THE DCIT CIR 3(1), MUMBAI V. M/S. ICICI BANK LTD (IN RESPECT OF M.S, ICICI LTD. MRGED WITH M.S, ICICI BANK LTD), MUMBAI

ITA 1112/MUM/2008

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1162 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-02-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 14-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Bad and doubtful debts
• Section: 143(3); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 1112 / MUM/ 20 08 ( / ASSESSMENT YEAR: 1997 - 98 ) DY. COMMISSIONER OF INCOME TAX - CIRCLE 3(1), ROOM NO. 607, 6 TH FLOOR, AAYKAR BHAVAN, M K ROAD, NEAR CHURCHGATE, MUMBAI - 400020 / VS. M/S ICICI BANK LTD., (IN RESPECT OF M/S ICICI LTD MERGED WITH M/S ICICI BANK LTD. LAXMI COMMERCIAL CENTRE, BEHIND NABARD BANK, 2 ND FLOOR, B KC, BANDRA (E), MUMBAI - 400051 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AAACT1398K ( / APPELLANT) : ( / RESPONDENT ) / R EVENUE BY : SHRI VISHWAS MUNDE / ASSESSEE B Y : MS.ARATI VISSANJI / DATE OF HEARING : 1 7 . 2 . 2017 / DATE OF PRONOUNCEMENT : 12. 4 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 21.11.2007 PASSE D BY THE LD.CIT(A) - XXVII, MUMBAI PERTAINS TO THE ASSESSMENT YEAR - 1997 - 98 WHEREIN THE REVENUE RAISED THE GROUND THAT THE LD.CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 AS IMPOSED BY THE AO QUA THE ADDITION ON AC COUNT OF WRITE 2 ITA NO. 1112 /MUM/ 2008 BACK OF BAD DEBTS, WRITING BACK OF INVESTMENTS, DEDUCTION U/S 10(23) OF THE ACT , DISALLOWANCE OF DEPRECIATION ON LEASE TRANSACTIONS TREATED AS FINANCE TRANSACTIONS , EXPENSES FOR EARNING DIVIDEND U/S 80M, EXPENSES APPORTIONED FOR EARNING DIVI DEND INCOME , SHARE ISSUE EXPENSES AND DISALLOWANCE OF DEDUCTION U/S 36(1)(VIII) OF THE ACT. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 15.2.2000 AT AN INCOME OF RS.4,46,96,07,540/ - AS AGAINST THE RETURNED INCOME OF RS.2,26,84,77,725/ - BY MAKING FOLLOWING DISALLOWANCES: S.NO. NATURE OF DISALLOWANCE AMOUNT IN RS. 1 UNDER RULE 6D 87,337 2 GUEST HOUSE EXPENSES 11,43,524 3 WRITE BACK OF BAD DEBTS 54,57,02,401 4 WRITING BACK OF INVESTMENTS 47,83,79,789 5 DEDUCTION U/S 10(23), 23,22,56,327 6 DEPRECIATION ON LEASE ASSETS 4,38,37,46,515 7 U/S 80M 52,08,28,403 8 EXPENSES INCURRED IN EARNING DIVIDEND INCOME 1,71,74,80,473 9 SHARE ISSUE EXPENSES 24,10,42,017 THEREAFTER, PENALTY WAS IMPOSED VIDE ORDER DA TED 31.3.2006 PASSED UNDER SECTION 271(1)( C ) OF THE ACT LEVYING A PENALTY OF RS.3,78,54,03,692/ - EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED BY HOLDING THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)( C ) OF THE ACT READ W ITH EXPLANATION (1) BY FURNISHING INACCURATE PARTICULARS OF INCOME / CONCEALING ITS INCOME TO THE TUNE OF RS.8,80,32,64,401/ - . 3 ITA NO. 1112 /MUM/ 2008 3 . IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) DELETED THE PENALTY QUA THE DISALLOWANCE UNDER RULE 6D OF THE INCOME TAX RULES, 1 962 BY HOLDING THAT SINCE THE ASSESSEE ITSELF DISALLOWED AN AMOUNT OF RS.14,50,370/ - AND REVISED ITS CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY FOLLOWING T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ARRO W (I) LTD REPORTED I N 229 ITR 325 (BOM) AND THEREFORE THE PENALTY WAS NOT JUSTIFIED ON THE DISALLOWANCE OF RS.87,337/ - MADE UNDER R ULE 6D OF THE RULES. 3 .1 QUA GUEST HOUSE EXPENSE S OF RS.11,43,524/ - , THE LD.CIT(A) DELETED THE PENALTY BY FOLLOWING THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 1996 - 97, WHEREIN THE PENALTY WAS DELETED IN THE SIMILAR CIRCUMSTANCES. 3.2 AS REGARDS THE WRITE BACK OF BAD DEBTS OF RS.54,57,02,401 / - , THE LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE OFFERED THE ENTIRE WRITE BACK OF BAD DEBTS OF RS.54,57,02,401/ - IN THE RETURN OF INCOME AND THE SAME COULD NOT BE SAID TO BE CONCEALMENT OF INCOME. 3.3 ON THE WRITING OFF OF INVESTMENTS RS.47,83,79,789/ - , THE LD.CIT(A) DELETED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS NOT CLAIME D ANY WRITING OFF OF INVESTMENT S AND THEREFORE THERE WAS NO CONCEALMENT OF INCOME ON T HE PART OF T HE AS S E S SEE. 3.4 ON THE DEDUCTION U/S 10(23G) OF RS.23,22,56,327/ - , THE LD. CIT(A) DELETED THE PENALTY BY HOLDING THAT SECTION 14A OF THE ACT WAS INTRODUCED BY THE FINANCE ACT, 2001 SUBSEQUENT TO THE FILING OF THE RETURN OF INCOME ON 29.11.1997 . AN IDENTICAL ISSUE WAS ALSO DECIDED IN ASSESSEES OWN CASE 4 ITA NO. 1112 /MUM/ 2008 IN THE ASSESSMENT YEAR 2000 - 01, WHEREIN THE PREDECESSOR OF THE LD.CIT(A) DELETED THE PENALTY ON THE GR OUND THAT AS ALL PARTICULARS HAD BEEN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 3.5 THE DEPRECIATION ON LEASE TRANSACTION TREATED AS FINANCE RS.4,38,37,46,515/ - WAS DELETED BY THE LD.CIT(A) BY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSMENT YEAR 1995 - 96 IN ASSESS E ES OWN CASE , WHEREIN THE SPECIAL BENCH OF THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE. 3.6 THE DISALLOWANCE UNDER SECTION 80M AND EXPENSES FOR EARNING THE DIVIDEND INCOME OF RS.52,08,28,403 AND RS.171,74,80,473/ - RESPECTIVELY WERE DELETED BY THE LD.CIT(A) BY HOLDING THAT THE ENTIRE EXPENSES APPORTIONED TO EARNING THE DIVIDEND INCOME AS HAS NOT BEEN DISALLOWED IN THE ASSESSMENT ORDER BUT ONLY DEDUCTION U/S 80M HAS BEEN DISALLOWED AND QUA THE SEC OND ISSUE OF EXPENSES FOR EARNING DIVIDEND, THE LD. CIT(A) DELE T ED THE PENALTY BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1994 - 95 IN WHICH THE SAME PENALTY WAS DELETED. 3.7 IN RESPECT OF SHARE ISSUE EXPENSES OF RS.24,10,42,017/ - , THE LD.CIT(A) HELD THAT IN ABSENCE OF ANY MENS REA NO PENALTY COULD BE CONFIRMED AND ALSO SPECIALLY WHEN THE APPELLANT MADE CLAIM ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS NO PENALTY WAS LEVIABLE . 3.8 ON THE D ISALLOWANCE OF DE DUCTION OF RS.68,25,97,615/ - , THE LD.CIT(A) HELD THAT WHEN THERE WAS NO SPECIFIC METHOD PRESCRIBED UNDER THE ACT 5 ITA NO. 1112 /MUM/ 2008 FOR THE CALCULATION OF SPECIAL RESERVE GIVEN IN THE ACT AND IT COULD NOT BE PRESUMED TH A T THE ONE FOLLOWED BY THE ASSESSEE WAS ERRONEO US. FURTHER, THE LD.CIT(A) HELD THAT SINCE THE DEDUCTION IS LINKED TO THE BUSINESS PROFITS, THE SAME WOULD BE SUBJECT TO REVISION ON ACCOUNT OF CHANGES TO THE BUSINESS PROFIT S AND ACCORDINGLY HELD THAT NO PENALTY WAS ATTRACTED. 4. ON THE OTHER HAND, THE LD.DR REITERATED THE SAME CONTENTIONS AS MADE BEFORE THE LD.CIT(A) AND RELIED UPON THE ORDER OF AO AND PRAYED THAT THE FAA HAS WRONGLY DELETED THE PENALTY IMPOSED FOR VARIOUS DISALLOWANCES MADE BY THE AO WHICH ATTRACTED PENALTY UNDER THE PROVISIONS OF S ECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME OF CONCEALMENT OF INCOME BY THE ASSESSEE. THE LD. DR PRAYED BEFORE THE BENCH THAT THE ORDER OF LD.CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED. 5. THE LD. AR ON THE OTHER H AND, REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD.CIT(A) AND RELIED ON LD.CIT(A)S ORDER STATING THAT THE LD.CIT(A) HAS PASSED VERY REASONED ORDER JUSTIFYING THE DELETION OF PENALTY AND THEREFORE DESERVE D TO BE CONFIRMED. THE LD. AR ALSO ARGUED THAT TH E ASSESSEE HAS DISCLOSED EVERYTHING IN THE ASSESSMENT PROCEEDINGS AND NOTHING WAS CONCEALED OR CAMOUFLAGE D . 