ABU DHABI COMMERICAL BANK LTD, MUMBAI V. DDIT (IT) 1(1), MUMBAI

CO 74/MUM/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6460 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2001-2002
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Section: 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 5024/MUM/2010 ASSESSMENT YEAR 2001-2002 DDIT (IT)-1 (1) MUMBAI. VS. M/S. ABU DHABI COMMERCIAL BANK LTD. MUMBAI 020 PAN AAACA4216B (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.74/MUM/2011 ARISING OUT OF ITA.NO.5024/MUM/2010 ASSESSMENT YEAR 2001-2002 M/S. ABU DHABI COMMERCIAL BANK LTD. MUMBAI 020 PAN AAACA4216B VS. DDIT (IT)-1 (1) MUMBAI. (CROSS-OBJECTOR) (RESPONDENT) FOR REVENUE : MRS. USHA NAIR FOR CROSS-OBJECTOR: MS. BOHROZE KOMDIN DATE OF HEARING : 22-09-2011 DATE OF PRONOUNCEMENT : 28-09-2011 ORDER PER D.MANMOHAN, V.P. 1. THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-10, MUMBAI. THE FOLLOWING GROUN DS WERE RAISED BY THE REVENUE 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF WEALTH TAX PAYMENT OF RS.1,05,213/- WHILE COMPUTING THE BOOK PROFIT U/S. 115JB OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THA T THE DISALLOWANCE OF RS.20,00,000/- OF HEAD OFFICE EXPENSES IS NOT IN ORDER WHILE COMPUTING THE BOOK 2 PROFIT U/S. 115JB OF THE I.T. ACT AND IN DIRECTING THE ASSESSING OFFICER TO DELETE IT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THA T THE INTEREST U/S. 234D OF THE I.T. ACT HAS NO RETROSPECTIVE APPLICATION WITHOUT APPRECIATING THAT THE PROVISIONS OF SEC. 234D ARE PROCEDURAL AND COMPENSATORY IN NATURE AND AS SUCH CAN BE APPLIED TO PROCEEDINGS OF EARLIER ASSESSMENT YEARS PENDING AS ON 1-6-2003. 1.1. IN THE CROSS-OBJECTIONS THE ASSESSEE-COMPANY RAISED THE FOLLOWING GROUNDS : 1. THE CIT(A)-10, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A) ) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER (AO) THAT THE PROVISIONS OF 115JB ARE NOT APPLICABLE TO THE BANK. 2. THE APPELLANTS SUBMIT THAT THE PROVISIONS OF MAT ARE NOT APPLICABLE TO THEM BEING A BANKING COMPANY. 2. WE HAVE HEARD THE LEARNED D.R. AS WELL AS LEARN ED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE AND CA REFULLY PERUSED THE RECORD. 3. FACTS IN SHORT ARE THAT THE ASSESSEE-COMPANY FI LED ITS RETURN OF INCOME ON 31-3-2007 ALONG WITH COMPUTATIO N OF TOTAL INCOME, INCOME ASSESSABLE TO TAX UNDER SECTION 115J B OF THE ACT ETC., THE ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTI ON 143 (3) OF THE ACT BUT ON AN APPEAL FILED BY THE ASSESSEE CERTAIN RELIEF WAS GRANTED BY THE CIT(A) VIDE ORDER DATED 13 TH JULY, 2004 AND WHILE GIVING EFFECT TO THE SAID ORDER THE TOTAL BUSINESS LOSS WAS COMPU TED AT RS.6,86,66,433/-. ACCORDING TO THE ASSESSEE, THE CO RRECT FIGURE OF BOOK PROFIT UNDER SECTION 115JB WAS NOT CORRECTLY TAKEN INTO CONSIDERATION AND THUS PREFERRED AN APPEAL BEFORE THE ITAT. SUBSE QUENT TO THE ORDER OF THE ITAT ASSESSING OFFICER PASSED ANOTHER ORDER ON 23/3/2009. IN THE SAID ORDER THE BOOK PROFIT FOR TH E PURPOSE OF TAX 3 PAYABLE UNDER SECTION 115JB OF THE ACT WAS TAKEN AT RS.17,52,28,782/-. THOUGH AN ORDER WAS PASSED ON 23 RD MARCH, 2009 NO SUCH ORDER APPEARS TO HAVE BEEN SERVED ON THE BA NK AND ON APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) OBSERVED, WITH REGARD TO PROVISION FOR WEALTH TAX AND HEAD OFFICE EXPENSES, AS UNDER : I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERI AL ON RECORD. CLAUSE (A) OF EXPLANATION BELOW SECTION 115 JB (2) PROVIDES THAT AMOUNT OF INCOME TAX PAID OR PAYABLE AND THE PROVISIONS THEREOF SHALL BE ADDED BACK WHILE COMPUTING BOOK PROFIT. INCOME-TAX DOES NOT INCLUDE WEALTH TAX. IN THE CASE OF CIT VS. ECHJAY FORGINGS P. LTD. (2001) 251 ITR 15 (BOM.) IT WAS HELD THAT NET PROFI T CANNOT BE INCREASED BY THE AMOUNT OF WEALTH TAX. SI MILAR VIEW WAS ALSO EXPRESSED IN JCIT VS. USHA MARTIN INDUSTRIES LTD. (2006) 105 TTJ 