UNION BANK OF INDIA, MUMBAI V. ADDL CIT LTU, MUMBAI

ITA 1627/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4403 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KEMWAL
• Keywords: Opportunity of being heard; Rule of consistency; Retrospective amendment; Reassessment proceedings
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2142/MUM/2014 ASSESSMENT YEAR: 2010-11 DCIT LTU, CENTRE-1, 29 TH FLOOR, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI-400005. VS. M/S UNION BANK OF INDIA, 239, VIDHAN BHAVAN MARG, NARIMAN POINT, MUMBAI-400021. PAN: AAACU0564G (APPELLANT) (RESPONDENT) ITA NO.1627/MUM/2014 ASSESSMENT YEAR: 2010-11 M/S UNION BANK OF INDIA, 239, VIDHAN BHAVAN MARG, NARIMAN POINT, MUMBAI-400021. PAN: AAACU0564G VS. DCIT LTU, CENTRE-1, 29 TH FLOOR, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI-400005. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.S. KEMWAL ( DR) ASSESSEE BY : SHRI C. NARESH DATE OF HEARING : 01.12.2015 DATE OF PRONOUNCEMENT : 08.01.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO CROSS APPEALS ARE DIRECTED AGAINST THE OR DER DATED 18.12.2013 PASSED BY CIT(A)-24, MUMBAI WHICH ARE RELATED TO ASSESSMENT Y EAR(AY) 2010-11. THE ISSUE RAISED IN APPEALS IN RESPECT OF FOLLOWING GROUNDS: 2. THE ASSESSEE RAISED THE FOLLOWING GROUND IN ITS APP EAL:- 2 ITA NOS. 2142 & 1627/M/2014 M/S UNION BANK OF INDIA (I) DISALLOWANCE MADE U/S 14A. (II) RESTRICTING THE DEDUCTION CLAIMED U/S 36(1)(VIII). 3. THE REVENUE IS IN APPEAL IN RESPECT OF FOLLOWING GR OUNDS: (I) BAD-DEBTS WRITTEN OFF. (II) ALLOWING DEDUCTION U/S 36(1)(VIII). (III) DEDUCTION CLAIMED U/S 36(1)(VIIA). (IV) DELETION OF COMPUTATION OF BOOK PROFIT U/S 115JB. (V) ABOUT THE DELETION OF ADDITION U/S 14A. 4. THE BRIEF FACT OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC SECTOR BANK AND FILED ITS RETURN OF INCOME ON 29.09.2010 DECLARING TOTAL INCO ME OF RS. 1054,85,28,225/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) AND WHILE MAKING COMPUTATION, THE ASSESSING OFFICER (AO) MADE VARIOUS ADDITION UNDER THE DIFFERENT HEAD VIDE ASSESSMENT ORDER DATED 18.02.2013, AGAINST THE ADDI TION MADE IN THE ASSESSMENT ORDER DATED 18.02.2013, THE ASSESSEE-BANK FILED AN APPEAL BEFORE THE CIT(A) WHEREIN THE APPELLATE AUTHORITY GRANTED PARTIAL RELIEF TO THE B ANK. 5. AGGRIEVED BY THE ORDER OF CIT(A) BOTH THE PARTIES FILED APPEAL BEFORE US IN RESPECT OF THE ISSUES/ADDITION DECIDED AGAINST EACH OF THEM A S STATED ABOVE. 6. FIRST WE SHALL TAKE UP THE APPEAL FILED BY THE ASSE SSEE BEING APPEAL NO. 1627/MUM/2014, WHEREIN THE ASSESSEE HAS ASSAILED TH E ORDER OF CIT(A) IN CONFIRMING THE EXPENDITURE OF RS. 57,49,13,477/- UNDER RULE 8D . 7. THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE HAS ARGUED THAT THE SIMILAR ISSUE HAS ALREADY BEEN REMANDED TO THE FILE OF AO IN THE ASSESSEES OWN CASE FOR AY 2008- 09,IN ITA NO. 4678/MUM/2013 WHEREIN IT WAS OBSERVIN G AS UNDER: THUS, WE NOTICE THAT THE AO HAS PROCEEDED TO COMPU TE THE DISALLOWANCE AS PER RULE 8D OF IT RULES WITHOUT SATISFYING HIMSELF THAT THE CLAIM OF THE ASSESSEE WAS NOT CORRECT BY HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. HENCE, THE DISALLOWANCE COMPUTED BY THE AO AND THAT CONFIRMED BY LD CIT(A) WAS NOT IN ACCORDANCE WITH THE MANDATE OF LAW. 11. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT T HIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. AC CORDINGLY, WE SET ASIDE THE ORDER OF LD CIT (A) ON THIS ISSUE AND RESTORE THE S AME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH. THE ASS ESSEE IS FREE TO URGE ALL THE CONTENTIONS, WHICH IT MAY DEEM IT NECESSARY BEFORE THE AO IN RESPECT OF THIS ISSUE. AFTER AFFORDING NECESSARY OPPORTUNITY OF BEI NG HEARD, THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 8. WE RESPECTFULLY FOLLOWING THE DIRECTION OF CO-ORDIN ATE BENCH ALSO REMAND THIS ISSUE TO THE FILE OF AO TO CONSIDER THIS ISSUE IN ACCORDANCE WITH THE DIRECTION IN ITA NO. 4678/MUM/2013. 3 ITA NOS. 2142 & 1627/M/2014 M/S UNION BANK OF INDIA 9. THE NEXT ISSUE FOR OUR CONSIDERATION IS CLAIM/DEDUC TION U/S 36(1) (VIII) OF I.T.ACT. 10. THE AR OF THE ASSESSEE HAS ARGUED THAT SIMILAR ISSU E WAS RAISED BY THE ASSESSEE-BANK IN RESPECT OF AY-2008-09 AND THE SAME WAS RESTORED TO THE FILE OF AO WITH THE FOLLOWING DIRECTION IN ITA NO. 4678/MUM/2013. HENCE, IN OUR VIEW, THE WORKINGS GIVEN BY THE ASSE SSEE, AO AND LD CIT(A) ON APPROXIMATE BASIS CANNOT BE APPROVED. ACCORDINGLY, IN OUR VIEW, THIS ISSUE ALSO REQUIRES RECONSIDERATION AT THE END OF THE ASSESSIN G OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE AO FOR HIS RECONSIDERATION. THE ASSESSEE IS DIRECTED TO CULL O UT THE INTEREST INCOME ACTUALLY EARNED FROM OUT OF ELIGIBLE ADVANCES. FROM THE GROSS INTER EST INCOME SO CULLED OUT, THE ASSESSEE IS DIRECTED TO DEDUCT THE COST OF FUNDS AND EXPENSE S ON A REASONABLE BASIS AND THEN WORK OUT THE DEDUCTION U/S 36(1)(VIII) OF THE ACT. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE EXPLANATIONS AND INFORMATION TO THE ASSESSI NG OFFICER IN ORDER TO ENABLE HIM TO SATISFY HIMSELF WITH THE WORKINGS FURNISHED BY THE ASSESSEE. ACCORDINGLY, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE ASSESSING OFFICER MAY TAKE APPROPRIATE DECISION ON THIS ISSUE IN ACCORDANCE WITH THE LAW. 11. HENCE KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY, THIS ISSUE IS ALSO RESTORED TO THE FILE OF AO TO CONSIDER IN ACCORDANCE WITH THE DIREC TION CONTAINED IN ITA NO. 4678/MUM/2013. 12. NOW WE SHALL TAKE UP THE GROUNDS RAISED IN ITA NO. 2142/ M/ 2014, FILED BY THE REVENUE, THE REVENUE HAS RAISED FIVE ISSUES IN ITS APPEAL. THE FIRST GROUND/ISSUE IS RELATING TO ALLOWING DEDU CTION ON ACCOUNT OF BAD-DEBTS WRITTEN OFF, THE AR OF THE ASSESSEE HAS ARGUED THAT IN ASSESSEES OWN CASE IN AY- 2007-08 THE SIMILAR ISSUE WAS RAISED BY THE REVENUE AND THE SAME WAS DECIDED BY THIS TRIBUNAL AGAINST THE REVENUE, HENCE, THIS GROUND IS SQUARELY COVERED BY THE FINDING GIVEN IN PARA 17 OF THE TRIBUNAL ORDER IN ITA NO. 4 842/MUM/2013, WHEREIN IT IS OBSERVED: WE NOTICE THAT THE TRIBUNAL HAS ALLOWED IDENTICAL CLAIM IN THE ASSESSEE'S OWN CASE IN AY 2007-08, VIDE ITS ORDER DATED 18.1.2003 PASSED IN ITA NOS.6631/MUM/2010 & 6349/MUM/2010. WE NOTICE THAT T HE TRIBUNAL HAS FOLLOWED THE DECISION RENDERED BY THE HON'BLE SUPRE ME COURT IN THE CASE OF CATHOLIC SYRIAN BANK (343 ITR 270) AND ALSO IN THE CASE OF CIT VS. KARNATAKA BANK LTD (2012)(349 ITR 705). WE ALSO NOTICE THAT T HE NEW EXPLANATION 2, WHICH COVERS BOTH RURAL AND NON-RURAL ADVANCES, HAS BEEN INSERTED UNDER SEC. 36(1)(VII) OF THE ACT BY THE FINANCE ACT, 2013 W.E. F. 1.4.2014 ONLY AND HENCE IT CANNOT HAVE RETROSPECTIVE EFFECT, SINCE IT AFFECTS SUBSTANTIVE RIGHTS OF THE ASSESSEES. ACCORDINGLY, WE ARE OF THE VIEW THAT THE RE IS NO REASON TO INTERFERE WITH THE DECISION OF LD CIT(A) ON THIS ISSUE. 13. HENCE, WE ARE OF THE OPINION THAT THE SIMILAR RATIO ARE APPLICABLE FOR THIS ORDER AND THE SAME IS SQUARELY COVERED BY THE FINDING OF ITA 4842/M/13 FURTHER KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY, THIS ISSUE IS DE CIDED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE . 4 ITA NOS. 2142 & 1627/M/2014 M/S UNION BANK OF INDIA 14. THE NEXT ISSUE FOR OUR CONSIDERATION IS DEDUCTION U /S 36(1)(VIII). AS WE HAVE OBSERVED IN PARA(S) 10-11 ABOVE IN APPEAL OF ASSESSEE-BANK A ND THIS ISSUE IS ALREADY RESTORED TO THE FILE OF AO. 15. THE NEXT GROUND FOR OUR CONSIDERATION IS ALLOWING D EDUCTION U/S 36(1)(VIIA) OF THE ACT. THE AR OF THE ASSESSEE HAS ARGUED THAT IDENTIC AL ISSUE WAS CONSIDERED BY THIS COORDINATE BENCH OF AHMADABAD TRIBUNAL IN ITA NO. 7 79/AHD/2011 CONSIDERING THE SIMILAR ISSUE HAS HELD AS UNDER: A READING OF SECTION 36(1)(VIIA) WILL SHOW THAT TH E DISTINCTION IS VERY CLEAR THAT THE PROVISION IS REQUIRED TO BE MADE BUT NEED NOT B E IN THE SAME PREVIOUS YEAR FOR WHICH THE DEDUCTION UNDER SECTION 36(1)(VIIA) I S CLAIMED, SINCE THE WORDS IN THE ACCOUNTS FOR THE PREVIOUS YEAR DOES NOT APPEAR IN THE SAID SECTION, WHEREAS, IT SPECIFICALLY APPEARS IN RELATION TO THE DEDUCTION UNDER SECTION 36(1)(VIIA). THUS, IT IS CLEAR THAT IT IS THE INTEN TION OF THE LEGISLATURE THAT THE PROVISION SHOULD BE MADE SPECIFICALLY FOR THIS PURP OSE BUT DID NOT HOWEVER REQUIRE THAT THE PROVISION NEEDS TO BE MADE ONLY IN THE RELEVANT PREVIOUS YEAR AS COULD BE CLEARLY SEEN ON COMPARATIVE READING OF SECTION 36(1)(VII) AND 36(1)(VIIA). IT IS CLEAR THAT THE PROVISIONS FOR BAD AND DOUBTF UL DEBTS SHOULD BE ALLOWED UNDER SECTION 36(1)(VIIA), TO THE EXTENT OF PROVISI ON MADE AND AVAILABLE IN THE BOOKS OF ACCOUNT, WHETHER MADE IN THE CURRENT PREVI OUS YEAR OR IN THE PRECEDING PREVIOUS YEARS AS NONE OF THE LOWER AUTHO RITIES I.E. EITHER ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) HAS EXAMINED THE ISSUE UNDER CONSIDERATION FROM THIS ANGEL AND AS THE ENTIRE FAC TS ARE NOT AVAILABLE FOR US TO ADJUDICATE THE ISSUE. IN THE INTEREST OF SUBSTANTIA L JUSTICE, THE ORDERS OF THE LOWER AUTHORITIES ARE TO BE SET ASIDE AND THE MATTER IS R EMANDED BACK TO THE FILE OF ASSESSING OFFICER. 16. HENCE, KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY , WE ALSO RESTORED THIS ISSUE TO THE FILE OF AO TO DECIDE THE SAME IN ACCORDANCE WITH TH E DIRECTION CONTAINED IN ORDER DATED 30/05/2014 IN ITA NO. 779/AHD/2011. 17. THE NEXT GROUND FOR OUR CONSIDERATION IS IN RESPECT OF APPLICABILITY OF PROVISION OF SECTION 115JB OF THE ACT. THE AR OF THE ASSEESSEE H AS ARGUED THAT IN ASSESSEES OWN CASE FOR AY 2007-08, THE SAME ISSUE WAS RAISED. 18. THE LD. AR FOR THE REVENUE HAS DRAWN OUR ATTENTION TO THE PARA 21 AND 22 OF THE ORDER OF THIS TRIBUNAL IN ITA NO. 6631 AND 6349/M/2010, WHICH ARE REPRODUCED HERE; 21. WE FIND THAT IN THE CASE OF KURUNG THAI BANK P CL) IN ITA NO. 3390/M/90 FOR A.Y. 2004-05 IT HAS BEEN HELD AS FOLL OWS: IN VIEW OF THE ABOVE DISCUSSIONS, AND FOLLOWING TH E VIEW TAKEN BY A COORDINATE BENCH IN THE CASE OF MAHARASHTRA STATE E LECTRICITY BOARD VS JCIT (82 ITD 422), WHICH HOLDS THAT PROVISIONS OF M AT CANNOT BE APPLIED TO ELECTRICITY COMPANIES FOR MUTUALLY SIMILAR REASO N WE UPHOLD THE PLEA OF THE ASSESSEE. THE PROVISIONS OF SEC. 115JB DO NOT A PPLY TO THE ASSESSEE, AND, AS SUCH, THE AO WAS IN ERROR IN CONCLUDING THA T INCOME HAD ESCAPED 5 ITA NOS. 2142 & 1627/M/2014 M/S UNION BANK OF INDIA ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE VERY I NITIATION OF REASSESSMENT PROCEEDINGS WAS BAD IN LAW, AND WE QUASH THE SAME. 22. THE DECISION OF THE LD. CIT(A) IS REVERSED AND WE HOLD THAT PROVISIONS OF SEC. 115JB CANNOT BE MADE APPLICABLE TO THE ASSESSE E. THIS GROUND OF THE ASSESSEE IS DISMISSED. 19. THUS, RESPECTFULLY FOLLOWING THE ORDER FOR EARLIER YEARS AND IN VIEW OF THE PRINCIPLE OF CONSISTENCY THIS GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE. 20. THE NEXT GROUND FOR OUR CONSIDERATION IS IN RESPECT OF DELETION OF ADDITION U/S 14A OF I.T. ACT. 21. AS WE HAVE ALREADY RESTORED THIS ISSUE TO THE FILE OF AO IN CONNECTED AAPEAL FILED BY ASSESSEE VIDE APPEAL NO. 1627/MUM/2014, IN PARA 8 O F THIS ORDER WITH THE DIRECTION TO THE AO TO CONSIDER THE SAME IN ACCORDANCE WITH T HE DIRECTION IN ITA NO. 4678/M/2013, HENCE THIS GROUND IS ALLOWED. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH JANUARY 2016. SD/- SD/- (N.K.BILLAIYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 08/01/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/