6 ITA NO. 1112 /MUM/ 2008 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS PASSED VERY REASONED AND DETAILED ORDER GIVING DETAILED EXPLANATION S AND JUSTIFICATION S FOR DELETING THE PENALTY IMPOSED BY THE AO ON VARIOUS DISALLOWANCES, THE DETAILS WHEREOF HAS BEEN GIVEN HEREINABOVE. WE FIND THAT UNDER RULE 8D OF THE RULES, THE DISALLOWANCE WAS MADE BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AND MOST OF THE ISSUES ARE THEREFORE ARE COVERED BY THE ASSESSEES OWN CASE AND WE ALSO FIND THAT ALL THE FACTS HAVE BEEN FULLY DISCLOSED IN THE RETURN OF INCOME AND IN THE ASSESSMENT PROCEEDINGS AND THEREFORE DO NOT ATTRACT ANY PENAL ACTION U/S 271(1)( C ) OF THE ACT SPECIFICALLY LINKING WITH THE DISALLOWANCE UNDER RULE 8D, THE SAME WAS MADE BY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT WHIC H WAS NOT AVAILABLE AT THE TIME OF FILING OF THE RETURN. THE REST OF THE EXPENSES WERE CLAIMED BY FOLLOWING THE DECISIONS IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEAR 19 87 - 88 WHICH ULTIMATELY HAS BEEN FOLLOWED BY THE LD.CIT(A).THE ISSUE REGARDING DISAL LOWANCE OF DEDUCTION U/S 36(1)(VIII) OF THE ACT OF 68,25,97,615/ - AND THE ISSUE WITH REGARD TO DEDUCTION U/S 10(23G) OF THE ACT, WE FIND THAT SECTION 14A WAS INTRODUCED BY THE FINANCE ACT, 2001 WHEREAS THE RETURN OF INCOME WAS FILED BEFORE 29.11.1997. ON THE ISSUE OF DEPRECIATION ON LEASE ASSET, THE SAME WAS DELETED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE EARLIER YEAR IN ASSESSEES OWN CASE AND HENCE NO ORDER OF LD.CIT(A) ON THIS ISSUE IS CORRECT . ON DISALLOWANCE U/S 80M, THE EXPENSES APPORTIONED 7 ITA NO. 1112 /MUM/ 2008 TO EARNING THE DIVIDEND INCOME AND MENTIONED IN THE RETURN OF INCOME AND THUS THE PENALTY WAS RIGHTLY DELETED BY THE FAA. LASTLY, ON THE ISSUE OF DISALLOWANCE AND DEDUCTION U/S 36(1)(VIII), THE DEDUCTION WAS VERIFIABLE AS LINKED WITH THE BUSINESS PROFIT O F THE ASSESSEE AND THE LD.CIT(A) WAS ALSO JUSTIFIED IN DELETING THE SAME. WITH REGARD TO WRITING OF BAD DEBTS, THE INVESTMENT WERE NOT CLAIMED IN THE RETURN OF INCOME AND CLAIMED IN THE ASSESSMENT PROCEEDINGS AND THEREFORE DO NOT CONSTITUTE IN FILING INAC CURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. DURING THE COURSE OF HEARING BEFORE US, THE LD.DR EXCEPT REITERATING THE CONTENTIONS AS RAISED BEFORE THE LD. CIT(A) NEITHER BROUGHT ANY MATERIAL TO PROVE CONTRARY TO THE FINDINGS OF THE LD.CIT(A) NOR PRODUCED ANY CASE LAW SO AS TO COMPEL US TO TAKE A DIFFERENT VIEW THAN THE VIEW SO TAKEN BY THE LD.CIT(A) . THEREFORE, IN VIEW OF THIS DISCUSSION HEREINABOVE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD .CIT(A) . ACCORDINGLY, WE CONFIRM THE ACTION OF T HE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH APRIL, 2017. S D SD ( MAHAVIR SINGH ) (RA JESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12 . 4 .2017 SRL,SR.PS 8 ITA NO. 1112 /MUM/ 2008 / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI