The ACIT,GNR Circle, Gandhinagar V. Dena Gujarat Gramin Bank, Gandhinagar

ITA 1664/AHD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1243 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. ITA NO. 1664/AHD/2012 2009-10 DY.CIT GANDHINAGAR CIRCLE GANDHINAGAR (REVENUE) DENA GUJARAT GRAMIN BANK BALWANTRAI BHAVAN JILLA PANCHAYAT BHAVAN SECTOR-17 GANDHINAGAR PAN: AAAJD 0596Q (ASSESSEE) 2. 57/AHD/2014 2010-11 ASSESSEE ACIT GANDHINAGAR CIRCLE 3. 946/AHD/2015 2011-12 ASSESSEE JCIT GANDHINAGAR CIRCLE REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : SHRI JIGAR M.PATEL, AR / DATE OF HEARING 16/11/2015 / DATE OF PRONOUNCEMENT 23/11/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS BUNCH OF THREE APPEALS; ONE BY THE REVENUE AND THE OTHER TWO BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE O RDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR (CIT(A) IN SHORT) PERTAINING TO ASSESSMENT YEARS (AYS) 2009-1 0, 2010-11 AND ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 2 - 2011-12 DATED 11/05/2012, 01/11/2013 & 27/02/2015 RESPECTIVELY. SINCE COMMON ISSUES AND FACTS ARE INVOLVED IN THESE APPEA LS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .1664/AHD/2012 FOR AY 2009-10. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITIONS MADE BY THE AO AND ALLOWING EXPENSES AMOUNTING TO RS.1,47,87,955/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNE D CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE A BOVE EXTENT. 2.1. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS A GAINST DELETION OF DISALLOWANCE OF RS.1,47,87,955/-. BRIEFLY STATED FA CTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 21/11/2011, THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLOWED THE CLAIM OF EXPEN DITURE OF PREMIUM PAID ON SLR INVESTMENTS TO THE TUNE OF RS.1,47,87,9 55/- TREATING THE SAME AS CAPITAL NATURE. THE ASSESSEE BEING AGGRIEV ED BY THE ASSESSMENT ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 3 - ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS AND FOLLOWING THE JUDGEMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF MADRAS INDUSTRIAL INVESTMEN T CORP.LTD. VS. CIT 225 ITR 802 (SC) AND ALSO FOLLOWING HIS EARLIER DEC ISION PASSED IN ASSESSEES OWN CASE FOR AY 2008-09, DELETED THE DIS ALLOWANCE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE RE VENUE IS APPEAL BEFORE US. 3. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECIS ION OF THE COORDINATE BENCH (ITT A BENCH AHMEDABAD) IN ASSESSEES OWN C ASE IN ITA NO.2059/AHD/2011 FOR AY 2008-09, DATED 05/06/2015. 3.1. THE LD.SR.DR DID NOT CONTROVERT THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE, HOWEVER HE SUPPORTED THE ASSESSME NT ORDER AND REASONING OF THE AO FOR MAKING DISALLOWANCE OF EXPE NDITURE. 4. WE HAVE HEARD THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W AS WELL AS THE JUDGEMENT/DECISION RELIED UPON BY THE LD.COUNSEL FO R THE ASSESSEE. WE FIND THAT THE LD.CIT(A) HAD DELETED THE DISALLOWANC E BY OBSERVING AS UNDER:- ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 4 - 2.3. I HAVE CAREFULLY CONSIDERED THE REASONING OF THE AO JUSTIFYING THE DISALLOWANCE MADE BY HIM AND THE SUB MISSIONS MADE BY THE APPELLANT IN THIS REGARD. SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER ASSESSMENT YEARS INCLUDING 2008- 09; WHEREIN IT WAS HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE REASONING OF THE A O JUSTIFYING THE DISALLOWANCE MADE BY HIM AND THE SUBMISSIONS MA DE BY THE APPELLANT IN THIS REGARD. THE SAME ISSUE WAS DECID ED IN FAVOUR OF ASSESSEE AND I AGREE WITH THE ASSESSEE THAT AMOR TIZATION OF PREMIUM IS ALLOWABLE IN ACCOUNTING PRACTICE. AS PE R THE RBIS GUIDELINES THE AMORTIZATION OF PREMIUM IN THE CASE OF ASSETS TREATED AS HTM (HELD TO MATURITY) (INVESTMENTS) IS TO BE AMORTIZED DIVIDED EQUALLY OVER THE PERIOD WHICH IS REMAINING FOR THEIR MATURITY. THIS IS WHAT CORRECTLY THE ASSESSE E HAS CLAIMED. AMORTIZATION OF EXPENSES HAS BEEN RECOGNIZED IN SIM ILAR CIRCUMSTANCES IN THE CASE OF PREMIUM ON DEBENTURES, WHICH ALSO ARE HELD AS INVESTMENTS IN THE DIFFERENT JUDGMENTS INCLUDING THAT OF HONBLE SUPREME COURT IN CASE OF MADRAS INDUSTR IAL INVESTMENT CORP.LTD. V/S. CIT (SUPRA) RELIED UPON BY THE APPELLANT. THE CASE OF THE ASSESSEE IS SQUARELY CO VERED AND THE AMORTIZATION OF THE EXPENSES OVER THE YEARS TILL MA TURITY OF THE SECURITIES IS ALLOWABLE. THE GROUND OF APPEAL IS ALLOWED. THE FACTS OF THE ISSUE REMAINING THE SAME, I DO NOT FIND ANY REASON TO DEVIATE FROM THE DECISION TAKEN BY ME IN THE EAR LIER ASSESSMENT YEAR I.E. AY 2008-09 IN THE CASE OF THE ASSESSEE. THEREFORE, THE GROUND OF APPEAL IS ALLOWED. THE AO IS DIRECTED TO VERIFY THE CALCULATION OF AMORTIZATION OVER THE YEARS TILL MAT URITY WHILE GIVING THE APPEAL EFFECT. 4.1. THE REVENUE HAD PREFERRED AN APPEAL AGAINST TH E ABOVEMENTIONED DECISION OF THE LD.CIT(A) PERTAINING TO AY 2008-09 AND THE COORDINATE ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 5 - BENCH (ITAT A BENCH AHMEDABAD) IN ITA NO.2509/AH D/2011(SUPRA) HAS DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE BY OBS ERVING AS UNDER:- 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE ARE OF THE VIEW THAT AMORTIZATION OF PRE MIUM IS ALLOWABLE IN ACCOUNTING PRACTICE. AS PER RBIS GU IDELINES, AMORTIZATION OF PREMIUM IN CASE OF ASSETS TREATED A S HTM (HELD TO MATURITY) (INVESTMENTS) IS TO BE AMORTIZED DIVIDED EQUALLY OVER THE PERIOD WHICH IS REMAINING FOR THEIR MATURITY. SAME HAS BEEN DONE BY ASSESSEE. AMORTIZATION OF EXPENSES HAS BEEN REC OGNIZED IN SIMILAR CIRCUMSTANCES IN CASE OF PREMIUM OF DEBENTU RES, WHICH WAS ALSO HELD AS INVESTMENTS IN DIFFERENT JUDGEMENT S INCLUDING THAT OF HONBLE SUPREME COURT IN CASE OF MADRAS INDUSTRI AL INVESTMENT CORP.LTD. VS. CIT(A) 225 ITR 802 (SC) RELIED BY ASS ESSEE. IN VIEW OF THIS, CIT(A) ALLOWED THE CLAIM OF ASSESSEE. THE ORDER OF CIT(A) IS ALSO SUPPORTED BY THE DECISION OF ITAT, PUNE B BENCH IN ITA NO.712/PN/2013 FOR AY 2009-10 IN CASE OF THE AHMEDN AGAR MERCHANTS CO-OP. BANK LTD. VS. ACIT. IN VIEW OF AB OVE DECISION, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE DISALLOWANCE OF RS.1,30,19,855/- MADE O N ACCOUNT OF EXPENSES BEING PREMIUM PAID ON SLR (STATUTORY LIQUI DITY RATIO) INVESTMENTS. SAME IS UPHELD. 4.2. SINCE THERE IS NO CHANGE INTO THE FACTS AND CI RCUMSTANCES OF THE CASE, THEREFORE RESPECTFULLY FOLLOWING THE AFORESAI D JUDGEMENT OF THE HONBLE APEX COURT AND DECISION OF THE TRIBUNAL, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) , SAME IS HEREBY UPHELD. THUS, THE APPEAL OF THE REVENUE IS REJE CTED. ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 6 - 5. NOW WE TAKE UP THE ASSESSEES APPEALS IN ITA NO. 57/AHD/2014 AND 946/AHD/2015 FOR AY 2010-11 & 2011-12 RESPECTIV ELY. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL S:- FOR AY 2010-11 THE APPELLANT RESPECTFULLY SUBMITS AS UNDER: 1. THAT THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.1,67,26,323/-, BE ING THE APPELLANTS CLAIM FOR DEDUCTION IN RESPECT OF AMORT IZATION OF PREMIUM ON INVESTMENTS, TREATING THE SAME AS EXPEND ITURE OF CAPITAL NATURE, NOT ALLOWABLE UNDER THE I.T. ACT. THE LEARNED CIT(APPEALS) OUGHT TO HAVE ALLOWED THE APPELLANTS CLAIM, IN VIEW OF THE FACT THAT THE IDENTICAL ISSUE IN AY 2007-08 TO AY 2009-10 WAS DECIDED IN FAVOUR OF THE APPELLANT BY H IS LEARNED PREDECESSOR, WHO HAD RESPECTFULLY FOLLOWING THE RAT IO AS LAID DOWN IN THE JUDICIAL PRONOUNCEMENTS OF THE HONBLE SUPRE ME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORP. LTD. V/S . CIT 225 ITR 802 AND CIT V/S. JAGATJIT INDUSTRIES LTD. 287 ITR 4 6 (DEL) ALLOWED THE APPEALS ON THIS POINT. THE APPELLANT REQUESTS THAT LEAVE BE GRANTED TO ADD , ALTER, AMEND OR WITHDRAW ANY GROUND OF APPEAL ON OR BEFORE FINAL HE ARING OF THE APPEAL. FOR AY 2011-12 THE APPELLANT RESPECTFULLY SUBMITS AS UNDER: 1. THAT THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.1,71,50,992/-, BE ING THE APPELLANTS CLAIM FOR DEDUCTION IN RESPECT OF AMORT IZATION OF PREMIUM ON INVESTMENTS, TREATING THE SAME AS EXPEND ITURE OF CAPITAL NATURE, NOT ALLOWABLE UNDER THE I.T. ACT. ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 7 - THE LEARNED CIT(APPEALS) OUGHT TO HAVE ALLOWED THE APPELLANTS CLAIM, IN VIEW OF THE FACT THAT THE IDENTICAL ISSUE IN AY 2007-08 TO AY 2009-10 WAS DECIDED IN FAVOUR OF THE APPELLANT BY H IS LEARNED PREDECESSOR, WHO HAD RESPECTFULLY FOLLOWING THE RAT IO AS LAID DOWN IN THE JUDICIAL PRONOUNCEMENTS OF THE HONBLE SUPRE ME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORP.LTD. V/S. CIT 225 ITR 802 AND CIT V/S. JAGATJIT INDUSTRIES LTD. 287 ITR 4 6 (DEL) ALLOWED THE APPEALS ON THIS POINT. THE LEARNED CIT(APPEALS) ALSO FAILED TO APPRECIATE THE MERITS OF THE APPELLANTS SUBMISSIONS THAT THE APPELLANTS CASE W AS SQUARELY COVERED BY THE FOLLOWING ITAT DECISIONS WHICH HAVE DIRECTLY HELD THAT PREMIUM ON AMORTIZATION OF INVESTMENTS IN THE CASE OF BANKS IS ALLOWABLE AS REVENUE EXPENDITURE. I. M/S.KRISHNA GRAMEEN BANK, GULBARGA VS. ADDL.CIT (I TA 146/BANGALORE/2011) II. NAGAR URBAN CO-OPERATIVE BANK LTD., AHMEDNAGAR VS. ADDL.CIT (ITA 711/PUNE/2013) III. ACIT, NASIK VS. OZER MERCHANT CO-OPERATIVE BANK LTD . [41 TAXMAN 110 (PUNE)] IT IS INDEED UNFORTUNATE THAT THE LEARNED CIT(APPEA LS) DID NOT EVEN DISCUSS IN HIS APPELLATE ORDER AS TO WHY HE CHOSE N OT TO FOLLOW THE DIRECTLY BINDING ITAT DECISIONS ON THE VERY POINT U NDER CONSIDERATION BEFORE HIM. THE APPELLANT REQUESTS THAT LEAVE BE GRANTED TO ADD , ALTER, AMEND OR WITHDRAW ANY GROUND OF APPEAL ON OR BEFORE FINAL HE ARING OF THE APPEAL. 6. THE ONLY EFFECTIVE ISSUE INVOLVED IN BOTH THE AS SESSEES APPEALS IS RELATED TO DISALLOWANCE OF PREMIUM EXPENDITURE CLAI MED ON STATUTORY LIQUIDITY OF SLR INVESTMENTS. THE ISSUE HAS ALREAD Y BEEN DECIDED BY US IN FAVOUR OF ASSESSEE (IN ITA NO.1664/AHD/2012 RE VENUES APPEAL FOR AY 2009-10-SUPRA), THEREFORE TAKING A CONSISTENT VI EW, WE HEREBY DIRECT ITA NO.1664/AHD/2012 (BY REVENUE) AND ITA NOS.57/AHD/2014 & ITA NO.946/AHD/15(BY ASSE SSEE) DCIT VS. DENA GUJARAT GRAMIN BANK AYS 2009-10, 2010-11, 2011-12 RESPECTIVELY - 8 - THE AO TO DELETE THE DISALLOWANCE AND ALLOW DEDUCTI ON OF EXPENDITURE CLAIMED BY THE ASSESSEE. THUS, ASSESSEES APPEALS ARE ALLOWED FOR AYS 2010-11 & 2011-12. 7. IN THE COMBINED RESULT, REVENUES APPEAL FOR AY 2009-10 IS DISMISSED, WHEREAS ASSESSEES APPEALS FOR AYS 2010- 11 & 2011-12 ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 23 RD DAY OF NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 11 /2015 &.. , .../ T.C. NAIR, SR. PS !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. () *+ / THE APPELLANT 2. ,*+ / THE RESPONDENT. 3. -.-/0 1 / CONCERNED CIT 4. 1 ( () ) / THE CIT(A)-GANDHINAGAR 5. 23 /0 , () (/0 , (. / DR, ITAT, AHMEDABAD 6. 356 7 / GUARD FILE. / BY ORDER, ,2) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD