The Dhanalaxmi Bank Ltd, Trichur V. The Addl.CIT, Trichur

ITA 125/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81329 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2014
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: RADHESH BHATT
• Keywords: Cost of acquisition
• Section: 14A; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 125/COCH/2014 ASSESSMENT YEAR : 2007-08 THE DHANALAXMI BANK LIMITED, DHANALAXMI BUILDINGS, NAICKANAL, THRISSUR-680 001. [PAN:AABCT 0019J] VS. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-1(1), THRISSUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI RADHESH BHATT, CA REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 27/08/2014 DATE OF PRONOUNCEMENT 05/09/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 21- 11-2013 PASSED BY THE CIT(A)-V, KOCHI FOR THE ASSES SMENT YEAR 2007-08. 2. THE FIRST GROUND IS WITH REGARD TO DISALLOWANCE MADE U/S. 14A COMPUTED UNDER RULE 8D HOLDING THAT THE GROUND OF APPEAL IS PREMATURE AND THE SAME WAS DISMISSED FOR STATISTICAL PURPOSES. THE CIT(A) ERR ED IN NOT ACCEPTING THE ASSESSEES CONTENTION THAT RULE 8D HAS NO APPLICATI ON TO THE ASSESSEE BANK FOR THE YEAR UNDER APPEAL. I.T.A. NO.125/COCH/2014 2 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT A S IMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN I.T. A. NO. 93&94/COCH/2009 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 VIDE ORDER DATED 30-12-2011 WHEREIN IT WAS OBSERVED AS UNDER: 2. THE FIRST ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE DISALLOWANCE IN THE SUM OF ` 59,22,784/-BY APPLYING S. 14A OF THE ACT, WITH THE IMPUGNED EXPENSES INCLUDING THE PURCHASE COST OF INTEREST-FREE SECURI TIES, AS ALSO THE PROPORTIONATE SHARE OF ADMINISTRATIVE EXPENSES, I.E., ` 58,641/-. IT WAS THE COMMON CONTENTION OF THE PARTIES DURING HEARING BEFORE US THAT THOUGH THE MATTER STANDS DECIDED IN THE ASSESSEES FAVOUR BY THE TRIBUNAL IN THE ASSESS EES OWN CASE FOR EARLIER YEAR, THE MATTER HAS SINCE ATTAINED FINALITY BY THE DECIS ION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASSESS EE-BANK, ALONG WITH, OTHERS FOR SEVERAL YEARS (IN I.T.A. NO. 1324 OF 2009 DATED.21 -10-2010 (EXHIBIT P-1), IT MAY BE RESTORED BACK TO HE FILE OF THE ASSESSING AU THORITY TO CARRY OUT THE DIRECTIONS BY THE HONBLE HIGH COURT, AFTER HEARING THE ASSESSEE. WE FIND THE SAID CONTENTION TO BE IN ACCORD WITH THE PROCEDURE THAT WOULD ENABLE THE APPLICATION OF THE DECISION BY THE HONBLE HIGH COU RT IN A FAIR AND TRANSPARENT MANNER. WE, ACCORDINGLY, DIRECT SO. 4. RESPECTFULLY FOLLOWING THE ABOVE ORDER, WE ARE INCLINED TO REMIT THIS ISSUE BACK TO THE FILE OF THE AO WITH SIMILAR DIRECTION. 5. THE NEXT GROUND IS WITH REGARD TO DISALLOWANC E OF PENSION DIRECTLY PAID TO EMPLOYEES UNDER SECTION 37 OF THE I.T. ACT. 6. AFTER HEARING BOTH THE PARTIES, WE FIND THAT A S IMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OW N CASE IN I.T.A. 93&94/COCH/2009 FOR THE ASSESSMENT YEARS 2005-06 AN D 2006-07 WITH THE FOLLOWING OBSERVATIONS: I.T.A. NO.125/COCH/2014 3 4. THE THIRD AND FINAL ISSUE AGITATED BY THE ASSES SEE IS IN RESPECT OF THE DISALLOWANCE OF THE CLAIM FOR PENSION U/S. 37(1) OF THE ACT IN THE SUM OF ` 1,66,96,636/-. THE ASSESSEE CLAIMED A TOTAL EXPENDI TURE OF ` 4176.18 LAKHS UNDER THE HEAD PAYMENT TO AND PROVISION FOR EMPLOY EES. THE SAME INCLUDES PAYMENT TO AN APPROVED PENSION FUND (AT ` 247.57 LAKHS) AND PAYMENT OF PENSION TO RETIRED EMPLOYEES (AT ` 166.97 LAKHS). IT IS THE THIRD PAYMENT WHICH IS THE SUBJECT MATTER OF CONTROVERSY BETWEEN THE ASSESSEE AND THE DEPARTMENT. THE REVENUES CASE STANDS DELINEATED AT PARA 16 TO 22 O F THE ASSESSMENT ORDER, MAKING A REFERENCE TO THE DECISIONS BY THE HIGHER C OURTS OF LAW, INCLUDING THE APEX COURT. THE LD. CIT(A) DID NOT RENDER ANY DECI SION IN THE MATTER IN VIEW OF THE FACT THAT THE MATTER WAS ALREADY BEFORE THE AO IN RESPECT OF THE IMMEDIATELY TWO PRECEDING YEARS (A.Y.2003-04 AND 2004-05) FOR B EING DECIDED IN TERMS OF THE DIRECTIONS BY THE ITAT VIDE ITS ORDER DATED 20- 08-2007 (ANNEXURE B). IT WAS, ACCORDINGLY, HELD THAT THE MATTER BE LIKEWISE RESTO RED BACK TO THE FILE OF THE AO FOR THE CURRENT YEARS AS WELL. FURTHER, THE LD.AR DURING HEARING SOUGHT TO PRESS INTO SERVICE THE DECISION IN THE CASE OF CIT VS. RANBAXY LABORATORIES LTD. 334 ITR 341(DEL.). THE MATTER HAVING BEEN ALREADY EXAMI NED BY THE TRIBUNAL, AND RESTORED BACK TO THE FILE OF THE AO, WITH DIRECTION S, WE ONLY CONSIDER IT FIT AND PROPER THAT THE MATTER BE LIKEWISE RESTORED BACK TO THE FILE OF THE AO, WHO SHALL DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, RELY ING ON THE DECISIONS BY THE HIGHER COURTS AS WELL AS BY THE TRIBUNAL THAT MAY C OME TO, OR ARE BROUGHT, TO HIS NOTICE, OF COURSE, AFTER AFFORDING DUE OPPORTUNITY OF REPRESENTATION TO THE ASSESSEE IN THIS REGARD. WE MAY CLARIFY THAT THE S AME ISSUE HAS ALSO BEEN CONSIDERED BY THIS TRIBUNAL IN THE CASE OF OTHER BA NKS AS WELL, AS IN THE CASE OF SOUTH INDIAN BANK LTD. (IN ITA NO. 935/COCH/2008 DA TED 31/5/2011 FOR AY 2005-06/COPY ON RECORD), AND REFERENCE TO WHICH WOU LD BE RELEVANT IN THE MATTER. WE DECIDE ACCORDINGLY. 7. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFIC ER FOR FRESH CONSIDERATION. 8. THE NEXT GROUND IS WITH REGARD TO PROVISION FOR LEAVE ENCASHMENT. A SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE JURISDICTIONAL HIGH COURT IN THE CASE OF SOUTH INDIAN BANK LTD. VS. CIT IN I.T.A. NO . 186/2011 VIDE JUDGMENT DATED 22-01-2014 WHEREIN THE HONBLE HIGH COURT DEC IDED THE ISSUE AGAINST THE ASSESSEE WITH THE OBSERVATION THAT PROVISION MADE FOR LEAVE ENCASHMENT CANNOT I.T.A. NO.125/COCH/2014 4 BE ALLOWED IN VIEW OF THE PROVISIONS OF SEC. 43B(F) OF THE ACT. ACCORDINGLY, WE DISMISS THIS GROUND OF THE ASSESSEE. 9. THE NEXT GROUND IN THE APPEAL IS WITH REGARD TO THE ADDITION OF RS.3,38,318/- ON ACCOUNT OF EXCESS CASH FOUND IN TH E BANK. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE AO MADE AN ADDITION OF RS. 3,38,318/- OF EXCESS CASH RECEIVED BY THE ASSESSEE TREATING IT AS INCOME OF THE ASSESSEE. 11. ON APPEAL, THE CIT(A) FOLLOWED THE DECISION OF EARLIER ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006-07 AND OBSERV ED THAT SINCE THERE IS NO INDIVIDUAL DETAILS REGARDING FOR WHOM IT WAS RECEIV ED ARE NOT AVAILABLE IN THE BANK AND IT CANNOT BE CONSIDERED AS AN ASCERTAINED LIABILITY AT THE TIME OF CLOSING OF THE ACCOUNTS. THE EXCESS AMOUNT IS LIABLE TO BE PAID BACK ONLY ON DEMAND AND NOT OTHERWISE AND IF NOT CLAIMED IS TRANSFERRED TO THE P&L ACCOUNT FOR THAT YEAR. THEREFORE, IT WAS OBSERVED THAT IT IS THE MI SCELLANEOUS INCOME OF THE ASSESSEE. 12. AFTER HEARING BOTH THE PARTIES, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE CIT(A). A SIMILAR ISSUE WAS CONSIDERED BY THE H ONBLE HIGH COURT IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. ADDL. CIT (349 ITR 569) WHEREIN IT WAS HELD THAT I.T.A. NO.125/COCH/2014 5 THE EXCESS CASH RECEIVED AT COUNTERS CAN BE CONSIDE RED AS INCOME OF THE BANK AND AS AND WHEN A CLAIM IS MADE AND THE ASSESSEE HA S TO MAKE ANY PAYMENT, THE SAME WILL BE LIABLE FOR DEDUCTION IN THE YEAR I N WHICH THE CLAIM IS MADE. WITH THIS OBSERVATION, WE DISMISS THIS GROUND. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 05-09-2014 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 5TH SEPTEMBER 2014 GJ COPY TO: 1. THE DHANALAXMI BANK LIMITED, DHANALAXMI BUILDING S, NAICKANAL, THRISSUR-680 001. 2. THE ADDL. COMMISSIONER OF INCOME-TAX, RANGE-1(1) , THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN