PNB HOUSING FINANCE LTD., NEW DELHI V. ADDL. CIT, SPECIAL RANGE- 7, NEW DELHI

CO 18/DEL/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7884 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 12-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT KHAN
• Assessee Lawyers: S KRISHNAN
• Keywords: Business income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DLEHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 5969/DEL/2017 ASSESSMENT YEAR: 2014-15 ADDL. CIT, SPCL. RANGE-7, VS. PNB HOUSING FINANC E LTD., NEW DELHI. 9 TH FLOOR ANTRIKSH BHAWAN, 22, K.G. MARG, NEW DELHI. C.O. NO. 18/DEL/2021 (IN ITA NO. 5969/DEL/2017 ASSESSMENT YEAR: 2014-15 PNB HOUSING FINANCE LTD., VS. ADDL. CIT, SPCL. RA NGE-7, 9 TH FLOOR ANTRIKSH BHAWAN, NEW DELHI. 22, K.G. MARG, NEW DELHI. PAN : AAACP3682N (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. S. KRISHNAN, ADVOCATE REVENUE BY : SH. FARHAT KHAN, SR. DR DATE OF HEARING: 07/07/2021 DATE OF ORDER : 24/08/2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 27.06.2017 PASSED BY T HE COMMISSIONER OF INCOME TAX (APPEALS)-38, NEW DELHI ('LD. CIT(A)') FOR THE ASSESSMENT YEAR 2014-15 IN THE CASE OF PNB HOUSING FINANCE LTD., (THE ASSESSEE), THE REVENUE PREFERRED THIS APPEAL. THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS IN THIS APPEAL. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN APPROVED HOUSING FINANCE COMPANY ENGAGED IN THE BUSINESS OF PROVIDIN G HOUSING LOANS TO INDIVIDUALS AND BODY CORPORATE FOR CONSTRUCTION, PU RCHASE AND UP- GRADATION OF HOUSES. FOR THE ASSESSMENT YEAR 2014- 15, THEY FILED THEIR RETURN OF INCOME ON 29.11.2014 DECLARING AN INCOME OF RS.1,43,38,89,780/- AND REVISED THE SAME ON 29.03.2 016 DECLARING INCOME OF RS.1,45,07,34,980/-. INCOME OF THE ASSESSEE WAS, HOWEVER, DETERMINED BY THE ASSESSING OFFICER AT RS.1,50,83,94,920/-, AF TER MAKING ADDITION OF RS.1,88,65,937/- UNDER SECTION 36(1)(VIII) OF THE I NCOME-TAX ACT, 1961 (THE ACT) ON ACCOUNT OF THE AMOUNT TRANSFERRED TO SPECIAL RESERVE AND RS.3,87,94,000/- U/S. 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES. WHEN THE ASSESSEE PREFERRED APPEAL, LEARNED CIT(A) DELETED BOTH THE ADDITIONS. HENCE, THE REVENUE IS AGGRIEVED BY S UCH DELETION AND PREFERRED THIS APPEAL. ASSESSEE ALSO FILED CROSS OB JECTIONS CLAIMING THAT THEY ARE ENTITLED TO DEDUCTION FOR A SUM OF RS.1,02 ,40,893/- AGAINST ITS BUSINESS INCOME ON ACCOUNT OF EDUCATION CESS AND HI GHER AND SECONDARY EDUCATION CESS. IN SO FAR AS THE ADDITION OF RS.1,88,65,937/- IS CO NCERNED, LD. ASSESSING OFFICER RECORDED THAT FOR THE ASSESSMENT YEAR 2010-11 ALSO, WHILE NOT ACCEPTING THE METHOD ADOPTED BY THE ASSES SEE, SIMILAR ADDITION WAS MADE AND, THEREFORE, WHILE FOLLOWING THE SAME F OR THIS YEAR ALSO, THE DISALLOWANCE U/S. 36(1)(VIII) OF THE ACT TO THE TUN E OF RS.1,88,65,937/- WAS MADE. ON THIS ASPECT, LEARNED CIT(A) RECORDED THAT, AS A MATTER OF FACT, THIS ISSUE IS FALLING FOR CONSIDERATION FROM THE AS SESSMENT YEAR 1998-99 TO 2012-13 AND EVERY YEAR IN APPEAL, CIT(A) HAS BEEN G RANTING RELIEF. LEARNED 3 CIT(A) PLACES RELIANCE ON THE ORDERS OF HER PREDECE SSORS FOR THE ASSESSMENT YEARS 2007-08 AND 2010-11 AND GRANTED R ELIEF. LEARNED AR BROUGHT TO OUR NOTICE THAT FOR THE ASSES SMENT YEAR 2009-10 AND 2010-11 ALSO, THIS ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 2123/DEL/2015 AND BATCH OF CASES AND GRANTED RELIEF. THE COORDINATE BENCH, ON THIS ASPEC T, OBSERVED THUS : 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS. THE APPELLANT IS A SUBSIDIARY OF PUNJAB NATIONAL BANK A ND IS ENGAGED IN THE BUSINESS OF RETAIL LENDING AND ALSO OFFERS LONG TER M FINANCE FOR CONSTRUCTION OF HOMES. THE ASSESSEE THE BUSINESS IN COME OF RS. 876230348/- BEFORE DEDUCTION U/S 36(1)(VIII) OF THE ACT. SUBSEQUENTLY, ASSESSEE CLAIMED DEDUCTION STATING THAT RS. 2817156 893/- WAS ON ACCOUNT OF TOTAL INTEREST ON HOUSING LOANS AND OUT OF IT RS. 1767869838/- WAS ON ACCOUNT OF INTEREST ON LONG TERM HOUSING LOA N. THUS ASSESSEE STATED THAT 62.75% IN ON ACCOUNT OF INTEREST ON LON G TERM HOUSING LOAN AND WORKED OUT APPLYING THAT PERCENTAGE ON THE TOTA L BUSINESS INCOME CALCULATED A SUM OF RS. 549834543/- PERTAINING TO L ONG TERM HOUSING LOAN AND COMPUTED DEDUCTION @20% OF RS. 10.99 CRORES AS DEDUCTION. THE ID ASSESSING OFFICER CHANGED THE ABOVE RATIO FROM 62.7 5 % TO 55.89% AS HE CONSIDERED THE TOTAL RECEIPT OF BUSINESS FOR THE PU RPOSE OF WORKING OUT PROPORTION. IN THE PRESENT CASE THE METHODOLOGY ADO PTED BY THE ASSESSEE IS CONSISTENTLY FOLLOWED FOR LAST EIGHT YEARS. SAME WAS ACCEPTED BY THE REVENUE WITHOUT ANY OBJECTION. THE ONLY ISSUE IS WI TH RESPECT TO HOW THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF LONG TERM HOUSING FINANCE SHALL BE WORKED OUT. THE ONLY ISSUE IS THAT ASSESSEE IS C OMPUTED WITH RESPECT TO THE TOTAL INCOME WITH RESPECT TO THE INTEREST INCOM E WHEREAS THE ID AO HAS APPLIED THE ABOVE RATIO TO THE TOTAL RECEIPT. W HEN THE METHOD HAS BEEN CONSISTENTLY ACCEPTED FOR THE ABOVE YEAR WE DO NOT FIND ANY REASON TO DEFER FROM THAT. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN ALLOWING THE ASSESSEE CLAIM OF DEDUCTION U/S 36(1 )(VIII) OF THE ACT APPLYING THE RATIO OF 62.75%. IN THE RESULT WE DO NOT FIND ANY M ERIT IN GROUND NO. 1 OF THE APPEAL. HENCE, IT IS DISMISSED. IN VIEW OF THE CONSISTENT VIEW TAKEN BY THE FIRST A PPELLATE AUTHORITY RIGHT FROM 1998-99 TO 2012-13 AND ALSO THE TRIBUNAL FOR ASSESSMENT YEARS 4 2009-10 AND 2010-11, IN THE ABSENCE OF ANY CHANGE O F EITHER FACTS OR LAW, WE FIND IT DIFFICULT TO TAKE A DIFFERENT VIEW AND C ONSEQUENTLY UPHOLD THE FINDINGS OF THE LD. CIT(A). HENCE, GROUND NO. 1 OF THE REVENUES APPEAL IS DISMISSED. IN SO FAR AS THE ADDITION OF RS.3,87,94,000/- BY IN VOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D IS CONC ERNED, IT IS THE FINDING OF FACT BY THE LD. CIT(A) THAT NO DIVIDEND WAS EARN ED BY THE ASSESSEE ON THE INVESTMENT OF RS.79261.48 LAKHS APPEARING AS OP ENING BALANCE AS ON 01.04.2013 AND INVESTMENT OF RS.75914.59 LAKHS APPE ARING AS CLOSING BALANCE CONSIDERED BY THE ASSESSING OFFICER. LEARNE D CIT(A) FOLLOWED THE BINDING PRECEDENT IN THE CASE OF JOINT INVESTMENTS (P)LTD. VS. CIT, 372 ITR 694 AND DELETED THE ADDITION. IT IS NOT ESTABLISHED BEFORE US THAT THE FINDING OF FACT BY THE LD. CIT(A) IS IN ANY WAY WRO NG. WE, THEREFORE, ARE OF THE OPINION THAT IN VIEW OF THE BINDING PRECEDENT F OLLOWED BY THE LD. CIT(A), FINDINGS OF CIT(A) CANNOT BE FOUND FAULT WI TH. GROUND NO. 2 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. NOW COMING TO THE CROSS-OBJECTIONS IN RESPECT OF EN TITLEMENT OF THE ASSESSEE FOR DEDUCTION IN RESPECT OF EDUCATION CESS AND HIGHER AND SECONDARY EDUCATION CESS PAID DURING THE YEAR, LD. AR PLACES RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF SESA GOA LTD. V. JCIT (2020) 117 TAXMANN.COM 96 (BOM) AND PRAYED THA T RELIEF MAY BE GRANTED. LEARNED DR SUBMITTED THAT THIS PLEA WAS NO T TAKEN BEFORE EITHER OF THE AUTHORITIES BELOW AND THEREFORE, THE FACTS N EED TO BE VERIFIED. LD. AR REPORTS NO OBJECTION. RECORDING THE SAME, WE LEA VE THE ISSUE OPEN TO BE ADJUDICATED BEFORE THE ASSESSING OFFICER. FOR TH IS PURPOSE, WE REMAND THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR VERI FICATION AND TAKING A VIEW IN ACCORDANCE WITH LAW. 5 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF AUGUST, 2021. SD/- SD/- (R.K. PANDA) (K. NARSIMHA CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24/08/2021