CENTRAL BANK OF INDIA, MUMBAI V. D.C.I.T. 2(1), MUMBAI

CO 153/MUM/2012

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3262 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-06-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 06-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI LD
• Keywords: Reopening of assessment; Business income; Bad and doubtful debts; Revised return; Reassessment proceedings
• Section: 143(3); 244A; 234B; 115JB; 147; 28

Judgement Text

CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.8581/MUM/2010 ( / ASSESSMENT YEAR: 1999-2000) DEPUTY COMMISSIONER OF INCOME TAX 2(1) AAYKAR BHAVAN ROOM NO. 575, 5 TH FLOOR M.K.ROAD, MUMBAI-400 020 / VS. CENTRAL BANK OF INDIA CENTRAL OFFICE CENTRAL ACCOUNTS DEPTT. CHANDERMUKHI, 4 TH FLOOR NARIMAN POINT, MUMBAI-400 021 ! ./ ./PAN/GIR NO. AAACC-2498-P ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & C.O. NO. 153/2012 [ARISING OUT OF ITA NO.8581/MUM/2010 ( / ASSESSMENT YEAR: 1999-2000) CENTRAL BANK OF INDIA CENTRAL OFFICE CENTRAL ACCOUNTS DEPTT. CHANDERMUKHI, 4 TH FLOOR NARIMAN POINT, MUMBAI-400 021 / VS. DEPUTY COMMISSIONER OF INCOME TAX 2(1) AAYKAR BHAVAN ROOM NO. 575, 5 TH FLOOR M.K.ROAD, MUMBAI-400 020 ! ./ ./PAN/GIR NO. AAACC-2498-P ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 2 ./I.T.A. NO.8582/MUM/2010 ( / ASSESSMENT YEAR: 2002-2003) DEPUTY COMMISSIONER OF INCOME TAX 2(1) AAYKAR BHAVAN ROOM NO. 575, 5 TH FLOOR M.K.ROAD, MUMBAI-400 020 / VS. CENTRAL BANK OF INDIA CENTRAL OFFICE CENTRAL ACCOUNTS DEPTT. CHANDERMUKHI, 4 TH FLOOR NARIMAN POINT, MUMBAI-400 021 ! ./ ./PAN/GIR NO. AAACC-2498-P ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & ./I.T.A. NO.910/MUM/2011 ( / ASSESSMENT YEAR: 2003-2004) DEPUTY COMMISSIONER OF INCOME TAX 2(1) AAYKAR BHAVAN ROOM NO. 575, 5 TH FLOOR M.K.ROAD, MUMBAI-400 020 / VS. CENTRAL BANK OF INDIA CENTRAL OFFICE CENTRAL ACCOUNTS DEPTT. CHANDERMUKHI, 4 TH FLOOR NARIMAN POINT, MUMBAI-400 021 ! ./ ./PAN/GIR NO. AAACC-2498-P ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & C.O. NO. 43/2013 [ARISING OUT OF ITA NO.910/MUM/2011 ( / ASSESSMENT YEAR: 2003-2004) CENTRAL BANK OF INDIA CENTRAL OFFICE CENTRAL ACCOUNTS DEPTT. CHANDERMUKHI, 4 TH FLOOR NARIMAN POINT, MUMBAI-400 021 / VS. DEPUTY COMMISSIONER OF INCOME TAX 2(1) AAYKAR BHAVAN ROOM NO. 575, 5 TH FLOOR M.K.ROAD, MUMBAI-400 020 ! ./ ./PAN/GIR NO. AAACC-2498-P ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : F.V.IRANI, LD. AR RE VENUE BY : H.N.SINGH, LD. DR (CIT) CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 3 / DATE OF HEARING : 28/09/2017 / DATE OF PRONOUNCEMENT : 04 /10/2017 / O R D E R PER BENCH 1. THE CAPTIONED APPEALS BY REVENUE FOR DIFFERENT A SSESSMENT YEARS ASSAIL SEPARATE ORDERS OF LD. FIRST APPELLATE AUTHO RITY. