Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 9218 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-03-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
08-03-2016
Assessment Year
2004-2005
Appeal Filed On
30-01-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NOS: 577 & 691/AHD/2011 (ASSESSMENT YEAR: 2006-07) AXIS BANK LIMITES (FORMERLY KNOWN AS UTI BANK LTD.) TRISHUL, 3 RD FLOOR OPP SAMTHESHWAR TEMPLE LAW GARDEN ELLISBRIDGE, AHMEDABAD ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD V/S V/S ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD AXIS BANK LIMITES (FORMERLY KNOWN AS UTI BANK LTD.) TRISHUL, 3 RD FLOOR OPP SAMTHESHWAR TEMPLE LAW GARDEN ELLISBRIDGE, AHMEDABAD (APPELLANT) (RESPONDENT) ITA. NOS: 1015 & 1129/AHD/2011 (ASSESSMENT YEAR: 2007-08) AXIS BANK LIMITES (FORMERLY KNOWN AS UTI BANK LTD.) TRISHUL, 3 RD FLOOR OPP SAMTHESHWAR TEMPLE LAW GARDEN ELLISBRIDGE, AHMEDABAD ADDL. COMMISSIONER OF INCOME TAX RANGE-1, V/S V/S ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD AXIS BANK LIMITES (FORMERLY KNOWN AS UTI ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 2 AHMEDABAD BANK LTD.) TRISHUL, 3 RD FLOOR OPP SAMTHESHWAR TEMPLE LAW GARDEN ELLISBRIDGE, AHMEDABAD (APPELLANT) (RESPONDENT) ITA. NO: 250/AHD/2012 (ASSESSMENT YEAR: 2004-05) AXIS BANK LIMITES (FORMERLY KNOWN AS UTI BANK LTD.) TRISHUL, 3 RD FLOOR OPP SAMTHESHWAR TEMPLE LAW GARDEN ELLISBRIDGE, AHMEDABAD V/S ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD PAN: AAACU 2414K APPELLANT BY : SHRI ARVIND SONDE, AR RESPONDENT BY : SHRI R.I. PATEL, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 08 -03-201 6 DATE OF PRONOUNCEMENT : 15 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 577 & 691/AHD/2011 ARE CROSS APPEALS BY TH E ASSESSEE AND THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT( A)-VI, AHMEDABAD DATED 16.12.2010 PERTAINING TO A.Y. 2006-07, ITA NOS. 101 5 & 1129/AHD/2011 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE F OR ASSESSMENT YEAR 2007- 08 AND IN ITA NO. 250/AHD/2012 ASSESSEES APPEAL FO R A.Y. 2004-05. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 3 2. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPO SED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. AT THE VERY OUTSET, IT WAS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL THAT THE REVENUE IS IN APPEAL AGAINST THE DELETION OF THE DI SALLOWANCE OF RS. 19,82,420/- MADE ON ACCOUNT OF ANNUAL TECHNICAL SER VICES (ATS) FEES PAID TO INFOSYS. IT IS THE SAY OF THE LD. COUNSEL THAT T HE GRIEVANCE OF THE REVENUE CANNOT BE ENTERTAINED BECAUSE OF THE CIRCULAR OF TH E CBDT RESTRICTING THE REVENUE TO FILE APPEAL BELOW THE TAX EFFECT WHICH I S RS. 10 LAKHS. THE LD. D.R. FAIRLY CONCEDED TO THIS. 4. WE HAVE CAREFULLY GONE THROUGH THE GROUNDS OF APPEA L TAKEN BY THE REVENUE ADMITTEDLY THE TAX EFFECT ON THE DELETED AMOUNT IS LESS THAN RS. 10 LAKHS, THEREFORE, REVENUES APPEAL IS DISMISSED IN THE LIG HT OF THE CIRCULAR OF THE CBDT NO. 21/2015 DATED 10.12.2015. ITA NO. 577/AHD/2011 FOR A.Y. 2006-07. GROUND NO. 1 RELATES TO THE CLAIM OF DEPRECIATION O F RS. 313.34 LACS ON WIND ENERGY GENERATORS. 5. THIS ISSUE HAS BEEN CONSIDERED BY THE A.O AT PARA 4 OF HIS ASSESSMENT ORDER WHEREIN HE HAS FOLLOWED THE FINDINGS GIVEN IN THE A SSESSMENT ORDER FOR A.Y. 05-06 AND FOLLOWING THE FINDINGS OF HIS PREDECESSOR , THE CLAIM OF DEPRECIATION WAS DISALLOWED. WHEN THE MATTER WAS AG ITATED BEFORE THE LD. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 4 CIT(A). THE CIT(A) ALSO FOLLOWED THE FINDINGS OF HI S PREDECESSOR AND DISMISSED ASSESSEES APPEAL. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE IS NO MORE RES INTEGRA IN SO FAR AS THE ASSESSEE IS CONCERNED BECA USE THE TRIBUNAL HAS ALLOWED THE CLAIM OF DEPRECIATION IN ASSESSEES OWN CASE IN 02-03, 04-05 & 05-06. PER CONTRA, THE LD. D.R. STRONGLY OBJECTING TO THE CLAIM OF THE LD. COUNSEL STRONGLY RELIED UPON THE DECISION OF THE TR IBUNAL SPECIAL BENCH IN THE CASE OF INDUSIND BANK 19 TAXMAN.COM 173. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND THE FACTS IN ISSUES. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL; THIS ISSUE HAS BEEN CONSIDERED AT LENGTH BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 02-03, 04-05 & 05-06. THE FACTS CONSIDERED BY THE TRIBUNAL IN ITA NOS. 152/AHD/06, 815/AHD/07 & 4387/AHD/07 AT PARA 24 AND THE FINDINGS THEREOF READ AS UNDER:- 24. BEFORE US, THE LEARNED A.R. AT THE OUTSET SUBMI TTED THAT THE ISSUE OF DEPRECIATION ON LEASED ASSETS HAS NOW BEEN SETTLED AND DECIDED B Y HON. SUPREME COURT IN THE CASE OF ICDS LTD VS. CIT & ANR (2013) 350 ITR 527 (SC). HE ALSO SUBMITTED THE FOLLOWING THE AFORESAID DECISION OF HON. APEX COURT, THE MUMBAI T RIBUNAL ON IDENTICAL FACTS IN THE CASE OF DEVELOPMENT CREDIT BANK LTD. VS. DCIT ITA N O. 300/AHD/2001 AND 4892/AHD/2003 HAS DECIDED THE ISSUE IN ASSESSEES F AVOUR. HE PLACED ON RECORD THE COPY OF THE AFORESAID DECISIONS AT PAGE 379 TO 461. THE LEARNED A.R. FURTHER SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO LEASE TRANSACTION IN THE NORMAL COURSE OF BUSINESS AS THE SAME WAS PERMISSIBLE BY THE BANKING REGULATION ACT. HE FURTHER SUBMITTED THAT THE LEASE INCOME EARNED BY THE ASSESSEE IS ALSO DISCLOSED IN ITS PROFIT AND LOSS ACCOUNT. HE POINTED OUT TO SCHEDULE 14 OF OTHER INCOME FORMIN G PART OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2002, PLACED AT PAGE 326 OF THE PAPER BOOK. HE ALSO PLACED ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 5 ON RECORD THE COMPARISON OR LEASE TRANSACTIONS ENTE RED BY THE ASSESSEE WITH FEATURES OF OWNERSHIP AS PER THE TEST LAID DOWN BY THE SUPREME COURT IN THE CASE OF ICDS LTD. (SUPRA). HE THUS URGED THAT THE ADDITION MADE BE TH E AO BE DELETED. 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE INCOME FROM LEASE HAS BEEN CONSIDERED BY ASSESSEE AS INCOME IT IS AN UNDISPUTED FACT THAT THE AO HAS CONSIDERED TH E LEASE ENTERED BY THE ASSESSEE TO BE A FINANCE LEASE TO ARRIVE AT THE CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO DEPRECIATION. WE FIND THAT THE ISSUE OF DEPRECIATION ON LEASED AS SETS HAS BEEN DECIDED BY HONOURABLE APEX COURT IN THE CASE OF ICDS LTD (SUPRA). ONE OF THE QUESTION BEFORE THE HON. SUPREME COURT WAS WHETHER THE ASSESSEE IS ENTITLED TO DEPR ECIATION VEHICLES FINANCE BY IT WHICH IS NEITHER OWNED NOR USED BY THE ASSESSEE BY VIRTUE OF THE BUSINESS THE HON. SUPREME COURT HELD AS UNDER: THE PROVISION ON DEPRECIATION IN THE INCOME-TAX AC T, 1961, READS THAT THE ASSET MUST BE 'OWNED, WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS'. THEREFORE, IT IMPOSES A TWIN REQUIREMENT OF 'OWNERS HIP' AND 'USAGE FOR BUSINESS' FOR A SUCCESSFUL CLAIM UNDER SECTION 32 OF THE ACT. THE SECTION REQUIRES THAT THE ASSESSEE MUST USE THE ASSET FOR THE 'PURPOSE, OF BUSINESS'. IT DOES NOT MANDATE USAGE OF THE ASSET BY THE ASSESSEE ITSELF. AS LONG AS THE ASSET IS UTILIZED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, THE RE QUIREMENT OF SECTION 32 WILL STAND SATISFIED, NOTWITHSTANDING NON-USAGE OF THE ASSET I TSELF BY THE ASSESSEE. THE DEFINITIONS OF 'OWNERSHIP' ESSENTIALLY MAKE OWN ERSHIP A FUNCTION OF LEGAL RIGHT OR TITLE AGAINST THE REST OF THE WORLD. HOWEVER, IT IS 'NOMEN GENERA-LISSIMUM', AND ITS MEANING IS TO BE GATHERED FROM THE CONNECTION IN WH ICH IT IS USED, AND FROM THE SUBJECT- MATTER TO WHICH IT IS APPLIED. AS LONG AS THE ASSES SEE HAS A RIGHT TO RETAIN THE LEGAL TITLE AGAINST THE REST OF THE WORLD, IT WOULD BE THE OWNE R OF THE ASSET IN THE EYES OF LAW. HELD, AFFIRMING THE DECISION OF THE TRIBUNAL, (I) T HAT THE ASSESSEE WAS A LEASING COMPANY WHICH LEASED OUT THE TRUCKS THAT IT PURCHASED. THER EFORE, ON A COMBINED READING OF SECTION 2(13) AND (24) OF THE ACT THE INCOME DERIVE D FROM LEASING OF THE TRUCKS WOULD BE BUSINESS INCOME, OR INCOME DERIVED IN THE COURSE OF BUSINESS, AND HAD BEEN SO ASSESSED. HENCE, IT FULFILLED THE REQUIREMENT OF SECTION 32 O F THE ACT, THAT THE ASSET MUST BE USED IN THE COURSE OF BUSINESS. THE ASSESSEE DID USE THE VE HICLES IN THE COURSE OF ITS LEASING BUSINESS. THE FACT THAT THE TRUCKS THEMSELVES WERE NOT USED BY THE ASS ESSEE WAS IRRELEVANT FOR THE PURPOSE OF THE SECTION. 26. THE CASE OF DEVELOPMENT CREDIT BANK LTD. THE IS SUE BEFORE MUMBAI TRIBUNAL WAS WITH RESPECT TO DEPRECIATION ON ASSETS GIVEN ON LEA SE. THE CO-ORDINATE BENCH OF TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 28 WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D WE ARE OF THE VIEW THAT CROSS APPEALS ON THE ISSUE OF ALLOWANCE OF DEPRECIATION I N THE CURRENT YEAR HAVE TO BE DECIDED ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 6 SIMULTANEOUSLY. IN SO FAR AS DISALLOWANCE OF DEPREC IATION ON THE ASSETS INVOLVED IN SLB TRANSACTIONS, THE ISSUE STANDS SETTLED IN FAVOUR OF THE ASSESSEE. FROM THE SYNOPSIS FILED BY THE AR, IT IS SEEN THAT THE ASSESSEE PROVIDED THE A O WITH ALL THE INFORMATION AS WAS ASKED FOR, I.E. LEASE AGREEMENTS, COPIES OF BILLS FOR PUR CHASE OF ASSETS, INSPECTION REPORTS, COPIES OF INSURANCE COVER ETC., WHICH, IN OUR CONSIDERED O PINION, WAS IDENTICAL CIRCUMSTANCE, WHICH WAS BEFORE THE HON'BLE DELHI HIGH COURT IN TH E CASE OF COSMO FILMS (SUPRA), I.E. SLB TRANSACTIONS, REVENUE AUTHORITIES APPLYING MCDO WELL'S CASE AND ARGUING THAT IT IS A DEVISE FOR LOWERING THE TAX EFFECT AND RELYING ON THE BOARD'S CIRCULAR (SUP RA), AND MORE IMPORTANTLY, THAT, THAT CASE ALSO PERTAINED TO ASSE SSMENT YEAR 1996-97. THE HON'BLE DELHI COURT TOOK THE VIEW THAT SLB TRANSACTIONS ARE GENUINE AND CANNOT BE CONSIDERED TO BE SHAM. 29. ON APPRECIATION OF THE RECORDS, AS PRODUCED BE FORE US, THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF COSMO FILMS LTD. (SUPRA) HAS ARGUMENTS OF THE ASSESSEE ON THE IMPUGNED ISSUE, THEREBY, IMPLIEDLY, REVERSED THE RA TIO IN THE DECISIONS OF MIDEAST (SUPRA) AND INDUSLND (SUPRA). WE FIND THAT TESTS LAID DOWN IN MIDEAST CASE WAS PRIMARILY TO ASCERTAIN THE GENUINENESS OF THE TRANSACTION ENTERE D BY THE ASSESSEE WITH ITS LESSEE, WHICH WAS DONE BY THE CIT(A) IN EACH CASE. 31. IN ANY CASE, THE ISSUE OF SLB TRANSACTION AND I N PARTICULAR THE ISSUE OF OWNERSHIP OF ASSET, ALSO HAS BEEN LAID TO REST BY THE HON'BLE AP EX COURT IN THE CASE OF ICDS LTD. VS CIT, IN CA NO. 3286 TO 3290 OF 2008, WHEREIN THE QU ESTION THAT WAS SOUGHT TO BE ANSWERED WAS WHETHER THE APPELLANT (ASSESSEE) IS TH E OWNER OF THE VEHICLES WHICH ARE LEASED OUT BY IT TO ITS CUSTOMERS. THE HON. SUPRE ME COURT OF INDIA, CONCLUDED, EXTRACTED FROM PARA 28, FROM A PERUSAL OF THE LEAS E AGREEMENT AND OTHER RELATED FACTORS, AS DISCUSSED ABOVE, WE ARE SATISFIED OF TH E ASSESSEES OWNERSHIP OF THE TRUCKS IN QUESTION (PARA28, PAGE28). 32. COMING TO THE ISSUE OF FINANCE LEASE, WHEREIN THE CIT(A) SUSTAINED THE DISALLOWANCE BECAUSE THE USAGE OF THE EQUIPMENT LEASE OUT COULD NOT BE SUBSTANTIATED. ON GOING THROUGH THE DECISION OF THE JURISDICTIONAL HIGH COU RT OF BOMBAY, WE FIND THAT THE ISSUE NOW IS AT REST, IN SO FAR AS THE LESSOR IS CONCERNE D, BECAUSE, WHILE DEALING THE CASE OF THE LESSOR, I.E. THE ASSESSEE IN THE INSTANT CASE, THE ASSET HAS LEFT ITS CORRIDORS FOR BEING UTILIZED, AND IN RETURN, RENT HAD BEEN RECEIVED BY THE ASSESSEE. THE HON. BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES LTD. HAS HELD THAT WHAT IS TO BE SEEN IS THAT THE ASSET HAS BEEN GIVEN ON LEASE AND THE LEASE RENT HAS BEEN RECEIVED, GIVEN IN THAT CASE, SO FAR AS LESSOR IS CONCERNED, THE ASSET HAS BEEN USED. 34. AFTER HAVING EXAMINED ALL THE TRANSACTIONS WHI CH HAVE BEEN IMPUGNED BEFORE US, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION UNDER ALL THE THREE CIRCUMSTANCES, I.E. SALE LEASE BACK, GENUINEN ESS OF TRANSACTION AND ASSET HAVING BEING PUT TO USE. WE, THEREFORE, ALLOW GROUND NO. 1 THE ASSESSEES APPEAL AND DISMISS BOTH THE GROUNDS OF THE DEPARTMENTS APPEAL. 27. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF ICDS (SUPRA) AND THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF DEVELOPMENT CREDIT BANK LTD, ASSESSEE I S ELIGIBLE FOR DEPRECIATION AND WE ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 7 THUS DELETE THE ADDITION MADE BY THE ASSESSING OFFI CER. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. 8. WE FIND THAT IN THE SUBSEQUENT YEARS ALSO, THE TR IBUNAL HAS FOLLOWED ITS OWN DECISION (SUPRA). RESPECTFULLY FOLLOWING THE F INDINGS OF THE TRIBUNAL, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIAT ION AND DELETE THE ADDITION MADE BY THE A.O AND CONFIRMED BY THE LD. CIT(A). GR OUND NO. 1 IS ACCORDINGLY ALLOWED. GROUND NO. 2 RELATES TO THE DISALLOWANCE MADE U/S. 14A OF THE ACT. 9. THIS GROUND IS CONSIDERED ALONG WITH THE ADDITIONAL GROUND OF APPEAL TAKEN BY THE ASSESSEE CLAIMING THAT EVEN THE SUO MOTU DIS ALLOWANCE SHOULD ALSO BE DELETED. 10. DISALLOWANCE U/S. 14A OF THE ACT HAS BEEN DISCUSSED BY THE A.O AT PARA 5 OF THE ASSESSMENT ORDER WHEREIN HE HAS OBSERVED THAT T HE ASSESSEE HAS EARNED EXEMPT INCOME OF RS. 25.80 CRORES AGAINST WHICH IT HAS DISALLOWED RS. 2.20 CRORES UNDER PROTEST. REFERRING TO THE ASSESSMENT O RDER FOR A.Y. 2005-06, THE A.O OBSERVED HAT IN THAT YEAR, THE ASSESSEE HAD MAD E A SIMILAR SUO MOTU DISALLOWANCE BUT THE DISALLOWANCE U/S. 14A WAS COMP UTED BY THE A.O AT RS. 37.37 CRORES. THE A.O PROCEEDED BY COMPUTING THE DI SALLOWANCE FOR THE YEAR UNDER CONSIDERATION ALSO AND MADE A FURTHER DI SALLOWANCE OF RS. 42.68 CRORES. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. BEFORE US, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN EARLIER YEA RS ALSO. THE LD. CONSEL ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 8 PLACED THE ORDER OF THE TRIBUNAL. PER CONTRA, THE L D. D.R. COULD NOT BRING ANY DISTINGUISHING DECISION/FACTS BEFORE US. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TS IN ISSUES, WE ALSO GONE THROUGH THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 02-03, 04-05 & 05-06. WE FIND THAT A SIMILAR ISSUE WAS CON SIDERED FIRST BY THE TRIBUNAL IN A.Y. 02-03 IN ITA NOS. 152/AHD/06, 815/ AHD/07 & 4387/AHD/07. WE FIND THAT THE TRIBUNAL HAS ALSO CON SIDERED THE ADDITIONAL GRIEVANCE OF THE ASSESSEE RELATING TO THE DELETION OF THE SUO MOTU DISALLOWANCE MADE BY IT. THE RELEVANT FACTS AND THE FINDINGS OF THE TRIBUNAL ON THIS ISSUE READS AS UNDER:- 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT ASSESSEE HAD SUBMITTED THAT IT HAD INVESTMENTS TO THE TUNE OF RS . 413.60 CRORE ON WHICH THE ASSESSEE HAS EARNED TAX FREE INCOME. AO ALSO NOTICED THAT A SSESSEE HAS CLAIMED EXEMPTION OF RS. 39.65 CRORE ON ACCOUNT OF INTEREST ON TAX FREE BOND S AND DEBENTURES AND DIVIDEND INCOME AND HAD FURTHER CALCULATED EXPENSES DISALLOWABLE U/ S 14A AT RS. 6.32 CRORE. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM AND ALLOCAT E TAX FREE INCOME TO TAX FREE INVESTMENT. ASSESSEE INTERALIA SUBMITTED THAT THE INVESTMENTS W ERE TOTALLY FUNDED OUT OF INTEREST FREE FUNDS WHICH WERE AVAILABLE WITH IT IN THE FORM OF C APITAL, RESERVES AND SURPLUS, BALANCE IN CURRENT ACCOUNT DEPOSITS ETC. ON THE BASIS OF IT S COMPUTATION, THE ASSESSEE HAD SHOWN INCREMENTAL POSITION OF TAX FREE INVESTMENT OF RS. 13 CRORE FOR THE YEAR UNDER APPEAL. ON THE AFORESAID INVESTMENT IT HAD COMPUTED THE TOTAL INTEREST COST OF RS. 6.23 CRORE WHICH WAS ADDED BACK TO COMPUTATION INCOME. THE SUBMISSI ON MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE AO FOR THE REASON THAT THE ASSESSEE HAD NOT CONFIRMED THE DATE OF PURCHASE OF INVESTMENTS AND THEREFORE HE WAS OF THE VIEW THAT THE ASSESSEE CANNOT CLAIM THAT THE INVESTMENTS WERE HELD BY IT PERMANENTLY FO R 8 LONG YEARS. HE ALSO NOTED THAT ASSESSEE HAD OPENING BALANCE OF TAX FREE INVESTMENT OF RS. 401 CRORE, HAD ENTERED INTO PURCHASE AND SALE OF INVESTMENT WORTH HUNDREDS OF C RORES IN THE TAX FREE INVESTMENT, THE TOTAL TRANSACTIONS IN SHARES AND BONDS AND DEBENTUR ES INCLUDING TAXABLE AND TAX FREE ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 9 INSTRUMENTS WAS TO THE TUNE OF RS. 6,818 CRORE HE A CCORDINGLY CONCLUDED THAT THE ASSESSEE WAS TRADING HEAVILY IN TAX FREE INSTRUMENT S. HE FURTHER NOTICED THAT ASSESSEE HAS CONSIDERED ONLY THE INTEREST COST OF FUNDS FOR THE PURPOSE OF DISALLOWANCE. HE WAS OF THE VIEW THAT SINCE THE BANK WAS CARRYING ON DIFFER ENT ACTIVITIES WHICH EARNED TAXABLE AS WELL AS TAX FREE INCOME THE BUSINESS OF THE ASSESSE E CANNOT BE TERMED AS INDIVISIBLE BUSINESS AND THEREFORE ALLOCATION OF EXPENSES IN PR OPORTION BASIS NEEDS TO BE DONE TAKING INTO ACCOUNT THE TOTAL FUNDS, INTEREST BEARING AND NON INTEREST BEARING FUNDS WITH THE ASSESSEE. HE THEREAFTER WORKED OUT DISALLOWANCE U/ S 14A AS UNDER: TOTAL TAX-FREE INVESTMENTS AT 31/3/2002 (RS. 414 CR ORES + 14.92 CRORES) RS. 428.92 CRORES PROPORTION OF TOTAL FUNDS TO INTEREST BEARING FUNDS 91% PROPORTION OF INTEREST BEARING FUNDS USED FOR TAX F REE INVESTMENT (91% OF RS. 428.92 CRORES) RS. 390.32 CRORES EXPENSES ALLOCATED TO SUCH AMOUNT OF RS. 390.32 CRO RES @ 9.4 % ON THE BASIS OF AVERAGE COST OF BORROWAL = 9.4% O F RS. 390.32 CR. RS. 36.68 CRORES TOTAL EXPENSES INCURRED FOR EARNING TAX-FREE INCOME IS DETERMINED AT RS. 36.68 CRORES DISALLOWANCES U/S 14A RS. 36.68 CRORES ALREADY DISALLOWED BY ASSESSEE RS. 6.23 CRORES BALANCE DISALLOWABLE RS. 30.45 CRORES 16.THE DISALLOWANCE WORKED OUT BY THE AO WAS RS. 36 .68 CRORE BUT SINCE THE ASSESSEE HAD ALREADY SUO MOTU DISALLOWED RS. 6.23 CRORE, HE MADE DISALLOWANCE OF BALANCE AMOUNT OF RS. 30.45 CRORE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISS IONS MADE BY THE ASSESSEE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 6.3 AFTER CONSIDERING THE SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS RELIED UPON, I AM OF THE OPINION THAT THE ACTION OF THE A.O. IS NO T CORRECT AS REGARDS DISALLOWING INTEREST EXPENSES AMOUNT AFTER ALLOCATING IT TO THE INVESTME NTS FOR EXEMPTED INCOME. THE APPELLANT HAS FILED THE DETAILS BEFORE THE A.O. ADM ITTING THAT ONLY PART OF THE INTEREST BEARING FUNDS IS USED FOR INVESTING IN THE INVESTME NTS GIVING TAX EXEMPTED INCOME. THE ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 10 INTEREST COST IS CALCULATED AT RS. 6.23 CR. WHICH I S OFFERED FOR TAXATION. HENCE, THE A.O. IS NOT JUSTIFIED IN FURTHER ALLOCATING THE INTEREST EX PENDITURE FOR THIS PURPOSE DISREGARDING THE FACT THAT THE APPELLANT HAS SURPLUS FUNDS. HOWE VER AS REGARDS THE OTHER OPERATING EXPENSES ARE CONCERNED, THE APPELLANT HAS NOT FILED ANY DETAILS AS TO HOW MUCH EXPENDITURE IS TO BE APPORTIONED FOR EARNING THE EX EMPTED INCOME. THE TOTAL OPERATING EXPENSES ARE RS. 205 .47 CR. AND THE EXEMPT INCOME CLAIMED B Y THE APPELLANT IS RS. 39.65 CR. WHEREAS THE TOTAL INCOME EARNED BY THE APPELLAN T IS RS. 1595.40 CR. HENCE THE EXEMPTED INCOME IS 2.485% OF THE TOTAL INCOME. THE REFORE, BY ALLOCATING THE OPERATING EXPENSES OF RS. 205.47 CR. IN THIS RATIO, THE EXPEN SE ALLOCABLE TO THE EXEMPT INCOME COMES TO RS. 5.11 CR. (205.47 X 2.485%) THEREFORE, THIS EXPENDITURE HAS TO BE DISALLOWED OUT OF THE TOTAL EXPENDITURE FOR EARNING THE EXEMPT INCOME UNDER THE PROVISIONS OF SEC. 14A. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT CHENNAI BENCH IN THE CASE OF SOUTHERN PETRO CHEMICALS INDUSTRIES V. DCIT, 93 TTJ 161. AS PT THIS DECISION, THE INVESTMENT DECISIONS ARE VERY STRATEGIC DECISIONS I N WHICH TOP MANAGEMENT IS INVOLVED AND, THEREFORE, PROPORTIONATE MANAGEMENT EXPENSES A RE REQUIRED TO BE DEDUCTED WHILE COMPUTING THE EXEMPTED INCOME. ON SIMILAR LOGIC, TH E OTHER OPERATING EXPENSES ARE ALSO TO BE DEDUCTED. THE APPELLANT HAS ALREADY DISALLOWE D RS. 6.23 CR. OUT OF INTEREST EXPENDITURE. THE DISALLOWANCE OUT OF OPERATING EXPE NSES COMES TO RS. 5.11 CR. WHICH IS JUSTIFIED. HENCE, THE DISALLOWANCE IS CONFIRMED TO THE EXTENT OF RS. 5.11 CR. AND THE BALANCE AMOUNT OF RS. 25.34 CR. IS DELETED. 17.AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE A ND REVENUE, BOTH ARE IN APPEAL BEFORE US. 18.BEFORE US, THE LEARNED A.R. PLACED AT PAGE 61 OF THE PAPER BOOK THE CHART SHOWING OPENING POSITION OF INTEREST FREE FUNDS VIS-A-VIS T AX FREE INVESTMENT FOR VARIOUS YEARS STARTING FROM 31 ST MARCH, 1995 TO 31 ST MARCH, 2003. FROM THE AFORESAID CHART, HE POINTED THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASS ESSEE IN THE FORM OF CAPITAL, RESERVES AND INTEREST FREE DEMAND DEPOSITS AGGREGATED TO RS. 1766 CRORE AS AGAINST WHICH THE TAX FREE INVESTMENT AT THE END OF THE YEAR WAS RS. 414 CRORE. HE THUS SUBMITTED THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WER E FAR IN EXCESS OVER THE TAX FREE INVESTMENT AND IN PERCENTAGE TERMS, THE INTEREST FR EE DEPOSITS IN RELATION TO TAX FREE FUNDS WORKED OUT TO 327%. HE FURTHER SUBMITTED THAT IN V IEW OF THE FACT THAT INTEREST FREE FUNDS WAS FAR IN EXCESS OF TAX FREE INVESTMENTS, NO DISAL LOWANCE U/S 14A WAS CALLED FOR. HE FURTHER SUBMITTED THAT THE DISALLOWANCE MADE SUO MO TU BY THE ASSESSEE OF RS. 6.23 CRORE SHOULD ALSO BE REVERSED FOR THE REASON THAT ON IDEN TICAL FACTS IN THE CASE OF ASSESSEE, THE HON. TRIBUNAL HAD DELETED THE ADDITION MADE U/S 14A AND WHICH WAS ALSO UPHELD BY HON. GUJARAT HIGH COURT IN TAX APPEAL NO. 118/AHD/2013. HE PLACED ON RECORD AT PAGE 335 TO 372 THE ORDER OF TRIBUNAL FOR A.Y. 2003-04 AND A T PAGE 373 TO 378 THE ORDER OF ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 11 GUJARAT HIGH COURT. THE LEARNED A.R. FURTHER SUBMIT TED THAT SINCE NO AMOUNT OF DISALLOWANCE U/S 14A CAN BE MADE IN THE CASE OF THE ASSESSEE AND THEREFORE URGED TO DELETE THE ENTIRE DISALLOWANCE U/S 14A. HE FURTHER SUBMITTED THAT THE DELETION OF ENTIRE DISALLOWANCE U/S 14A CAN BE RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE TRIBUNAL AND FOR WHICH HE PLACED RELIANCE ON THE DECISIONS IN TH E CASE OF NATIONAL THERMAL POWER COMPANY LIMITED VS. CIT 1998 229 383 ITR (SC), JUTE CORPORATION OF INDIA VS. CIT (1991) 187 ITR 688 (SC). HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF ASIT KUMAR GHOSH VS. CIT (1953) 24 ITR 576 FOR THE PROPO SITION THAT ESTOPPEL IS ONLY A RULE OF EVIDENCE AND NOT A CAUSE OF ACTION. IN ANY EVEN T ESTOPPEL IS NOT A BASIS OF LIABILITY TO ASSESSMENT UNDER THE INCOME TAX ACT AND THEREFORE T HE ASSESSMENT OF A PERSON FOR AN AMOUNT OF INCOME TO WHICH HE IS A STRANGER CANNOT B E BASED ON THE GROUND THAT HE HIMSELF WANTED TO BE ASSESSED ON IT. THE LEARNED D .R. ON THE OTHER HAND POINTED TO THE RELEVANT PARAGRAPHS OF THE ORDER OF AO AND RELIED O N THE ORDER OF AO AND FURTHER SUBMITTED THAT THE AO HAS RIGHTLY MADE THE DISALLOW ANCE U/S 14A AND THUS SUPPORTED HIS ORDER. 19.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS EARNED RS. 39 .65 CRORE ON ACCOUNT OF INTEREST ON TAX FREE BONDS, DEBENTURES AND DIVIDEND INCOME WHIC H HAS BEEN CLAIMED AS EXEMPT. IT IS ALSO A FACT THAT THE ASSESSEE WHILE COMPUTING THE T OTAL INCOME HAS SUO MOTU DISALLOWED RS. 6.32 CRORE U/S 14A. AO WORKED OUT THE DISALLOWA NCE UNDER SECTION 14A AT RS. 36.68 CRORE AND AFTER SETTING OFF DISALLOWANCE MADE BY TH E ASSESSEE, HE DISALLOWED RS. 30.45 CRORE. WE FIND THAT BEFORE AO, ASSESSEE HAS NOT RAI SED THE CONTENTION ABOUT NO DISALLOWANCE U/S 14A AND THEREFORE THE AO HAD PROCE EDED AHEAD ON THE BASIS OF SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE. CIT(A) HAD DELETED THE ADDITION TO THE EXTENT OF RS. 25.35 CRORE. WE FURTHER FIND THAT ON IDENTICAL FACTS FOR A.Y. 2003-04, (ITA NO 2571/AHD/2006), THE CO-ORDINATE BENCH OF TRIBUNAL H AD RESTRICTED THE DISALLOWANCE TO THAT MADE BY THE ASSESSEE BY HOLDING AS UNDER: 33. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT DURING THE YEAR THE ASSES SEE HAS EARNED INTEREST OF RS 17.45 CRORE ON TAX FREE BOND AND DEBENTURES AS AGAINST WH ICH THE ASSESSEE HAD SUO MOTO DISALLOWED RS 5.53 CRORE BEING THE INTEREST EXPENSE S U/S 14A AS AGAINST WHICH THE AO HAS WORKED OUT THE DISALLOWANCE OF RS 32.76 CRORE. AFTE R GIVING THE CREDIT OF DISALLOWANCE OF RS 5.53 CRORE MADE BY THE ASSESSEE, THE AO DISALLOW ED RS 27.23 CRORE U/S 14A. AS ON ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 12 31 ST MARCH 