DCIT 2.3.1, MUMBAI V. ICICI BANK LIMITED, MUMBAI

WTA 5/MUM/2025

AI Insights

The appeals arise from orders passed by the Commissioner of Wealth-tax (Appeals)-51, Mumbai, under section 23 of the Wealth-tax Act, 1957. The main issues involved the valuation of assets, including motor cars and holiday homes, and the treatment of properties acquired through recovery of bad debts. The Income Tax Appellate Tribunal (ITAT) considered whether the assessee, ICICI Bank, could claim deductions for debts against taxable assets and whether certain properties should be considered as stock-in-trade. The Tribunal's decisions were influenced by previous rulings and the specific provisions of the Wealth Tax Act.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834623 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Wealth Tax Appeal
• Pronouncement Date: 05-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 26-09-2025
• Other Referred Cases: IDBI Vs. DCWT, Samarth Knitters Pvt. Ltd., Zee Entertainment Enterprises Ltd., ING Vysya Bank Ltd., L.M. Devaraj
• Laws Referred To: Wealth-tax Act, 1957
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Assessee Lawyers: ARATIVISSANJI
• Keywords: Business income; Bad and doubtful debts; Cost of acquisition; Recovery proceedings

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER WTA No. 4/Mum/2025 Assessment Year: 2005-06 ICICI Bank Limited Taxation Department, ICICI Bank Towers, Bandra Kurla Complex, Bandra (E), Mumbai-400051 PAN: AAACI1195H Vs. DCIT, Circle 2(3)(1), Mumbai Aayakar Bhawan, 5th Floor, Room No.552/556, M.K. Road, Mumbai- 400020 (Appellant) (Respondent) WTA No. 5/Mum/2025 Assessment Year: 2002-03 & WTA No. 6/Mum/2025 Assessment Year: 2005-06 DCIT, Circle 2(3)(1), Mumbai Vs. ICICI Bank Limited (Appellant) (Respondent) Assessee by Ms. Arati Vissanji- Advocate Department by Shri R A Dhyani- CIT DR Date of Hearing 06.01.2026 Date of Pronouncement 05.02.2026 ORDER Per Bench: These appeals arise out of orders passed by the Commissioner of Wealth-tax (Appeals)-51, Mumbai [hereinafter referred to as “the CWT(A)”] under section 23 of the Wealth-tax Act, 1957. WTA Nos. 4 and 6/Mum/2025 pertain to assessment year 2005-06, whereas WTA No. 5/Mum/2025 pertains Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 2 to assessment year 2002-03.Since common issues are involved and the parties are the same, all the appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. 1. The brief facts of the case are that the assessee is a banking company. Assessments for the relevant years were completed under section 16(3) read with section 17 of the Wealth-tax Act. In the assessment orders, the Assessing Officer hasmade additions on account of valuation of motor cars, inclusion of holiday homes, disallowance of proportionate debts, inclusion of immovable properties acquired in the course of recovery of bad debts , treated certain urban land under construction as an asset and rejected the declared value of a residential apartment situated at Prabhadevi. On appeal, the CWT(A) granted partial relief. The assessee has filed appeal in WTA No. 4/Mum/2025 for assessment year 2005-06. The Revenue has filed appeal in WTA No. 5/Mum/2025 for assessment year 2002-03 and in WTA No. 6/Mum/2025 for assessment year 2005-06. Assessee’s Appeal - WTA No. 4/Mum/2025 (A.Y. 2005-06) 2. Ground 1 is against confirming the Deduction of proportionate debts not allowed by the A.O. The assessee has claimed debt amounting to Rs 195,02,80,018/- from net taxable wealth under section 2(m) onproportionate basis. The A.O has disallowed the entire claim as assessee has failed to prove the nexus between the debt owed against the asset chargeable for wealth tax. The Ld. CWT(A) has confirmed the addition observing that the assessee has substantial owned funds and therefore it may be presumed that taxable assets have been acquired out of own fund. 3. The Ld. AR has argued that as per proviso to Rule 14, proportionate debts can be claimed against taxable assets. The Ld. AR has submitted that the issue is covered in assessee’s own case for assessment year 1995-96 and 1997-98, and Assessing Officer himself has allowed the similar claim in assessment year 2002-03. Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 3 4. On the other hand, the Ld. DR supported the order of Ld. CWT(A). He submitted that assessee has not been able to identify the debt against the asset chargeable to wealth tax. 5. We have considered the rival submissions. The assessee in the return of income has claimed proportionate deduction of total loans and liabilities at Rs.98,84,88,238/-, however, it has claimed debt amount to Rs.195.02 Cr on proportionate basis by applying the ratio of Total Loans to Total Assets on Assets Chargeable to wealth-tax. It is seen that in assessee’s case for assessment year 1996-97 in WTA No. 180/Mum/2000 the ITAT has restored the matter back to the Assessing Officer with direction to calculate the debt on proportionate basis as prescribed by the proviso to Rule 14(2)(A)(V) of Schedule III Part D of Wealth Tax Act as decided in the case of IDBI Vs. DCWT in WTA No.796/Mum/1998. The proportionate debt computed by assessee is not as per the Rule, we therefore, restore this issue before the Assessing Officer to recompute the proportionate debt as per direction given in AY 1996-97 by applying Rule 14(2) of Schedule III Part D of Wealth Tax Act. The assessee is also directed to provide all the relevant data for this purpose. 6. Ground 2 is relating to disallowance of exemption on Holiday homes. The assessee while computing the value of immovable property excluded the Holiday Homes of Rs.5,83,94,158/-. The Assessing Officer disallowed the same as Holiday Homes are in the nature of guest house and covered under definition of assets as per Clause 2(ea)(i). The Ld. CWT(A) confirmed the disallowance. The Ld.AR has argued that the holiday homes are not given to outsiders for a fee, but used for its own use only, therefore, not chargeable to wealth tax u/s 2(ea). The Ld. AR however, fairly submitted that this issue is covered against the assessee by the order of Hon’ble Tribunal in WTA No.179/Mum/2000 for assessment year 1996-97. We find that the Tribunal in AY 1995-96 and 1996-97 in assessee’s case has adjudicated this issueholding that Holiday Homes are in nature of guest house Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 4 and covered under definition of asset , therefore,respectfully following the same, this ground of appeal is dismissed. 7. Ground 3 is relating to Valuation of Motor Carsat 80% of insured value . The assessee while valuing the motor cars has adopted 80% of the insured value. The Assessing Officer therefore has adopted the full value for the purpose of computation of wealth on motor cars. The Ld. CWT(A) has confirmed the addition observing that the decision in Samarth Knitters Pvt. Ltd. was rendered in the context of AY 1991-92, at a time when the insurance market operated under very different regulatory and economic circumstances. The Ld. AR has argued that the insurance value does not represent the actual value of the car and hence, the Tribunal as concluded 80% of the insurance value as market value. The Ld. AR relied on the decision of Hon’ble Tribunal inassessee’s own case in WTA No.179/Mum/2000 for assessment year 1996- 97 dated 31.01.2002. We find that the issue is covered in the favour of the assessee by the decision of Hon’ble Tribunal in assessee’s own case for assessment year 1996-97 and also in the case of Zee Entertainment Enterprises Ltd. (26 ITR 0314). We accordingly direct the Ld. AO to delete the addition. In the result, this appeal is party allowed. Revenue’s Appeal - WTA No. 6/Mum/2025 (A.Y. 2005-06) 8. The sole issue raised in this appeal is whether the CWT(A) was justified in accepting the assessee’s claim that immovable properties acquired on account of recovery of bad debts, constitute stock-in-trade and are therefore not chargeable to wealth tax. 9. The assessee in the return has claimed the acquired properties where a borrower failed to repay the outstanding dues and treated it as a stock-in- trade and excluded from taxable assets. The Assessing Officer disallowed the same observing that assessee is neither a real estate agent nor is in business of buying or selling of properties, therefore, property cannot be sold in the nature of stock-in-trade. The Ld. CWT(A) confirmed the addition. Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 5 10. The Ld. DR supported the order of Assessing Officer and relied on the grounds of appeal. 11. The Ld. AR submitted that assessee is in the business of banking and the properties are acquired in lieu of advances made in ordinary course of business and these properties form part of stock-in-trade and shown under Schedule 11 which is other assets and not under Schedule 10 of fixed assets. The Ld. AR submitted that the gain or loss on sale of such non-banking assets is for business income in the return of income. The Ld. AR relied on the case of Hon’ble Karnataka High Court in ING Vysya Bank Ltd. (150 taxmann.com 80). 12. We have considered the rival submissions. It is not in dispute that the assessee is a banking company and that the properties were acquired in the course of recovery of loans advanced in the ordinary course of banking business. The Hon’ble Bombay High Court in L.M. Devaraj (supra) has held that assets acquired by a bank in recovery proceedings are business assets and cannot be treated as investments. The Hon’ble Karnataka High Court in ING Vysya Bank Ltd. (supra) has taken a similar view.Respectfully following the above judicial precedents, we find no infirmity in the order of the CWT(A). The Revenue’s appeal in WTA No. 5/Mum/2025 is dismissed. Revenue’s Appeal - WTA No. 5/Mum/2025 (A.Y. 2002-03) 13. The Revenue has raised following grounds of appeal:- 1. Disallowance of exemption for properties acquired on account of recovery of bad debts 2. Disallowance of exemption for properties under construction 3. Addition to the value of immoveable property 14. Ground No.1 has already been adjudicated in AY 2005-06 which applies mutatis mutandis. 15. Ground No.2 is relating to disallowances of exemption of properties under construction. The assessee has declared the properties under construction as non-taxable, as buildings under construction are not taxable to wealth tax as per Section 2(ea) of the Act. The Assessing Officer held that exemption from Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 6 wealth tax is available if construction is not permissible on such land under any law. As the building was under construction the Ld. AO assessed the value of such building to wealth tax.The Ld. CWT(A) held that construction was ongoing and the structure was incomplete and therefore property cannot be classified as a building. 16. The Ld. DR relied on the order of Assessing Officer in support of the ground of appeal. 17. The Ld. AR on the other hand, submitted that the properties under constructions are not taxable to wealth tax as per Section 2(ea) of the Act and relied upon the Punjab & Haryana High Court decision in the case of Neena Jain (330 ITR 0157). 18. We have heard the rival submission. The Ld. CWT(A) has recorded the finding that construction activity had commenced on the land and building is under construction. Section 2(ea) excludes land which is occupied by a building under construction. The Revenue has not brought any material on record to controvert the factual finding recorded by the Ld. CWT(A).In the absence of any contrary evidence, we find no reason to interfere with the order of the CWT(A) on this issue. The ground of revenue is accordingly dismissed. 19. Ground No.3 is relating to addition to the value of immoveable property. The assessee has valued 24 residential flats at Prabhadevi at Rs.10,525/- as per Part B of Schedule III of the Act in the return of wealth. The assessee has claimed exemption u/s 2(ea)(i)(i) of Rs.5,263/- for 12 flats allotted to employees having gross annual salary of less than Rs.5,00,000/- and offered to tax Rs.5,263/-. The Assessing Officer adopted the cost of acquisition of the property at Rs.21,98,901/- as the value for the purpose of wealth tax stating that the maintainable rent and annual retainable value of the asset was too meagre considering the built up area of 27,856 sq. ft. The Ld. CWT(A) deleted the addition holding that as per proviso to Rule 3 of Part B to Schedule III the requirement to adopt the higher of cost are computed value applies only to properties acquired after 01.04.1974. For properties acquired prior to that date, the Act mandates valuation solely as per the formula under Rule 3 without reference to cost of acquisition. The Ld. CWT(A) also held that mere Printed from counselvise.com WTA Nos.4, 5 & 6/M/2025 ICICI Bank Limited 7 observation that the net maintainable rent appears meagre is not a sufficient ground to disregard the prescribed methods. We find no infirmity in the order of Ld. CWT(A) and therefore this ground of appeal of revenue is dismissed. Accordingly, the Revenue’s appeal in WTA No. 6/Mum/2025 (A.Y. 2005-06) is dismissed. In the result Assessee’s appeal in WTA No. 4/Mum/2025 is partly allowed and Revenue’s appeal in WTA No. 5/Mum/2025 and WTA No. 6/Mum/2025 are dismissed. Order pronounced in the open court on 05/02/2026 Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) Judicial Member (JAGADISH) Accountant Member Mumbai, Dated: 05/02/2026 Ashwani Rao Sr. Private Secretary Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T. By order (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "