DCIT Vs Punjab National Bank (ITAT Delhi)
ITAT Delhi upholds major relief to PNB – ₹2,000+ crore disallowances struck down; consistency & banking precedents prevail
Revenue’s appeal against Punjab National Bank (erstwhile Oriental Bank of Commerce) for AY 2017-18 challenged multiple deletions made by CIT(A)/NFAC, involving disallowances aggregating over ₹2,000 crore. The ITAT dismissed all 11 grounds raised by the department, reaffirming established legal precedents & the bank’s consistent victories in prior years.
The appeal had a delay of 458 days, which was condoned citing Collector Land Acquisition vs Katiji (167 ITR 471 SC). The major issues & findings were as follows:
Interest on Fixed Deposits (₹5.61 lakh): Disallowance deleted as the bank furnished cheque proof, TDS records & bank guarantee; AO failed to verify further.
Section 14A Disallowance (₹22.45 crore): Deleted as investments were held for SLR/CRR compliance, forming stock-in-trade. Following Maxopp Investment Ltd v. CIT (402 ITR 640 SC) & Delhi HC rulings in PNB’s own cases, s.14A was held inapplicable.
Depreciation on Temporary Structures (₹21.46 crore): Allowed as recurring issue already decided in bank’s favour for AY 2016-17; consistency principle applied.
Inter-Office Adjustments (₹570.86 crore): Addition struck down since such internal entries represent reconciliation between branches—“no one can earn profit from oneself.”