543 (KOL.) (SB). IN VIEW OF THESE FACTS, THE ADDITION OF RS.1,05,213 MADE ON AC COUNT OF WEALTH TAX PROVISIONS IS DELETED. AS REGARDS PRO VISIONS OF HO EXPENSE, THE ASSESSING OFFICER HAS NOT ASSIGN ED ANY REASON. THE HONBLE SUPREME COURT IN THE CASE O F APOLLO TYRES LTD. (2002) 255 ITR 273 (SC) HAS HELD THAT THE ASSESSING OFFICER HAS NO AUTHORITY TO RECAST TH E PROFIT COMPUTED AS PER BOOKS. HE IS ENTITLED TO MAKE THOSE ADJUSTMENTS WHICH ARE PROVIDED IN THE ACT. ACCORDIN GLY, IT IS HELD THAT THE DISALLOWANCE OF RS.20,00,000 OF HO EXPENSE IS NOT IN ORDER. FURTHER, CIT(A) HAS ALSO A LLOWED APPEAL OF ASSESSEE ON THESE TWO ISSUES IN FAVOUR OF THE APPELLANT. I HAVE ALSO NO REASON TO DEVIATE FROM MY PREDECESSOR CIT(A). THEREFORE, THE ADJUSTMENTS MADE ON ACCOUNT OF HO EXPENSES ARE DELETED. ACCORDINGLY THI S GROUND OF APPEAL IS ALLOWED. 4. REVENUE IS AGGRIEVED BY THE ORDER PASSED BY THE CIT(A). VIDE GROUND NOS. 1 AND 2 IT WAS CONTENDED THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF WEALTH TAX PAYMENT AND IN GROUND NO.2 IT WAS CONTENDED THAT THE CIT(A) ERRED IN HOLDING THAT THE DISALLOWANCE OF HEAD OFFICE EXPENSES IS NOT IN ORDER. HOWEVER, A T THE TIME OF HEARING NO MATERIAL/CASE LAW WAS REFERRED TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A). ADMITTEDLY THE DECISION OF THE LEAR NED CIT(A) IS BASED UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT AND SPECIAL BENCH OF ITAT, KOLKATA, VIS--VIS GROUND NO.1, AND HE FOLLOWED THE DECISION OF THE APEX COURT IN THE CASE OF APOLLO TY RES 255 ITR 273 TO 4 HOLD THAT WITH REGARD TO PROVISION OF HEAD OFFICE E XPENSES ASSESSING OFFICER HAS NOT ASSIGNED ANY REASON AND HE HAD NO A UTHORITY TO RECAST THE PROFIT COMPUTED AS PER BOOKS. SINCE THE LEARNED D.R. WAS UNABLE TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A), W E CONFIRM THE ORDER OF THE CIT(A) ON THESE ISSUES AND REJECT GROUND NOS .1 AND 2 OF THE REVENUES APPEAL. 5. AS REGARDS GROUND NO.3 LEARNED CIT(A) FOLLOWED HE DECISION OF THE ITAT, DELHI, SPECIAL BENCH IN THE C ASE OF EKTA PROMOTERS 305 ITR 1 (DEL.) (SB) TO HOLD THAT INTERE ST UNDER SECTION 234D SHOULD NOT BE CHARGED IN THE CASE OF THE ASSES SEE FOR ASSESSMENT YEAR 1991-92 SINCE AMENDMENT IS PROSPECT IVE IN OPERATION. LEARNED DR WAS UNABLE TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A) AND DID NOT REFER TO ANY CONTRARY DE CISION ON THE ISSUE. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND AC CORDINGLY REJECT GROUND NO. 3 OF THE REVENUE. 6. GROUND NOS. 4 AND 5 ARE GENERAL IN NATURE AND T HEREFORE, THEY DO NOT REQUIRE INDEPENDENT CONSIDERATION. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. 8. IN THE CROSS-OBJECTION FILED BY THE ASSESSEE IT WAS CONTENDED THAT MAT PROVISIONS ARE NOT APPLICABLE TO A BANKING COMPANY AND IN THIS REGARD RELIED UPON DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF KRUNG THAI BANK PCL VS. JOINT DIRECTOR OF INCOME TAX (INTRENATIONAL TAXATION) (2010) 133 TTJ 435 (MUM.) 9. LEARNED DR HAS NOT RAISED ANY OBJECTION FOR ADM ISSION OF THIS ISSUE SINCE GROUND RAISED BY THE ASSESSEE IS S UPPORTED BY THE DECISION OF THE ITAT, MUMBAI BENCH. BY RESPECTFULLY FOLLOWING THE SAME WE DIRECT THE ASSESSING OFFICER TO RECONSIDER THE MATTER IN ACCORDANCE WITH LAW. 5 ITA.5024/M/2010 & CO 74/M/2011 M/S. ABU DHABI COMMERCIAL BANK LTD. 10. IN THE RESULT, CROSS OBJECTION FILED BY THE AS SESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28-09-2011. SD/- SD/- (RAJENDRA SINGH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 28 TH SEPTEMBER, 2011 VBP/- COPY TO 1. DDIT (IT)-1 (1), 117, 1 ST FLOOR, SCINDIA HOUSE, N.M. ROAD, BALLARD PIER, MUMBAI 400 038. 2. M/S. ABU DHABI COMMERCIAL BANK LTD. 75, REHMAT M ANZIL, VEER NARIMAN ROAD, CHURCHGATE, MUMBAI 020 PAN AAAC A4216B 3. CIT(A)-10, MUMBAI. 4. DIT (INTERNATIONAL TAXATION), MUMBAI 5. DR A BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.