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE SAME. SINCE THE APPEAL INVOLVES COMMON ISSUES, WE DISPOSE-OFF THE SAME BY WAY OF TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST WE TAK E REVENUES APPEAL & ASSESSEES CROSS OBJECTIONS FOR ASSESSMENT YEAR [AY ] 1999-2000 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI [CIT(A)], APPEAL NO. CIT(A)4/DCIT-2(1)/IT-17 8/09-10 DATED 23/09/2010. THE ORIGINAL ASSESSMENT WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX, RANGE-2(1), MUMBAI ON 18/03/2002 U/S 143(3) OF THE INCOME TAX ACT, 1961. THE ASSESSEE WAS SUBJECTED TO REASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 VIDE ORDER DATED 28/01/2005 ON THE PREMISES THAT CERTAIN ADJUSTMENTS TO BOOK PROFIT REMAINED TO BE ADDED. IN THE PRESENT APPEAL, WE ARE CONCERNED WITH ISSUES ARISING OUT OF REASSESSMENT PROCEEDINGS. ITA NO. 8581/M/2010 & C.O. NO. 153/M/2012 , AY 1999 -2000 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF BANKING WAS ASSESSED FOR IMPUGNED AY [1999-2000] U/S 143(3) ON 18/03/2002 AT RS.67.19 CR ORES UNDER NORMAL CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 4 PROVISIONS AS AGAINST RETURNED LOSS OF RS.126.25 CR ORES FILED BY THE ASSESSEE ON 29/03/2001 AS PER REVISED RETURN OF INCOME . THE BOOK PROFITS WITHIN THE MEANING OF SECTION 115JA HAS BEEN COMPUTED AT RS.48.90 CRORES AS AGAINST BOOK LOSS OF RS.152.72 CRORES AS PER RETURN OF INCOME. 2.2 THE REVENUE HAS RAISED FIVE GROUNDS OF APPEAL I N ITA NO.8581/M/2010 OUT OF WHICH GROUND NO.1 & 5 ARE GEN ERAL IN NATURE. THE EFFECTIVE GROUNDS ARE GROUND NUMBERS 2 TO 4 WHI CH CONTEST THE ORDER OF LD.CIT(A) QUA RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ADJUSTMENT OF BAD DEBTS & DIMINUTION IN VALUE OF IN VESTMENTS FROM COMPUTATION OF BOOK PROFITS U/S 115JA. THE ASSESSEE, IN CROSS OBJECTIONS, HAS RAISED TWO GROUNDS WHICH CONTEST RE OPENING OF ASSESSMENT AND CERTAIN ADJUSTMENT TO BOOK PROFITS U /S 115JA. THE ASSESSEE, BY WAY OF ADDITIONAL GROUND OF APPEAL, HA S QUESTIONED THE VERY APPLICABILITY OF PROVISIONS OF SECTION 115JA I N THE CASE OF THE ASSESSEE AND SINCE THE SAME IS LEGAL ISSUE AND GOES TO THE ROOT OF THE MATTER, WE TAKE UP THE SAME FIRST. 3. THE RESPECTIVE COUNSEL, AT THE OUTSET, BROUGHT T O OUR NOTICE THE FACT THAT THE ASSESSEE BEING A SCHEDULED BANK WAS GOVERNED BY THE PROVISIONS AS APPLICABLE TO BANKING COMPANY AND WAS NOT REQUIRED TO PREPARE ITS PROFIT & LOSS ACCOUNT IN ACCORDANCE WIT H THE PROVISIONS OF PART II AND PART III OF THE SCHEDULE VI TO THE COMP ANIES ACT, 1956 AND THEREFORE, THE PROVISIONS OF SECTION 115JA WERE NOT AT ALL APPLICABLE TO THE ASSESSEE. OUR ATTENTION HAS BEEN DRAWN TO SEVER AL JUDICIAL PRONOUNCEMENTS PLACED ON RECORD. CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 5 4. WE HAVE CAREFULLY CONSIDERED THE SAME. WE FIND T HAT SECTION 115JA OF THE ACT IS A SPECIAL PROVISION INTRODUCED TO TH E INCOME TAX ACT BY THE FINANCE (NO.2) ACT, 1996 W.E.F. 01/04/1997 AND AS PER SUB- SECTION (1) OF THE SAID PROVISION, IN THE CASE OF A COMPANY WHOSE TOTAL INCOME COMPUTED UNDER THE ACT IS LESS THAN 30% OF I TS BOOK PROFITS , THEN THE TOTAL INCOME CHARGEABLE TO TAX IN THE RELEVANT PREVIOUS YEAR SHALL BE DEEMED TO BE AN AMOUNT EQUAL TO 30% OF SUCH BOOK PROFIT . SUB-SECTION (2) OF THE SAID PROVISION PROVIDES THAT THE COMPANY REFERRED TO IN SUB- SECTION (1) OF SECTION 115JA MUST PREPARE A PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND PART III OF THE SCHEDULE VI OF THE COMPANIES ACT, 1956. THE ITAT MUMBAI BENCHES IN THE CASE OF KRUNG THAI BANK PCL VS. JCIT [2010 133 TTJ 435] HAVE HELD THAT THE PROVISIONS CONTAINED IN SECTION 115JB, WHICH IN OTHER WORDS IS ALSO KNOWN AS MINIMUM ALTERNATIVE TAX [MAT] PROVISIONS, ARE NOT APPLICABLE TO BANKING COMPANIES SINCE THEY ARE NOT REQUIRED TO PREPARE A PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF P ARTS II AND PART III OF THE SCHEDULE VI OF THE COMPANIES ACT, 1956. THE AFO RESAID DECISION HAS SUBSEQUENTLY BEEN FOLLOWED IN A NUMBER OF DECISIONS OF DIFFERENT BENCHES OF THE TRIBUNAL. IN FACT, IN ASSESSEES OWN CASE FOR AY 2000-01 IN ITA NO. 3639/MUM/2004 , THE COORDINATE BENCH VIDE ORDER DATED 12/08/2016 HELD THAT THE PROVISIONS CONTAINED IN SECTION 115JA / 115JB ARE NOT APPLICABLE TO THE ASSESSEE, BEING A BANKING COMPANY. IN VIEW OF THE ABOVE SAID BINDING PRECEDENT OF COORDINATE BENC H IN ASSESSEES OWN CASE, WE HOLD THAT SINCE THE PROVISIONS OF SECTION 115JA ARE NOT APPLICABLE TO THE ASSESSEE. ACCORDINGLY, THE GROUND S OF APPEAL RAISED IN BOTH THE APPEALS BECOME MERELY ACADEMIC IN NATURE A ND DO NOT REQUIRE CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 6 ANY FURTHER ELABORATION OR ADJUDICATION. RESULTANTL Y, REVENUES APPEAL STANDS DISMISSED WHEREAS ASSESSEES CROSS OBJECTION S SUCCEEDS ON LEGAL GROUNDS I.E. APPLICABILITY OF SECTION 115JA TO THE ASSESSEE BANK AND THEREFORE, STANDS PARTLY ALLOWED. ITA NO. 8582/M/2010, AY 2002-2003 5. THIS IS REVENUES APPEAL FOR AY 2002-03 WHICH AS SAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI [CIT(A)] APPEAL NO. CIT(A)4/R-2(1)/IT-246/09-10 DATED 23/09/2010. THE ASSESSMENT WAS FRAMED BY LD. INCOME TAX OFFICER RANGE 2(1)(1), MUMBAI ON 31/10/2006 U/S 143(3) READ WITH SECTION 147. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT INTEREST U/S. 234D CAN NOT BE CHARGED IN THE A.Y.2002-03 WITHOUT APPRECIATING THAT CHARGEABILITY OF INTEREST IS IN RELATION TO THE PERIOD IN WHICH THE ORDER IS PASSED AND NOT THE ASSESSMENT YEAR OF THE CASE. 6. FACTS GIVING RISE TO THE DISPUTE IS THAT THE ASS ESSEE HAS BEEN ASSESSED U/S 143(3) READ WITH SECTION 147 ON 31/10/2006 AT RS.457.12 CRORES. THE ASSESSEE CONTESTED THE IMPOSITION OF IN TEREST U/S 234D FOR RS.8,01,64,223/- BEFORE FIRST APPELLATE AUTHORITY B Y PLACING RELIANCE ON THE DECISION OF ITO VS. EKTA PROMOTERS PRIVATE LIMITED [305 ITR 1 S B DELHI] ON THE PREMISES THAT INTEREST U/S. 234D COULD BE CH ARGED ONLY AFTER AY 2003-04 AND NOT FOR ANY EARLIER YEARS. THE LD. CIT(A) AGREED WITH THE SAME, AGAINST WHICH THE REVENUE IS IN FURT HER APPEAL BEFORE US. 7. THE LD. DR DREW OUR ATTENTION TO PAGE NOS. 91 & 92 AND CONTENDED THAT THE INTEREST U/S 234D HAS BEEN CHARG ED ONLY IN REGULAR ASSESSMENT U/S 143(3) AND THE SAME HAS RIGHTLY BEEN CHARGED AS PER CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 7 STATUTORY PROVISIONS SINCE THE ASSESSEE WAS GRANTED REFUND U/S 143(1). PER CONTRA, LD. COUNSEL FOR ASSESSEE CONTENDED THAT INTEREST U /S 234D COULD NOT BE APPLIED IN REASSESSMENT PROCEEDINGS SI NCE THE SAME DO NOT CONSTITUTE REGULAR ASSESSMENT WITHIN THE MEANING OF SECTION 234D AS PER JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN CIT VS. INDERJEET BEDI [2002 126 TAXMAN 259]. 8. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS. T O UNDERSTAND THE ISSUE, IT IS IMPERATIVE TO UNDERSTAND THE FACTUAL M ATRIX. THE DOCUMENTS PLACED ON RECORD REVEALS THAT THE ASSESSEE HAS CLAI MED REFUND OF RS.131.75 CRORES AS PER ORIGINAL RETURN OF INCOME F ILED ON 31/10/2002. THE REFUND HAS BEEN REVISED UPWARDLY TO RS.134.28 C RORES IN REVISED RETURN OF INCOME FILED ON 26/03/2004. IN THE MEANTI ME, REFUND HAS BEEN DETERMINED / GRANTED AS PER INTIMATION U/S 143(1) DATED 25/07/2003 AT RS.145.75 CRORES WHICH COMPRISE OF REFUND AMOUNT OF RS.131.61 CRORES AND INTEREST U/S 244A FOR RS.14.13 CRORES. SUBSEQUE NTLY, THE ASSESSEE HAS BEEN ASSESSED U/S 143(3) ON 24/02/2005 AT RS.39 9.67 CRORES ON WHICH TAX, AS PER INCOME TAX COMPUTATION FORM, WORKS OUT TO RS.142.63 CRORES. AFTER DEDUCTING PREPAID TAXES AND ADDING INTEREST U/S 234B AND 234D FOR RS.3.23 CRORES & RS.8.01 CRORES, THE NET DEMAND RAISED IS RS.19.48 CRORES. IN THIS AMOUNT, THE REFU ND ALREADY GRANTED TO ASSESSEE FOR RS. 145.75 CRORES HAS BEEN FURTHER ADD ED. FINALLY, TOTAL DEMAND RAISED IS RS. 165.23 CRORES. THE ASSESSEE HA S CONTESTED THE QUANTUM ASSESSMENT PASSED U/S 143(3), FIRST BEFORE FIRST APPELLATE AUTHORITY AND THEREAFTER BEFORE THIS TRIBUNAL VIDE ITA NO. 2557/MUM/2011 ORDER DATED 12/08/2016, WHERE, PRIMA-FACIE , THE IMPOSITION OF INTEREST U/S 234D IS NOWHERE IN DISPU TE. THE REVENUE HAD CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 8 ALSO CONTESTED CERTAIN ISSUES FOR THIS YEAR BEFORE THIS TRIBUNAL VIDE ITA NO. 2364/MUM/2011 ORDER DATED 12/08/2016 BUT APPARE NTLY THE ISSUE OF 234D IS NOT IN DISPUTE IN THAT APPEAL ALSO. THE ASS ESSEE, IN REASSESSMENT PROCEEDINGS, HAVE BEEN SADDLED WITH CE RTAIN FURTHER ADDITIONS WHICH HAVE BEEN FURTHER CONTESTED BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/09/2010. HOWEVER, UPON PERU SAL OF THE IMPUGNED ORDER OF LD. CIT(A), WE FIND THAT THE AMOU NT OF INTEREST COMPUTED U/S 234D REMAINS THE SAME I.E. RS.8.01 CRO RES, WHICH LEAD US TO CONCLUDE THAT NO FURTHER INTEREST U/S 234D HAS B EEN COMPUTED BY REVENUE IN REASSESSMENT PROCEEDINGS. 9. ON MERITS, WE FIND THAT EXPLANATION-2 TO SECTION 234D SQUARELY APPLIES TO THE ASSESSEE SINCE THE ORIGINAL QUANTUM ASSESSMENT ORDER U/S 143(3) WAS PASSED AFTER 01/06/2003. THE LD.CIT(A) H AS PROVIDED RELIEF TO THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN ITO VS. EKTA PROMOTERS PRIVATE LIMITED [305 ITR 1 S B DELHI]. HOWEVER, WE FIND THAT THE IMPUGNED ISSUE STOOD SQUA RELY AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT OF HON BLE BOMBAY HIGH COURT RENDERED IN CIT VS. INDIAN OIL COPRORATION LTD. [ 2012 25 TAXMANN.COM 284] WHERE HONBLE COURT HAS CLINCHED T HE ISSUED IN THE FOLLOWING MANNER:- 27. IN VIEW OF THE ABOVE, WE HOLD THAT THE DECISION OF THE TRIBUNAL IN ITO V . EKTA PROMOTERS (P.) LTD. [2008] 113 ITD 719 (DELHI) (SB) WHICH HAS BEEN FOL LOWED IN THE IMPUGNED ORDER BY THE TRIBUNAL IS NOT CORRECT. ONE MORE ASPECT OF THE MATTER WHICH MUST BE BORNE IN MIND IS THAT TILL SUCH TIME AS THE ASSESSMENT PROCEEDINGS ARE COMPLETED IN RESPECT OF ANY ASSESSMENT YEAR, THE AM ENDMENT MADE TO THE ACT WOULD BE APPLICABLE EVEN IN CASE OF PENDING PROCEED INGS. IT IS NOT THE CASE OF THE RESPONDENT THAT THE PROCEEDING IN REGARD TO REFUND WHICH HAS BEEN GRANTED UNDER SECTION-143(1) OF THE ACT ARE CONCLUDED AND FINAL. THE REFUND WHICH HAS BEEN GRANTED UNDER SECTION 143(1) OF THE ACT IS PROVISIO NAL, TO BE FINALLY DETERMINED WHEN FINAL ASSESSMENT ORDER IS PASSED UNDER SECTION 143( 3) OF THE ACT. EXPLANATION-2 TO SECTION 234D OF THE ACT MAKES IT CLEAR THAT IT WOUL D BE APPLICABLE TO PENDING CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 9 PROCEEDINGS I.E. WHERE ASSESSMENTS IN RESPECT OF SU CH ASSESSMENT YEAR IS NOT COMPLETED ON 1/6/2003. RESPECTFULLY FOLLOWING THE SAME, WE REVERSE THE STA ND OF LD. CIT(A) IN THIS REGARD AND ALLOW REVENUES APPEAL SINCE NO ADD ITIONAL INTEREST HAS BEEN COMPUTED U/S 234D IN REASSESSMENT PROCEEDINGS AND THE SAME DID NOT ARISE OUT OF REASSESSMENT PROCEEDINGS. ITA NO. 910/M/2011 & C.O. NO. 43/M/2013 , AY 2003-2 004 10. THE REVENUES APPEAL ITA NO. 910/M/2011 CONTEST ORDER OF LD. CIT(A) APPEAL NO. CIT(A) 4/ITO-2(1)(1)/IT-177/06-07 DATED 29/11/2010. THE ASSESSMENT WAS FRAMED BY LD. INCOME TAX OFFICER RANGE 2(1)(1), MUMBAI ON 31/10/2006 U/S 143(3) READ WITH SECTION 147. THE FOLLOWING SOLE GROUND HAS BEEN URGED:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS.220.2 3 LACS ON SALE OF SHARES IS TO BE TREATED AS CAPITAL GAIN AND NOT AS BUSINESS INCOME CHARGEABLE TO TAX U/S. 28 WITHOUT APPRECIATING THAT (I) AS FAR AS BANKS ARE CONCERNED FOR INCOME TAX PU RPOSE ALL INVESTMENTS ARE TREATED AS CURRENT ASSETS AND PROFIT AND LOSS O N SALE OF THE SAME IS TO BE TREATED AS BUSINESS INCOME. (II) THE ASSESSEE BANK HAS BEEN VALUING THE INVEST MENTS AT THE END OF PREVIOUS YEAR ON THE BASIS OF COST OR MARKET PRICE WHICH EVER IS LEAST THUS TREATING THE INVESTMENTS AS STOCK-IN-TRADE. (III) THE ASSESSEE BANK HAS HELD THE INVESTMENTS AS BUSINESS ASSETS IN ITS BANKING BUSINESS. 11. FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY VIDE QUANTUM ASSESSMENT ORDER DATED 31/10/2006 PASSED U/S 143(3) READ WITH SECTION 147. THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE PREM ISES THAT THE ASSESSEE EARNED LONG TERM CAPITAL GAINS [LTCG] ON SALE OF CERTAIN INVESTMENT AND CLAIMED SET-OFF OF BROUGHT FORWARD L ONG TERM CAPITAL CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 10 LOSSES OF EARLIER YEARS FROM THE SAME. HOWEVER, THE INVESTMENTS IN QUESTION, IN THE OPINION OF LD. AO, CONSTITUTED BUS INESS ASSETS HELD IN THE NORMAL COURSE OF BANKING BUSINESS AND THEREFORE ASSESSABLE UNDER THE HEAD BUSINESS INCOME. ACCORDINGLY, THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM INDEXATION OR SET-OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSSES AGAINST THE SAME. 12. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/11/2010 WHE RE LD. CIT(A) AGREED WITH THE CONTENTIONS OF THE ASSESSEE BY MAKI NG FOLLOWING OBSERVATIONS:- 7. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE AU THORIZED REPRESENTATIVE AND I FIND THAT THE ASSESSEE HAS BEEN DECLARING CAPITAL G AIN ON SALE OF INVESTMENT HELD TO MATURITY AS CAPITAL GAIN IN EARLIER YEARS A LSO WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. THESE INVESTMENTS WERE HELD BY T HE BANK FOR MORE THAN ONE YEAR. I ALSO FIND THAT THE APPELLANT HAS DIVIDE D THE INVESTMENT IN TWO CATEGORIES I.E. CURRENT CATEGORY AND PERMANENT CATE GORY. THE CURRENT CATEGORY INVESTMENT WHEN SOLD ARE TREATED AS BUSINE SS INCOME AND PERMANENT CATEGORY WHICH ARE HELD TO MATURITY FOR M ORE THAN ONE YEAR ARE TREATED AS CAPITAL GAIN AS THEY ARE COVERED WITHIN THE DEFINITION OF LONG TERM CAPITAL GAIN. HENCE THE A.O.IS NOT JUSTIFIED IN TRE ATING THE LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AS BUSINESS INCOME. RELI ANCE IS PLACED ON THE DECISION OF UCO BANK VS CIT (240 ITR 355). RELIANCE IS ALSO PLACED ON THE DECISION OF CIT VS NSS INVESTMENT PVT. LTD. (277 IT R 149)(MAD) WHEREIN IT WAS HELD THAT A COMPANY CAN HOLD SHARES AS THE STOC K-IN TRADE FOR THE PURPOSE OF DOING BUSINESS OF BUYING AND SELLING SUC H SHARES AT THE SAME TIME IT CAN ALSO HOLD SOME OTHER SHARES AS ITS CAPI TAL FOR THE PURPOSE OF EARNING DIVIDEND. THE SHARES WERE NOT HELD AS STOCK -IN-TRADE. HENCE, THERE WOULD BE CAPITAL GAIN AND NOT BUSINESS INCOME. RELI ANCE IS ALSO PLACED ON THE DECISION OF SUPREME COURT IN THE CASE OF MADHYA PRADESH CO-OPERATIVE BANK LTD. VS ADDL. CIT (218 ITR 43)(SC) WHEREIN IT WAS HELD AS UNDER:- THE SUPREME COURT HELD THAT IF A CO-OPERATIVE SOCIE TY IS ENGAGED ONLY IN THE BUSINESS OF BANKING, BUT PART OF ITS ACTIVIT Y IS NOT ATTRIBUTABLE TO ENGAGEMENT IN SUCH ACTIVITY, THEN THE INCOME DERIVE D FROM THE INVESTMENT IN GOVERNMENT SECURITIES PLACED WITH THE STATE BANK OF INDIA / RESERVE BANK OF INDIA CANNOT BE REGARDED AS THE ESSENTIAL PART OF ITS BANKING ACTIVITY INASMUCH AS THE SAME DOES N OT FORM PART OF ITS STOCK-IN-TRADE OR WORKING / CIRCULATING CAPITAL. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE A .O.IS DIRECTED TO DELETE THIS ADDITION. THIS GROUND OF APPEAL IS ALLOWED. CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 11 13. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEF ORE US. THE LD. DR HAS CONTENDED THAT ALL INVESTMENT FOR BANKING COMPA NY CONSTITUTE NORMAL BUSINESS ASSETS AND HENCE ASSESSABLE AS BUSINESS INCOME ONLY . PER CONTRA, LD. AR PLACED RELIANCE ON THE STAND OF LD. CIT(A) A ND EXPLAINED THAT THE ASSESSEE HAD TWO CATEGORIES OF I NVESTMENT VIZ. CURRENT INVESTMENT AND PERMANENT INVESTMENT. THE DISPUTE WAS ONLY RELATING TO PERMANENT INVESTMENT SINCE CURRENT INVESTMENT WAS ALWAYS TREATED UNDER THE HEAD BUSINESS INCOME . THE PERMANENT INVESTMENTS WERE HELD BY THE ASSESSEE FOR A MINIMUM PERIOD OF O NE YEAR AND THE SAME WAS CARRIED IN THE BOOKS ONLY AT COST PRICE. F URTHER, THE ASSESSEE WAS CONSISTENTLY FOLLOWING SUCH PRACTICE OF CLASSIF ICATION AND TREATMENT SINCE PAST SEVERAL YEARS, WHICH THE REVENUE HAS ACC EPTED IN EARLIER YEARS. OUR ATTENTION IS DRAWN TO THE FACT THAT SIMI LAR ISSUE WAS DECIDED IN ASSESSEES FAVOR BY FIRST APPELLATE AUTHORITY IN IM MEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2002-2003 AND THE REVENUE, WHI LE ACCEPTING THE SAME, DID NOT PREFER ANY APPEAL AGAINST THE SAME. 14. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND TH AT THE ASSESSEE IS CONSISTENTLY FOLLOWING SUCH CLASSIFICATION AND TREA TMENT OF INCOME FROM INVESTMENT SINCE PAST MANY YEARS. THE REVENUE HAS N OWHERE DISPUTED THAT PERMANENT INVESTMENT WERE CARRIED AT COST PRIC E. FURTHER, UPON PERUSAL OF THE ORDER OF LD. CIT(A) FOR AY 2002-03, WE FIND THAT THE SAME ISSUE AROSE IN THAT YEAR ALSO AND LD. CIT(A) UPHELD THE STAND OF THE ASSESSEE AND CONCLUDED THAT THE INCOME FROM INVESTM ENT WAS RIGHTLY OFFERED UNDER THE HEAD CAPITAL GAINS. IT IS NOTEWORTHY THAT THE REVENUE, IN ITS APPEAL FOR AY 2002-03, ACCEPTED THE STAND OF LD . CIT(A) AND DID NOT PREFER ANY FURTHER APPEAL QUA THIS ISSUE. THEREFORE, FOLLOWING THE RULE OF CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 12 CONSISTENCY, WE SEE NO REASON TO DISTURB THE FINDIN GS OF LD. CIT(A) IN THIS YEAR AND THEREFORE, INCLINED TO DISMISS REVENU ES APPEAL ON THIS GROUND. RESULTANTLY, THE REVENUES APPEAL STANDS DI SMISSED. 15. THE FIRST GROUND OF ASSESSEES CROSS OBJECTION ASSAILS REOPENING OF ASSESSMENT. SINCE, WE HAVE ALREADY DISMISSED REVENU ES APPEAL ON MERITS, THIS GROUND REMAINS MERELY ACADEMIC IN NATU RE AND THEREFORE, WE DISMISS THE SAME IN LIMINE BEING INFRUCTUOUS. 16. IN GROUND NO. 2, THE ASSESSEE IS AGGRIEVED BY DIREC TION OF LD. CIT(A) TO LD. AO TO COMPUTE INTEREST U/S 234D ON TH E PREMISES THAT THE QUANTUM ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 147 DID NOT CONTAIN ANY SPECIFIC DIRECTIONS FOR THE SAME. HOWEV ER, IT IS SETTLED LEGAL POSITION THAT CHARGING OF INTEREST IS MANDATORY AND CONSEQUENTIAL IN NATURE AND THEREFORE, NO SPECIFIC DIRECTION TO CHAR GE THE SAME IS REQUIRED IN THE QUANTUM ASSESSMENT ORDER. SO FAR AS THE QUAN TUM IS CONCERNED, WE FIND THAT THE ASSESSEE HAS BEEN CHARGED INTEREST U/S 234D PURSUANT TO ORIGINAL QUANTUM ASSESSMENT ORDER PASSED U/S 143 (3). WE HAVE ALREADY DISMISSED REVENUES APPEAL FOR THIS YEAR AN D THEREFORE, PRACTICALLY, THE ASSESSEE IS NOT SADDLED WITH ANY F URTHER ADDITIONS IN REASSESSMENT PROCEEDINGS. HENCE, THIS GROUND RAISED BY THE ASSESSEE ALSO BECOMES INFRUCTUOUS AND HENCE, DISMISSED IN LIMINE. FINALLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE STANDS DISMI SSED. 17. IN NUTSHELL, ITA NO.8581/M/2010, ITA NO. 910/M/ 2011 & CO NO.43/M/2013 STANDS DISMISSED, CO NO.153/M/2012 STA NDS PARTLY ALLOWED & ITA NO.8582/M/2010 STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. CENTRAL BANK OF INDIA ASSESSMENT YEARS-1999-2000, 2002-03, 2003-04 13 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.10.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI