NKGSB CO. OPERATIVE BANK LTD, MUMBAI V. ADDL CIT RG 1(3), MUMBAI

ITA 2406/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87922 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: RAJIV WAGLAY
• Keywords: Depreciation; Source of fund; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.2406/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) NKGSB CO-OPERATIVE BANK LIMITED, 361, LAXMI SADAN, V P ROAD, GIRGAON, MUMBAI-400004 / VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 1(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ !' ./PAN/GIR NO. :AAACT5544P # / ASSESSEE BY: SHRI RAJIV WAGLAY $ # / REVENUE BY:: SHRI PREMANAND J % & $ ' ( / DATE OF HEARING : 7.1.2015 )* $ ' ( / DATE OF PRONOUNCEMENT : 7.1.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 01- 02-2013 PASSED BY LD CIT(A)-2, MUMBAI AND IT RELATE S TO THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DISALLOWING THE CLAIM OF RS.4.29 CRORES HOLDING THE SAME AS CAP ITAL IN NATURE. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, HAS PURCHASED ANOTHER BANK NAMED SHRI SHAHU CO-OP BANK LTD (SSCBL) AT A C OST OF RS.6.57 CRORES. IN THE COMPUTATION OF INCOME, THE ASSESSEE CLAIMED A DEDUCTION ITA NO.2406/MUM/2013 2 OF RS.4.29 CRORES. ACCORDING TO LD A.R, THE SAID A MOUNT REPRESENTS EXCESS OF LIABILITIES OVER THE ASSETS. ACCORDING TO LD A. R, THE ASSESSEE PURCHASED THE ABOVE SAID BANK AS PER THE DIRECTIONS GIVEN BY THE RESERVE BANK OF INDIA AND AS PER THE RBI DIRECTIONS, THE SAME CAN B E AMORTIZED OVER A PERIOD OF FIVE YEARS. HOWEVER, THE ASSESSEE TREATE D THE SAME AS MERGER EXPENDITURE AND ACCORDINGLY CLAIMED THE SAME AS RE VENUE EXPENDITURE. THE AO DISALLOWED THE SAID CLAIM AND THE LD CIT(A) ALSO CONFIRMED THE DIALLOWANCE BY HOLDING THAT THE EXCESS PAYMENT OF R S.4.29 CRORES IS A CAPITAL LOSS. SINCE IT WAS INCURRED FOR EXPANSION OF BRANCHES AND FOR CREATING NEW SOURCES OF INCOME, THE LD CIT(A) HELD THAT IT WAS A CAPITAL EXPENDITURE. THE LD CIT(A) ALSO HELD THAT THE DIRE CTION OF RBI TO AMORTIZE THE LOSS IN FIVE YEARS PERIOD WILL ALSO NOT HELP TH E ASSESSEE, SINCE THE DEDUCTION OF THE SAME HAS TO BE EXAMINED IN ACCORDA NCE WITH THE PROVISIONS OF THE INCOME TAX ACT. AGGRIEVED, THE A SSESSEE HAS FILED THIS APPEAL BEFORE US. 4. ON THIS ISSUE, WE ARE INCLINED TO AGREE WITH T HE DECISION TAKEN BY THE LD CIT(A). THE EXCESS OF THE LIABILITIES OVER THE ASSETS OF SSCBL BANK, IN OUR VIEW ALSO, CANNOT BE CONSIDERED AS MERGER E XPENDITURE FALLING UNDER REVENUE FIELD, SINCE IT IS NOT AN EXPENDITURE INCURRED BY THE ASSESSEE. HENCE, WE ARE OF THE VIEW THAT LD CIT(A) WAS JUSTIFIED IN DISALLOWING THE SAID CLAIM. 5. BEFORE US, THE ASSESSEE HAS FILED AN ADDITIONAL GRO UND AS PER WHICH IT IS CLAIMED THAT THE EXCESS OF THE LIABILITIES OV ER THE ASSETS OF SSCBL BANK ACTUALLY REPRESENTS INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION U/S 32(1)(II) OF THE ACT. THERE APPEARS TO BE SOME MER IT IN THE SAID CLAIM, SINCE NO PRUDENT BUSINESS MAN WOULD SHELL OUT MONEY IN EXCESS OF THE COST OF NET ASSET ACQUIRED BY HIM, UNLESS THERE IS SOME OTHER LONG TERM BENEFIT ATTACHED TO IT. ACCORDINGLY WE ADMIT THE A DDITIONAL GROUND, SINCE IT A LEGAL ISSUE AND DOES NOT REQUIRE CONSIDERATION OF ANY FRESH FACTS. ITA NO.2406/MUM/2013 3 ADMITTEDLY, IN THE ADDITIONAL GROUND, THE ASSESSEE IS RAISING A NEW CLAIM THAT WAS NOT CONSIDERED BY THE TAX AUTHORITIES. HEN CE, WE ARE OF THE VIEW THAT THIS NEW CLAIM REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS CLAIM BY DULY CONSIDERING THE SUBMISSIONS MADE AND INFORMATION FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7TH JAN, 2015. )* % + , - 7TH JAN, 2015 * $ .& / SD SD ( . . /I.P. BANSAL ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % & MUMBAI: 7TH JAN,2015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % 2' ( ) / THE CIT(A)- CONCERNED 4. % 2' / CIT CONCERNED 5. 6. 34 . '5 , ( 5 , % & / DR, ITAT, MUMBAI CONCERNED . 6 7 & / GUARD FILE. 8 % / BY ORDER, TRUE COPY 9 ! (ASSTT. REGISTRAR) ( 5 , % & /ITAT, MUMBAI