$ 61 and 63 * IN HIGH COURT OF DELHI AT NEW DELHI + ITA 904/2019 + ITA 906/2019 PR. COMMISSIONER OF INCOME TAX-7 Appellant Through: Mr. Deepak Anand, Jr. Standing counsel for Mr. Zoheb Hossain, Sr. Standing counsel. versus M/S PUNJAB AND SIND BANK Respondent Through: Mr. Salil Kapoor ad Mr.Sumit Lalchandani, Advs. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA ORDER % 16.10.2019 CM APPL. 45398/2019 (delay) in ITA 904/2019 and CM APPL. 45400/2019 (delay) in ITA 906/2019 1. By these applications, applicant seeks condonation of delay of 107 days in filing both applications. For reasons stated in these applications, delay is condoned. 2. applications stand disposed of in aforesaid terms. ITA 904/2019 and ITA 906/2019 3. present appeals are directed against order dated 09.01.2019 passed by Income Tax Appellate Tribunal in ITA No. 1441 and 1442/Del/2015 in respect to assessment year 2011-12 and 2012-13 in respect of respondent. Tribunal has dismissed said appeals preferred by appellant. Tribunal held, on issue of disallowance of contribution made to Employees Provident Fund Trust which respondent assessee claimed as its legitimate business expenditure, in favour of respondent assessee and upheld order passed by CIT (A). While doing so, Tribunal followed its decision in case of DSIT v. Ranbaxy Laboratories Limited (2009) 124 ATJ (Delhi) 771. We find that this issue is fully covered by decision of this Court in Principal Commissioner of Income Tax -07 vs. Punjab and Sind Bank, ITA 737/2017. question of law considered by this Court in said appeal inter alia was question C . This question was answered in paragraph 7, 8 and 9 which read as follows; 7. third issue pertains to correctness of order of ITAT in deleting addition of Rs. 38,02,52,097/- made by AO on account of contribution made by Assessee to Punjab & Sind Bank Employees Pensions Fund Trust. ITAT, in deciding issue in favour of Assessee, relied upon decision dated 6th March 2013 of Bombay High Court in ITA No. 2232 of 2011 (The Commissioner of Income Tax 6, Mumbai v. M/s. Glaxo Smithkline Pharmaceuticals). It is seen that Bombay High Court has in above order in turn relied on two orders passed by it dated 1st March 2013 in ITA No. 568 of 2012 (CIT v. Suashish Diamonds Ltd.) and Commissioner of Income Tax v. Western India Paper & Board Mills (P) Limited (1991) 189 ITR 309 (Bom). Bombay High Court has, in its three orders, consistently held that, although contributions to pension funds may not be allowable under Section 36 (1) (iv) of Act, same is allowable under Section 37 of Act. 8. Learned counsel for Revenue has been unable to point out to Court any view contrary to one taken by Bombay High Court. 9. It appears that although no appeal was filed by Revenue against order of Bombay High Court in M/s. Glaxo Smithkline Pharmaceuticals (supra), Revenue has filed Special Leave Petitions before Supreme Court against subsequent orders passed in 2013. However, no stay has been granted thereof. Consequently, Court declines to frame question on this issue. 4. In our view, since this Court has already taken view in matter, no question of law arises on this aspect. 5. Insofar as disallowance of expenditure under Section 14A is concerned, ITAT has relied upon decision of Supreme Court Maxopp Investment Ltd vs. CIT (2018), 402 ITR 640 (SC). decision of Supreme Court reads as follows: 48. In those cases, where shares are held as stock-in-trade, main 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 14-A 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. 49. We note from facts in State Bank of Patiala case that AO, while passing assessment order, had already restricted disallowance to amount which was claimed as exempt income by applying formula contained in Rule 8-D of Rules and holding that Section 14-A 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 affirming view of ITAT, though we are not subscribing to theory of dominant intention applied by High Court. 50. 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 hereinabove." 6. Tribunal has held in favour of respondent assessee that it had earned revenue on shares held as stock in trade only by quirk of fate. 7. In light of aforesaid concluded position, both on facts and in law, in our view, no question of law arises for consideration in present appeal. Accordingly, present appeals stand dismissed. VIPIN SANGHI, J SANJEEV NARULA, J OCTOBER 16, 2019 Pallavi Pr. Commissioner of Income-tax-7 v. Punjab and Sind Bank