HDFC BANK LTD, MUMBAI V. JCIT SP RG 15, MUMBAI

ITA 1544/MUM/2000

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88428 (ITAT-MUMBAI)
• Duration Of Justice: 14 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 11-02-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 27-03-2000
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: J EHANGIR D MISTRY
• Keywords: Depreciation; Question of law; Block assessment
• Section: 143(3); 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BE NCH, MUMBAI , !' $ $ $ $ % & ' , !' ( BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I .T.A. NO. 1544/MUM/2000 ( ) ) ) ) / ASSESSMENT YEAR : 1996-97 ./I .T.A. NO. 2797/MUM/2000 ( ) ) ) ) / ASSESSMENT YEAR : 1997-98 ./I .T.A. NO. 341/MUM/2003 ( ) ) ) ) / ASSESSMENT YEAR : 1998-99 HDFC BANK LTD. SANDOZ HOUSE, DR.ANNIE BASENT ROAD, WORLI, MUMBAI 400 018. / VS. THE JCIT, RANGE 15, AAYKAR BHAVAN, ROOM NO.517, MUMBAI 400 020 '* ./ +, ./ PAN/GIR NO. : AAACH 2702H ( *- / APPELLANT ) .. ( ./*- / RESPONDENT ) ./I .T.A. NO. 1700/MUM/2000 ( ) ) ) ) / ASSESSMENT YEAR : 1996-97 ./I .T.A. NO. 2790/MUM/2000 ( ) ) ) ) / ASSESSMENT YEAR : 1997-98 ./I .T.A. NO. 664/MUM/2003 ( ) ) ) ) / ASSESSMENT YEAR : 1998-99 THE JCIT, RANGE 15, AAYKAR BHAVAN, ROOM NO.517, MUMBAI 400 020 / VS. HDFC BANK LTD. SANDOZ HOUSE, DR.ANNIE BASENT ROAD, WORLI, MUMBAI 400 018. '* ./ +, ./ PAN/GIR NO. : AAACH 2702H ( *- / APPELLANT ) .. ( ./*- / RESPONDENT ) I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 2 ASSESSEE BY: SHRI JEHANGIR D. MISTRY REVENUE BY: SHRI KISHAN VYAS 0 %1 / DATE OF HEARING :11.02.2015 23) 0 %1 / DATE OF PRONOUNCEMENT : 18 .02.2015 !& / O R D E R PER N.K. BILLAIYA, AM: ITA NO.1544/M/2000 AND 1744/M/200 ARE CROSS APPEA LS BY THE ASSESSEE AND THE REVENUE FOR ASSESSMENT YEAR 1996-9 7. ITA NO.2797/M/2000 AND ITA NO.2790/M/2000 ARE CROSS AP PEALS FOR A.Y 1997-98 AND ITA NO.341/M/2003 & ITA NO.664/M/2003 A RE CROSS APPEALS FOR A.Y 1998-99. THESE BUNCH OF APPEALS W ERE HEARD TOGETHER AS THEY HAVE COMMON GROUNDS AND ARE DISPOSED OF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1544/M/2000-A.Y. 1996-97, ASSESSEES APPEAL: 2. FIRST GROUND RELATES TO THE DISALLOWANCE OF GUES T HOUSE EXPENSES UNDER SECTION 37(4) OF THE INCOME TAX ACT, 1961 (TH E ACT). AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CO NCEDED THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HONBL E SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES LTD., 278 ITR 546( SC). CONSIDERING THE ISSUE IN LIGHT OF THE DECISION OF THE HONBLE SUPRE ME COURT, GROUND NO.1 IS DISMISSED. I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 3 3. GROUND NO.2 RELATES TO DISALLOWANCE OF DEPRECIAT ION ON ASSETS LEASED TO REPL. THIS ISSUE HAS BEEN DISCUSSED AT L ENGTH BY THE AO AT PARA-7 OF HIS ORDER AND AT PARA 7.4 THE AO OBSERVE D THAT THE INVESTIGATION DIRECTORATE OF THE DEPARTMENT HAD CARRIED OUT THE S EARCH UNDER SECTION 132 OF THE ACT, IN THE CASE OF REPL ENGINEERING LTD., AND OTHER COMPANIES BELONGING TO THIS GROUP. TO INVESTIGAT E INTO LARGE SCALE BOGUS LEASING TRANSACTION OF WIND MILLS ENTERED IN TO BY THE REPL WITH VARIOUS COMPANIES. DURING THE COURSE OF SEARCH / INVESTIGATION A REFERENCE WAS MADE TO GEDA TO CONFIRM THE CONTENTS OF THE COMMISSIONING CERTIFICATE ISSUED BY IT AND PRODUCED BEFORE THE INCOME TAX AUTHORITIES FOR CLAIMING OF DEPRECIATION. GED A CONFIRMED THAT HDFC BANK LTD. HAVE NEITHER INSTALLED ANY WIND MILL S IN THE STATE OF GUJARAT NOR ANY COMMISSIONING CERTIFICATE WERE ISSU ED TO HDFC BANK LTD.. THE INVESTIGATION DIRECTORATE CARRIED OUT A DETAILED INVESTIGATION INTO THE GENUINENESS OF LARGE SCALE LEASING OF WI ND MILLS WITH REPL ENGINEERING LTD. WITH VARIOUS COMPANIES. THE COMPA NY WAS FOUND TO HAVE ENTERED INTO BOGUS LEASING TRANSACTION WITH VA RIOUS COMPANIES WHICH INCLUDE HDFC BANK LTD. AS A SEQUEL OF THE S EARCH OPERATION, CONDUCTED BY INVESTIGATION DIRECTORATE IN THE CASE OF REPL GROUP ESTABLISHING NON-EXISTENCE OF ASSETS AND BOGUS LEASE TRANSACTIONS ENTERED BY THE GROUP, THE AO DISALLOWED THE CLAIM OF DEPRECIATION ON ASSETS LEASED TO REPL. 3.1 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEF ORE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE LD. CIT(A) THAT THE P ROPER COURSE OF ACTION SHOULD BE UNDER SECTION 158BD OF THE ACT AND , THEREFORE, THE ADDITIONS/DISALLOWANCE MADE BY THE AO IS BAD IN LAW . 3.2 LD. CIT(A) DID NOT ACCEPT THIS CONTENTION OF TH E ASSESSEE. AGGRIEVED, BEFORE US THE LD. COUNSEL FOR THE ASSESS EE REITERATED THAT THE I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 4 ADDITIONS, IF AT ALL CAN BE MADE ONLY UNDER SECTI ON 158BD OF THE ACT. IN SUPPORT STRONG RELIANCE WAS PLACED ON THE DECISIONS OF THE TRIBUNAL DELHI BENCH IN THE CASE OF KAPIL DEV IN ITA NO.2259/DEL/2 002. 3.3 PER CONTRA, LD. DR STRONGLY SUBMITTED THAT THE FACTS OF THE CASE IN HAND ARE TOTALLY DIFFERENT FROM THE FACTS OF THE CA SE RELIED UPON BY THE COUNSEL. 3.4 WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISION OF THE TRIBUNA L DELHI BENCH IN THE CASE OF KAPIL DEV (SUPRA). THE RELEVANT PORTION OF THE DECISION OF THE TRIBUNAL DELHI BENCH READ AS UNDER: 11.1 THE MAIN QUESTION WHICH THUS ARISES BEFORE U S IS IF IT ALL THE SEIZED MATERIAL REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE, WHETHER THE PROCEDURE PRESCRIBED BY SEC. 158BD WAS TO BE MANDATORILY FOLLOWED AND HAVING FAILED TO DO SO, W HETHER THE MATERIAL COULD BE USED BY AO IN REGULAR ASSESSMENT U/S 143(3), BY GOING BEYOND I) CHAPTER XIV-B; AND II) FINDINGS GIV EN BY DCIT(INV.), MUMBAI.. 11.2. THE LEGISLATURE W.E.F. 1-7-1995 ENACTED A SPE CIAL PROCEDURE FOR ASSESSMENT OF UNDISCLOSED INCOME ON THE BASIS O F SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. PROCEDU RE WAS DEVISED FIRSTLY TO IMPOSE A TAX OF 60% AS AGAINST THE REGUL AR RATE OF TAX AND SECONDLY TO ENABLE THE AO TO MAKE BLOCK ASSESSMENT IN RESPECT OF 6 YEARS IN SUBSTITUTION OF THE REGULAR ASSESSMENT PRO CEEDINGS. CHAPTER XIV-B IS NAMED AS SPECIAL PROCEDURE FOR AS SESSMENT OF UNDISCLOSED INCOME AS A RESULT OF SEARCH. SECTION 158BA(1) IS PRECEDED BY NON-OBSTINATE CLAUSE NOTWITHSTANDING A NYTHING CONTAINED IN ANY PROVISIONS OF THIS ACT. A PLAIN R EADING OF THESE PROVISIONS REVEALS THAT IN CASE THE AO HAVING JURIS DICTION ON THE SEARCHED PERSON FINDS THAT SOME SEIZED MATERIAL IND ICATES UNDISCLOSED INCOME OF ANY OTHER PERSON, IN THAT CAS E HE SHOULD FORWARD A REFERENCE U/S 158BD AFTER RECORDING A PRO PER SATISFACTION AND BEFORE COMPLETION OF BLOCK ASSESSM ENT. THEREAFTER I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 5 THE OTHER PERSONS AO IS REQUIRED TO PROCEED ACCORD ING TO SEC. 158BD READ WITH SEC. 158BC. WITH THIS OVER-RIDING P ROVISION ON THE STATUTE, IN OUR CONSIDERED VIEW, THE ADDITION, IF AT ALL COULD HAVE BEEN CONSIDERED IN THE HANDS OF ASSESSEE U/S 158BD AND NOT REGULAR ASSESSMENT U/S 143(3). THE PROCEDURE PRESCR IBED IS MANDATORY, BESIDES IT IS EXPLICIT FROM THE BLOCK AS SESSMENT ORDER OF RC THAT HIS AO, DID NOT CARRY A SATISFACTION THAT T HE DIARY IN ANY WAY REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. IT HAS BEEN OBSERVED IN RCS BLOCK ASSESSMENT THAT KAPIL DEV HA S DENIED THE CASH ENTRIES IN DIARY AND THEREFORE AFTER CONSIDERI NG THE EVIDENCE, FACTS AND CIRCUMSTANCES, THE ADDITION WAS MADE IN T HE HANDS OF RC. THUS, THREE IMPORTANT FACTORS EMERGE FROM THE BLOCK ASSESSMENT ORDER OF RC: (I) ASSESSECS EXPLANATION WAS CONSIDERED DURING BL OCK ASSESSMENT PROCEEDINGS AND IT WAS HELD THAT THE SEI ZED MATERIAL REPRESENTED UNDISCLOSED INCOME OF RC AND N OT THE ASSESSEE. (II) NO INDICATION IS GIVEN THAT THE CASH ENTRIES I N DIARY MAY ALSO AMOUNT TO KAPIL DEVS INCOME. (III) NO SATISFACTION U/S 158BDWAS COMMUNICATED TO THE ASSESSEES AO. 11.3. IN VIEW OF THESE OBSERVATIONS, WE ARE INCLINE D TO HOLD THAT IF THE DEPARTMENT PROPOSED TO MAKE AN ASSESSMENT BASED ON SEARCHED MATERIAL, THEN THE COURSE AVAILABLE TO IT WAS TO PROCEED AS P ER THE PROVISIONS OF CHAPTER XIV-B I.E. SEC. 158BD READ WITH SEC. 158 BC OF THE ACT AND NOT U/S 143(3). 11.4. HONBLE DELHI HIGH COURT IN THE CASE OF R.K. JAM (SUPRA) HAS OBSERVED THAT IN CASE OF SEARCH MATERIAL, THE S AME IS TO BE ASSESSED BY WAY OF BLOCK ASSESSMENT UNDER CHAPTER X IV-B. SIMILAR VIEW IS ECHOED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF DR. M.K. E. MENON AND BY HONBLE GUJARAT HIGH COURT IN N.R. PAPER & BOARD LTD. & OTHERS (SUPRA). A SIMILAR VIEW HAS B EEN UPHELD BY HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHW ARI (SUPRA). IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION OF RS.83 LACS CANNOT BE MADE IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS BY TAKING RECOURSE TO SEC. 143( 3). THUS, THE ADDITIONAL GROUND OF THE ASSESSEE IS ALLOWED. I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 6 11.5. THE APPEAL IS VERY OLD, FILED WAY BACK IN 200 2. THEREFORE, WE WOULD LIKE TO DECIDE THE MERITS OF THE ADDITION. IT EMERGES FROM RECORD THAT: (I) ASSESSEES STAND WAS EXAMINED IN THE COURSE OF BLOCK ASSESSMENT OF RC, THERE ALSO HE DENIED HAVING ANY CONNECTION WITH THE DIARIES CASH ENTRIES MADE IN TH E HANDWRITING OF RC. (II) DURING THE COURSE OF SEARCH IN RCS PREMISES A ND IN SUBSEQUENT SEARCH OF THE ASSESSEES PREMISES, NO CORROBORATIVE INCRIMINATING EVIDENCE WAS FOUND TO S UGGEST SUCH CASH PAYMENTS OR ASSETS OF SAID FIRM M/S DEV Y OGI DEVELOPERS. (III) LOWER AUTHORITIES HAVE SOLELY RELIED ON VARIO US UNCORROBORATED EVIDENCE INCLUDING THE FACT THAT IN THE DIARY TWO CHEUQE ENTRIES MATCH WITH ASSESSEES RECORD IN RESPECT OF HIS CAPITAL CONTRIBUTION IN THE FIRM M/S DCV YOG I DEVELOPERS, THEREFORE, IT IS TO BE INFERRED THAT AL L THE CASH ENTRIES MENTIONED IN RCS SEIZED DIARY BELONGED TO THE ASSESSEE. HAD THE PAPER BEEN IN THE HANDWRITING OF ASSESSEE, THIS PRESUMPTION COULD HAVE SOME RELEVANCE, BUT WIT H STARK REALITY OF THE DIARY BEING WRITTEN IN THE HAND OF RC AND FOUND IN HIS PREMISES DURING THE COURSE OF SEARCH; IN OUR VIEW, SUCH INFERENCES ARE SHAKY AND HAVE NO LEGS TO STAND EXCEPT CREATING A SUSPICION. (IV) THE STATUTORY PRESUMPTION U/S 132(4A) HAS BEEN RAISED AGAINST RC AND ADDITION CONFIRMED IN HIS HANDS BY B LOCK ASSESSMENT U/S 158BD. (V) THE ASSESSEE HAD WITHDRAWN FROM THE FIRM M/S DE V YOGI DEVELOPERS IN APRIL 1997 AND RC WAS SEARCH ON 4/5 S EPT. 1997. ASSESSEE ON ALL FORUMS CONTENDED THAT HE WAS NOT COMFORTABLE WITH THE PARTNERSHIP, WHICH IS CORROBOR ATED BY THE FACT THAT CHEQUES ISSUED BY RC BOUNCED. ON MEAS URES OF PREPONDERANCE OF PROBABILITIES ALSO THE STATEMENT O F RC WHICH IS NOT EVEN BELIEVED BY HIS AO, CANNOT IMPLIC ATE THE ASSESSEE WITHOUT THERE BEING A CORROBORATIVE EVIDEN CE. THERE CANNOT BE A PROTECTIVE ASSESSMENT ON THE BASI S OF ABOVE ASSUMPTIONS AND FACTS WITH A BALD DIRECTION T HAT IF THE ADDITION IS NOT MADE IN THE HANDS OF RC, THE SAME S HOULD BE ADDED IN THE HANDS OF THE ASSESSEE. I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 7 (VI) ON FRAMING OF PROTECTIVE ASSESSMENT U/S 143(3) ALSO THE ARGUMENT OF LD. COUNSEL MERITS CREDENCE. THE SPECIA L PROVISIONS OF THE ACT PRESCRIBE AN ASSESSMENT BASED ON SEARCHED MATERIAL ITSELF AND VESTS POWER IN AO TO I NITIATE PROCEEDINGS U/S 158BD READ WITH SEC. 158BC IN THE HANDS OF OTHER PERSONS. THUS, THE AO HAS TO RECORD SATISF ACTION EITHER TO THE EFFECT THAT THE SEIZED MATERIAL BELON GED TO THE SEARCHED PERSON OR THE OTHER PERSON. 11.6. IN THE LIGHT OF FOREGOINGS, WE DELETE THE AD DITION OF RS.83 LACS ON MERIT ALSO. 3.5 THE ONLY DISTINGUISHING FACT IF AT ALL IS THAT IN THE CASE OF KAPIL DEV (SUPRA) A DIARY WAS FOUND BY THE SEARCH PARTY AND I N THE CASE IN HAND ON PHYSICAL INVESTIGATION MADE DURING THE SEARCH OF RE PL BOGUS TRANSACTION CAME TO THE NOTICE OF THE DEPARTMENT. IN OUR CONSI DERED OPINION, THESE FACTS CANNOT BE SAID TO BE DISTINGUISHABLE IN THE L IGHT OF THE PROVISIONS OF SECTION 158 BD. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH WE SET ASIDE THE ORDER OF LD. CI T(A) AND DIRECT THE AO TO DELETE THE ADDITION ON ACCOUNT OF DEPRECIATIO N. GROUND NO.2 IS ALLOWED. 4. GROUND NO.3 RELATES TO THE CLAIM OF DEPRECIATION ON ASSETS GIVEN ON LEASE TO REPL. SINCE WE HAD DECIDED THIS ISSUE IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE QUA GROUND NO.2, THIS GROUN D BY THE ASSESSEE BECOME INFRUCTUOUS. 5. GROUND NO.4 RELATES TO THE DISALLOWANCE OF DEPRE CIATION ON LEASED ASSETS TO AEL. THE AO HAS CONSIDERED THIS ISSUE AT PARA-17 OF PAGE 52 OF THE ASSESSMENT ORDER. WHILE SCRUTINIZING THE RETUR N OF INCOME THE AO NOTICED THAT THE ASSESSEE HAS ENTERED INTO A LEASE AGREEMENT UNDER WHICH ASSETS WERE LEASED FOR A TOTAL CONSIDERATION OF RS. 2,04,36,150/-. THE AO I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 8 FURTHER OBSERVED THAT THE LEASED ASSETS WERE PURCH ASED BY THE ASSESSEE FROM LESSEE ITSELF NAMELY, ASIAN ELECTONICS LTD. THE AO OBSERVED THAT ON THE BASIS OF THE LEASE AGREEMENT, THE ASSESSEE IS MAKING CLAIM OF OWNERSHIP AND USE OF ASSETS FOR ITS BUSINESS PURPOS E TO ADVANCE ITS CLAIM OF DEPRECIATION. THE AO VERIFIED THE TRANSACTION F ROM AEL WHICH CONFIRM THE TRANSACTION. THE AO OBSERVED THAT THE CAPACITORS WERE SOLD TO HDFC BANK LTD. BY AEL AND WERE IMMEDIATELY TAKEN BACK ON LEASE AND THEN THE SAME CAPACITORS WERE SUBSEQUENTLY SUB- LEASED TO MSEB. AFTER CONSIDERING THE AFORESTATED FACTS, THE AO FI NALLY CONCLUDED THAT THE CLAIM OF OWNERSHIP BY THE ASSESSEE IS NEBULOUS, MEA NINGLESS AND PURELY ACADEMIC IN NATURE AND PROCEEDED BY DISALLOWING T HE CLAIM OF DEPRECIATION OF LEASED ASSETS TO AEL. 5.1 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE LD. CIT(A). LD. CIT(A) DISMISSED THE GROUND OF APPEAL HOLDING THAT THE ASSESSEE HAS CLAIMED DEPRECIATION WHICH IS VIOLATION OF THE CIRC ULAR OF RESERVE BANK OF INDIA. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE US . 5.2 LD. COUNSEL FOR THE ASSESSEE STRONGLY RELIED UP ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF I.C.D.S LT D. VS. CIT, 350 ITR 527 (SC). THE LD. COUNSEL FOR THE ASSESSEE FURTHE R POINTED OUT THAT THE DECISION OF HONBLE SUPREME COURT HAS BEEN CONSISTE NTLY FOLLOWED BY THE TRIBUNAL MUMBAI BENCH IN THE CASE OF DEVELOPMENT CR EDIT BANK IN ITA NO.3006/M/2001 AND 4892/M/2003, LARSEN & TOUBRO LTD . IN ITA NO.2200/M/2000, SISCOM LTD. IN ITA NO.7901/M/2003, ICICI BANK LTD. IN ITA NO.3827/M/2005. 5.3 LD. DR COULD NOT BRING ANY DISTINGUISHING DECIS ION IN FAVOUR OF REVENUE. I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 9 5.4 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ICDS LTD.(SUPR A), WHICH HAS BEEN FOLLOWED BY THE BENCHES OF THE TRIBUNAL MUMBAI IN T HE CASES CITED HEREIN ABOVE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF DEPRECIATION ON LEASED ASSETS TO AEL. GROUND NO.4 IS ALLOWED. 5.5 SINCE WE HAVE ALLOWED GROUND NO. 2 & 4, THE GRI EVANCE RAISED VIDE GROUND NO.5 BECOME OTIOSE. 5.6 THE ADDITIONAL GROUND RAISED BY THE ASSESSEE RE LATES TO DISALLOWANCE OF COST OF ASSETS LEASED TO REPL AS TR ADING LOSS. SINCE WE HAVE ALLOWED GROUND NO.2 OF THE PRESENT APPEAL, ADD ITIONAL GROUND RAISED BY THE ASSESSEE BECOMES INFRUCTUOUS. ITA NO.1700/M/2000-A.Y.1996-97, REVENUES APPEAL: 6. THE SOLE GROUND IN THE REVENUES APPEAL RELATES TO THE DELETION OF THE ADDITION ON ACCOUNT OF BROKEN PERIOD INTEREST. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN INCOME TAX APPEAL NO.330 OF 2012. 6.1 WE HAVE CAREFULLY PERUSED THE ORDER OF THE HON BLE JURISDICTIONAL HIGH COURT (SUPRA). WE FIND THAT QUESTION B BEF ORE THE HONBLE COURT WAS: WHETHER THE ITAT WAS CORRECT IN LAW IN HOLDING TH AT THE BROKEN PERIOD INTEREST IS ALLOWABLE AS THE DEDUCTION, IN SPITE OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF CIT V S. VIJAYA BANK, 187 ITR 541 AND RAJASTHAN HIGH COURT DECISION IN THE CASE OF BANK OF RAJASTHAN, 316 ITR 391. ? I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 10 THE HONBLE COURT HELD AS UNDER: 6. EVEN AS FAR AS QUESTION (B) IS CONCERNED, WE FI ND NO INFIRMITY IN THE ORDERS PASSED BY THE CIT (APPEALS) OR THE IT AT. IN DECIDING THIS ISSUE, CIT (APPEALS) AND THE ITAT HAVE MERELY FOLLOWED THE JUDGMENT OF THIS COURT IN THE CASE OF AMERICAN EXPR ESS INTERNATIONAL BANKING CORPORATION V/S. COMMISSIONER OF INCOME TAX, REPORTED IN (2002) 258 ITR 601. ON GOING THRO UGH THE JUDGMENT, WE FIND THAT QUESTION (B) REPRODUCED ABOV E AND PROJECTED AS SUBSTANTIAL BY MR. SURESH KUMAR IS SQU ARELY ANSWERED BY THE JUDGMENT OF THIS COURT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION (SUPRA). IN VIEW THEREOF, WE DO NOT FIND THAT EVEN QUESTION (B) GIVE S RISE TO ANY SUBSTANTIAL QUESTION OF LAW THAT NEEDS TO BE ANSWE RED BY THIS COURT. 6.2 AS NO DISTINGUISHING FACT/DECISION HAS BEEN BRO UGHT ON RECORD BY LD. DR, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), THIS GROUND OF T HE APPEAL IS DISMISSED. 6.3 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.2797/MUM/2000-A.Y. 1997-98-ASSESSEES APPEAL : 7. GROUND NO.1 RELATES TO THE DISALLOWANCE OF GUEST HOUSE EXPENSES . AN IDENTICAL ISSUES HAS BEEN DECIDED BY US AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE IN ITA NO.1544/M/2000 VIDE GROUND NO.1. RESPECTFULLY FOLLOWING OUR OWN DECISION, GROUND N O.1 IS DISMISSED. 7.1 GROUND NO.2 RELATES TO DISALLOWANCE OF DEPRECIA TION ON ASSETS LEASED TO REPL. SIMILAR ISSUE HAS BEEN DECIDED QU A GROUND NO.2 IN ITA NO.1544/M/2000. FOR SIMILAR REASONS GROUND NO.2 IS ALLOWED. I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 11 7.2 GROUND NO.3 RELATES TO THE DISALLOWANCE OF DEPR ECIATION ON LEASED ASSETS TO REPL ENGINEERING LTD. SIMILAR ISSUE WAS CONSIDERED BY US IN ITA NO.1544/MUM/2000, WHEREIN WE HAVE HELD THAT THI S GRIEVANCE OF THE ASSESSEE BECOMES OTIOSE, QUA OUR DECISION ON GROUND NO.2. 7.3 GROUND NO.4 RELATES TO THE DISALLOWANCE OF DE PRECIATION ON LEASED ASSETS TO AEL. IDENTICAL ISSUE WAS DECIDED IN ITA NO.1544/M/2000, WHEREIN WE HAVE FOLLOWED THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF ICDS LTD., 350 ITR 527(SC). FOR SIMILAR RE ASONS ON SIMILAR SET OF FACTS GROUND NO.4 IS ALLOWED. 8. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEC OME OTIOSE DUE TO OUR FINDING GIVEN FOR GROUND NO.2 OF THIS APPEAL. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.2790/MUM/2000-A.Y. 97-98, REVENUES APPEAL: 10. THE FIRST GROUND RELATES TO THE DELETION OF THE ADDITION ON ACCOUNT OF BROKEN PERIOD INTEREST. AN IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA NO.1700/M/2000, WHEREIN WE HAVE FOLLOWED THE D ECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. FOR SIMILAR REASONS THIS GROUND IS DISMISSED. 11. GROUND NO.2 RELATES TO THE DISALLOWANCE OF INTE REST ATTRIBUTABLE TO EARN TAX FREE INCOME. 11.1 LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NO TICE THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2001-0 2 TO A.Y 2005-06 IN I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 12 ITA NO.330. 354, 328, 329, 335/M/2012. IT IS THE SAY OF THE LD. COUNSEL THAT IN ALL THESE YEARS THE TRIBUNAL HAS DECIDED TH IS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 11.2 CONSIDERING THE FACT THAT IN EARLIER YEARS THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST TH E REVENUE, WE DO NOT FIND ANY REASON WHY SAME SHOULD NOT BE ALLOWED FOR THE YEAR UNDER CONSIDERATION. IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESSEE OWN CASE IN EARLIER YEARS WE CONFIRM THE FINDING OF LD. CIT(A) AND DISMISS GROUND NO.2 OF REVENUES APPEAL. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.341/MUM/2003-A.Y. 1998-99- ASSESSEES APPEA L: 13. THE SOLE DISALLOWANCE IS IN RESPECT OF DEPRECI ATION ON LEASED ASSETS TO REPL. THIS ISSUE HAS BEEN CONSIDERED BY US IN I TA NO.1544/MUM/2000 VIDE GROUND NO.2 OF THAT APPEAL. RESPECTFULLY FOLLOWING OUR OWN DECISION FOR A.Y 1996-97, WE DIRE CT THE AO TO DELETE THE DISALLOWANCE OF DEPRECIATION OF LEASED ASSETS T O REPL. GROUND NO.1 IS ACCORDINGLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.664/MUM/2003- A.Y. 1998-99-REVENUES APPEAL: 15. THE FIRST GRIEVANCE OF THE REVENUE RELATES TO T HE DELETION OF THE ADDITION OF BROKEN PERIOD INTEREST. THIS ISSUE HAS BEEN DECIDED BY US IN I .T.A. NO. 1544/MUM/2000 &OTHERS HDFC BANK LTD. 13 FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN I TA NO.1700/M/2000. FOLLOWING OUR OWN FINDING, GROUND NO.1 IS DISMISSED . 16. GROUND NO.2 RELATES TO THE DELETION OF THE ADDI TION ON ACCOUNT OF INTEREST EXPENDITURE ATTRIBUTABLE TO EARN TAX FREE INCOME. SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE IN ITA NO.2790/M/2000 FOR A.Y 1997-98 VIDE GROUND NO.2 OF THAT APPEAL. FOLLOWING THE FINDING FOR A.Y 1997-98 THIS GROUND I S DISMISSED. 17. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 18 TH OF FEB. 2015. SD/- SD/- (AMIT SHUKLA ) (N.K. BILLAIYA) !' /JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; 4! DATED : 18.02.2015 . . ./ VM , SR. PS !& !& !& !& 0 00 0 .% .% .% .% 5)% 5)% 5)% 5)% / COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 .% , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. !& !& !& !& / BY ORDER, /% .% //TRUE COPY// ; ;; ; / < < < < + + + + (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI