exempt income, on which no tax is leviable; and (ii) providing deduction in respect of expenditure actually incurred which directly resulted in earning of exempt income by assessee. 30) Mr. K. Radhakrishnan, learned senior counsel appearing for Revenue, on other hand, made fervent plea to accept view taken by Delhi High Court. He submitted that objective behind 32 insertion of Section 14A of Act manifestly pointed out that expenditure incurred in respect of income earned, which is exempted from tax, has to be disallowed. He also pointed out that this message was eloquently brought out by this Court in Walfort Share and Stock Brokers P Ltd. case. Otherwise, argued learned senior counsel, assessee will get double benefit, one, in form of exemption from income tax insofar as dividend income is concerned and other by getting deduction on account of expenditure as well. He, thus, submitted that expression in relation to had to be given expansive meaning in order to sub-serve purpose of said provision. He also emphasised that literal meaning of Section 14A of Act pointed towards that and that was equally purpose behind insertion of Section 14A as well. 31) We have given our thoughtful consideration to argument of counsel for parties on both sides, in light of various judgments which have been cited before us, some of which have already been taken note of above. 32) In first instance, it needs to be recognised that as per section 14A(1) of Act, deduction of that expenditure is not to be allowed which has been incurred by assessee in relation to income which does not form part of total income under this Act . Axiomatically, it is that expenditure alone which has been incurred in relation to income 33 which is includible in total income that has to be disallowed. If expenditure incurred has no causal connection with exempted income, then such expenditure would obviously be treated as not related to income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of total income. 33) There is no quarrel in assigning this meaning to section 14A of Act. In fact, all High Courts, whether it is Delhi High Court on one hand or Punjab and Haryana High Court on other hand, have agreed in providing this interpretation to section 14A of Act. entire dispute is as to what interpretation is to be given to words in relation to in given scenario, viz. where dividend income on shares is earned, though dominant purpose for subscribing in those shares of investee company was not to earn dividend. We have two scenarios in these sets of appeals. In one group of cases main purpose for investing in shares was to gain control over investee company. Other cases are those where shares of investee company were held by assessees as stock-in-trade (i.e. as business activity) and not as investment to earn dividends. In this context, it is to be examined as to whether expenditure was incurred, in respective scenarios, in relation to dividend income or not. 34 34) Having clarified aforesaid position, first and foremost issue that falls for consideration is as to whether dominant purpose test, which is pressed into service by assessees would apply while interpreting Section 14A of Act or we have to go by theory of apportionment. We are of opinion that dominant purpose for which investment into shares is made by assessee may not be relevant. No doubt, assessee like Maxopp Investment Limited may have made investment in order to gain control of investee company. However, that does not appear to be relevant factor in determining issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning dividend income, that much of expenditure which is attributable to dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of Act in mind, said provision has to be interpreted, particularly, word in relation to income that does not form part of total income. Considered in this hue, principle of apportionment of expenses comes into play as that is principle which is engrained in Section 14A of Act. This is so held in Walfort Share and Stock Brokers P Ltd., relevant passage whereof is already reproduced above, for sake of continuity of discussion, we would like to quote following few lines therefrom. 35 next phrase is, in relation to income which does not form part of total income under Act . It means that if income does not form part of total income, then related expenditure is outside ambit of applicability of section 14A.. xxx xxx xxx theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14 A. 35) Delhi High Court, therefore, correctly observed that prior to introduction of Section 14A of Act, law was that when assessee had composite and indivisible business which had elements of both taxable and non-taxable income, entire expenditure in respect of said business was deductible and, in such case, principle of apportionment of expenditure relating to non-taxable income did not apply. principle of apportionment was made available only where business was divisible. It is to find cure to aforesaid problem that Legislature has not only inserted Section 14A by Finance (Amendment) Act, 2001 but also made it retrospective, i.e., 1962 when Income Tax Act itself came into force. aforesaid intent was expressed loudly and clearly in Memorandum explaining provisions of Finance Bill, 2001. We, thus, agree with view taken by Delhi High Court, and are not inclined to accept opinion of Punjab & Haryana High Court which went by dominant purpose theory. aforesaid reasoning would be applicable in cases where 36 shares are held as investment in investee company, may be for purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by assessees to have controlling interest in investee companies have to fail and are, therefore, dismissed. 36) There is yet another aspect which still needs to be looked into. What happens when shares are held as stock-in-trade and not as investment , particularly, by banks? On this specific aspect, CBDT has issued circular No. 18/2015 dated November 02, 2015. 37) This Circular has already been reproduced in Para 19 above. This Circular takes note of judgment of this Court in Nawanshahar case wherein it is held that investments made by banking concern are part of business or banking. Therefore, income arises from such investments is attributable to business of banking falling under head profits and gains of business and profession . On that basis, Circular contains decision of Board that no appeal would be filed on this ground by officers of Department and if appeals are already filed, they should be withdrawn. reading of this circular would make it clear that issue was as to whether income by way of interest on securities shall be chargeable to income tax under head income from other sources or it is to fall under head profits and gains of 37 business and profession . Board, going by decision of this Court in Nawanshahar case, clarified that it has to be treated as income falling under head profits and gains of business and profession . Board also went to extent of saying that this would not be limited only to co-operative societies/Banks claiming deduction under Section 80P(2)(a)(i) of Act but would also be applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies. 38) From this, Punjab and Haryana High Court pointed out that this circular carves out distinction between stock-in-trade and investment and provides that if motive behind purchase and sale of shares is to earn profit, then same would be treated as trading profit and if object is to derive income by way of dividend then profit would be said to have accrued from investment. To this extent, High Court may be correct. At same time, we do not agree with test of dominant intention applied by Punjab and Haryana High Court, which we have already discarded. In that event, question is as to on what basis those cases are to be decided where shares of other companies are purchased by assessees as stock-in-trade and not as investment . We proceed to discuss this aspect hereinafter. 39) In those cases, where shares are held as stock-in-trade, main 38 purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as income under head profits and gains from business and profession . What happens is that, in process, when shares are held as stock-in-trade , certain dividend is also earned, though incidentally, which is also income. However, by virtue of Section 10 (34) of Act, this dividend income is not to be included in total income and is exempt from tax. This triggers applicability of Section 14A of Act which is based on theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share and Stock Brokers P Ltd. case. Therefore, to that extent, depending upon facts of each case, expenditure incurred in acquiring those shares will have to be apportioned. 40) We note from facts in State Bank of Patiala cases that AO, while passing assessment order, had already restricted disallowance to amount which was claimed as exempt income by applying formula contained in Rule 8D of Rules and holding that section 14A of Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by AO, CIT(A) disallowed entire deduction of expenditure. That view of CIT(A) was clearly untenable and rightly set aside by ITAT. Therefore, on facts, Punjab and Haryana High Court has arrived at correct conclusion by 39 affirming view of ITAT, though we are not subscribing to theory of dominant intention applied by High Court. It is to be kept in mind that in those cases where shares are held as stock-in-trade , it becomes business activity of assessee to deal in those shares as business proposition. Whether dividend is earned or not becomes immaterial. In fact, it would be quirk of fate that when investee company declared dividend, those shares are held by assessee, though assessee has to ultimately trade those shares by selling them to earn profits. situation here is, therefore, different from case like Maxopp Investment Ltd. where assessee would continue to hold those shares as it wants to retain control over investee company. In that case, whenever dividend is declared by investee company that would necessarily be earned by assessee and assessee alone. Therefore, even at time of investing into those shares, assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by assessee. In contrast, where shares are held as stock-in-trade, this may not be necessarily situation. main purpose is to liquidate those shares whenever share price goes up in order to earn profits. In result, appeals filed by Revenue challenging judgment of Punjab and Haryana High Court in State Bank of Patiala also fail, though law in this respect has been clarified 40 hereinabove. 41) Having regard to language of Section 14A(2) of Act, read with Rule 8D of Rules, we also make it clear that before applying theory of apportionment, AO needs to record satisfaction that having regard to kind of assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where assessee in his return has himself apportioned but AO was not accepting said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such satisfaction, nature of loan taken by assessee for purchasing shares/making investment in shares is to be examined by AO. 42) Civil Appeal No. 1423 of 2015 is filed by M/s. Avon Cycles Limited, Ludhiana, wherein AO had invoked section 14A of Act read with Rule 8D of Rules and apportioned expenditure. CIT(A) had set aside disallowance, which view was upturned by ITAT in following words: ...Admittedly assessee had paid total interest of Rs.2.92 crores out of which interest paid on term loan raised for specific purpose totals to Rs.1.70 crores and balance interest paid by assessee is Rs.1.21 crores. funds utilized by assessee being mixed funds and in view of provisions of Rule 8D(2)(ii) of Income Tax Rules disallowance is confirmed at Rs.10,49,851/-, we find no merit in ad hoc disallowance made by CIT (Appeals) at Rs.5,00,000/-. Consequently, ground of appeal raised by Revenue is partly allowed and ground raised by assessee in cross-objection is allowed... 41 Taking note of aforesaid finding of fact, High Court has dismissed appeal of assessee observing as under: In present case, after examining balance-sheet of assessee, finding of fact has been recorded that funds utilized by assessee being mixed funds, therefore, interest paid by assessee is also interest on investments made. Such being finding of fact, we do not find that any substantial question of law arises for consideration of this Court. After going through records and applying principle of apportionment, which is held to be applicable in such cases, we do not find any merit in Civil Appeal No. 1423 of 2015, which is accordingly dismissed. 43) Few appeals are filed by Revenue against assessees which pertained to period prior to introduction of Rule 8D of Rules. Here, case is decided in favour of assessees also on ground that Rule 8D of Rules is prospective in nature and could not have been made applicable in respect of Assessment Years prior to 2007 when this Rule was inserted. This view has already been upheld by this Court in Civil Appeal No. 2165 of 2012 (Commissioner of Income Tax, Mumbai v. M/s. Essar Teleholdings Ltd. through its Manager), pronounced on January 31, 2018, that said Rule is prospective in nature. On this ground alone, these appeals of Revenue fail as it is not necessary to go into other issues. 42 44) To sum up: (a) Appeals of assessees, i.e. Civil Appeal Nos. 104-109, 110-112, 130, 1423 of 2015, are dismissed. (b) Appeals of Revenue, i.e. Civil Appeal Nos. 3267, 19614, 10096 of 2013, 8596 of 2014, 18019 of 2017, 115, 123, 6590 of 2015, Civil Appeals arising out of SLP (C) Nos. 27054, 31417 of 2016, 20475, 23123, 32405 of 2017, Diary Nos. 36413, 39820, 39823, 41890, 41903, 41922 of 2017 and 1146 of 2018 are dismissed. (c) Appeal of Revenue, i.e. Civil Appeal arising out of Diary No. 41203 of 2017, is allowed. .............................................J. (A.K. SIKRI) .............................................J. (ASHOK BHUSHAN) NEW DELHI; FEBRUARY 12, 2018. 43 ITEM NO.1501 COURT NO.6 SECTION XIV S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Civil Appeal No(s). 104-109/2015 MAXOPP INVESTMENT LTD.. Appellant(s) VERSUS COMMR.OF I.T NEW DELHI Respondent(s) ([HEARD BY : HON. A.K. SIKRI AND HON. ASHOK BHUSHAN, JJ.]) WITH C.A. No. 1423/2015 (IV) C.A. No. 3267/2013 (XIV) C.A. No. 130/2015 (XIV) C.A. No. 110-112/2015 (XIV) C.A. No. 1500/2018 (III) C.A. No. 1508/2018 (XIV) C.A. No. 115/2015 (XIV) C.A. No. 8596/2014 (III) C.A. No. 1505/2018 (III) C.A. No. 10096/2013 (III) C.A. No. 123/2015 (XIV) C.A. No. 6590/2015 (XIV) C.A. No. 1576/2018 (IV) C.A. No. 1579/2018 (IV) C.A. No. 1578/2018 (IV) C.A. No. 18019/2017 (III) C.A. No. 1580/2018 (IV) C.A. No. 1575/2018 (IV) Diary No(s). 1146/2018 (IX) Diary No(s). 39823/2017 (IX) Diary No(s). 41903/2017 (IX) C.A. No. 1577/2018 (IV) Diary No(s). 41203/2017 (IX) Diary No(s). 41922/2017 (IX) Date : 12-02-2018 These appeals were called on for pronouncement of judgment today. For Appellant(s) Mr. Satyen Sethi, Adv. Mr. Arta Trana Panda, Adv. Mr. Rameshwar Prasad Goyal, AOR Mr. K. Radha Krishnan, Sr. Adv. Mr. Arijit Prasad, Adv. Mr. Rupesh Kumar, Adv. 44 Mr. D.L. Chidanand, Adv. Ms. Sadhna Sandhu, Adv. Mr. Manish Pushkarna, Adv. Ms. Gargi Khanna, Adv. Mrs. Anil Katiyar, AOR Mr. Brajesh Kumar, AOR Mr. Ajay Vohra, Sr. Adv. Ms. Kavita Jha, AOR Mr. Udit Naresh, Adv. For Respondent(s) Mrs. Anil Katiyar, AOR Mr. Rajiv Tyagi, AOR Mr. D. Kumar, Adv M/S. Khaitan & Co., AOR Mr. Ambhoj Kumar Sinha, AOR Ms. Kavita Jha, AOR Mr. Sanjay Bansal, Sr. Adv. Mr. Aljo K. Joseph, AOR Ms. Shelna K. Adv. Mr. Ashish Somvanshi, Adv. Mr. Mayank Nagi, Adv. Mr. Tarun Singh, Adv. Mr. Shekhar Prit Jha, AOR Hon'ble Mr. Justice A.K. Sikri pronounced judgment of Bench comprising His Lordship and Hon'ble Mr. Justice Ashok Bhushan. Appeals of assessees, i.e. Civil Appeal Nos. 104-109, 110-112, 130, 1423 of 2015, are dismissed, appeals of Revenue, i.e. Civil Appeal Nos. 3267, 19614, 10096 of 2013, 8596 of 2014, 18019 of 2017, 115, 123, 6590 of 2015, Civil Appeals arising out of SLP (C) Nos. 27054, 31417 of 2016, 20475, 23123, 32405 of 2017, Diary Nos. 36413, 39820, 39823, 41890, 41903, 41922 of 2017 and 45 1146 of 2018 are dismissed and Appeal of Revenue, i.e. Civil Appeal arising out of Diary No. 41203 of 2017, is allowed in terms of signed reportable judgment. Pending application(s), if any, stands disposed of accordingly. (Ashwani Thakur) (Mala Kumari Sharma) COURT MASTER COURT MASTER (Signed reportable judgment is placed on file) Maxopp Investment Ltd. v. Commissioner of Income-tax, New Delhi