2003, THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WAS TO THE TUNE OF RS 3404 CRORE (COMPRISING OF SHARE CAPITAL OF RS 230 C RORE, RESERVES OF RS 689 CRORES AND INTEREST FREE DEMAND DEPOSITS OF RS 2485 CRORES) AS AGAINST WHICH THE TAX FREE INVESTMENTS WERE TO THE TUNE OF RS 589 CRORE. THUS THE INTEREST FREE FUNDS WERE FAR IN EXCESS OF THE INVESTMENTS. CIT (A) HAS GIVEN A FIND ING THAT THE FACTS IN AY 2003-04 ARE IDENTICAL TO THE FACTS OF THE CASE IN AY 2002-03 AN D ACCORDINGLY HE HAS FOLLOWED THE DECISION OF CIT (A) FOR AY 2002-03. THESE FACTS HAV E NOT BEEN CONTROVERTED BY THE LD. D.R. NOR HAVE THEY BROUGHT ON RECORD ANY FACTS TO T HE CONTRARY. HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES & PO WER LTD (SUPRA) HAS HELD THAT IF THERE ARE INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SU FFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAS RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM INTEREST FREE FUNDS AVAILABLE. IN THE PRESENT CASE, SINCE THE ASSESSEE HAS SUO MOTO DISALLOWED RS 5.53 CRORE U/S 14A, RESPECTFULLY FOLL OWING THE DECISION OF BOMBAY HIGH COURT, WE ARE OF THE VIEW THAT IN THE FACTS OF THE PRESENT CASE, NO FURTHER DISALLOWANCE OVER AND ABOVE THAN WHAT HAS BEEN DISALLOWED BY THE ASSESSEE IS CALLED FOR. AS FAR AS DISALLOWANCE OF OTHER ADMINISTRATIVE EXPENSES IS CO NCERNED, THE UNDISPUTED FACT IS THAT THE DISALLOWANCE HAS BEEN MADE BY THE AO WITHOUT GI VING A FINDING AS TO HOW MUCH ADMINISTRATIVE EXPENDITURE HAS BEEN INCURRED TO EAR N THE EXEMPT INCOME. IN THE CASE OF HERO CYCLES (SUPRA) THE HON'BLE HIGH COURT HAS HELD THAT THE CONTENTION OF THE REVENUE THAT DIRECTLY OR INDIRECTLY SOME EXPENDITURE IS ALW AYS INCURRED WHICH MUST BE DISALLOWED U/S 14A CANNOT BE ACCEPTED. DISALLOWANCE U/S 14A RE QUIRES FINDING OF INCURRING OF EXPENDITURE. IN THE PRESENT CASE, THE AO HAS PRESUM ED THAT THE ASSESSEE MIGHT HAVE INCURRED EXPENDITURE TO EARN THE EXEMPT INCOME. HE HAS NOT GIVEN ANY FINDING OF INCURRING OF EXPENDITURE. IN VIEW OF THESE FACTS AN D RESPECTFULLY FOLLOWING THE DECISION OF HIGH COURT, WE ARE OF THE VIEW THAT NO DISALLOWANCE OF ADMINISTRATIVE EXPENSES CAN BE MADE. WE ACCORDINGLY DIRECT FOR THE DELETION OF THE ADDITION MADE BY THE AO AND ALLOW THIS GROUND OF THE ASSESSEE. 20.BEFORE US, THE LEARNED A.R. HAS RAISED A NEW ARG UMENT WHEREIN IT WAS SUBMITTED THAT EVEN THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE WHILE COMPUTING THE INCOME SHOULD BE DELETED AND FOR WHICH HE PLACED RELIANCE THE DEC ISION OF HON. CALCUTTA HIGH COURT AND THE DECISION OF SUPREME COURT. WE FIND THAT TH IS GROUND WAS NOT TAKEN BY THE ASSESSEE BEFORE A.O. AND CIT(A). AO HAD PROCEEDED O N THE BASIS OF THE SUO-MOTO DISALLOWANCE MADE BY THE ASSESSEE. THUS THE AO OR C IT(A) DID NOT HAD ANY OPPORTUNITY TO EXAMINE THE AFORESAID CONTENTION AND THEREFORE T HERE IS NO FINDING ON IT EITHER BY THE A.O. AND CIT(A). IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE MATTER WITH RESPECT TO NIL DISALLOWANCE UNDER 14A BE REMITTED BACK TO THE FILE OF AO FOR EXAMINING IT AFRESH. THUS THE MATTER IS REMITTED TO THE FILE OF AO AND H E IS DIRECTED TO ADMIT THE ISSUE AND DECIDE THE ISSUE AFRESH ON MERITS. AS PER LAW AFTE R CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND AFTER GIVING A REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 13 ASSESSEE IS ALSO DIRECTED AND FURNISH PROMPTLY THE DETAILS CALLED FOR BY THE AO TO DECIDE THE ISSUE. THUS THIS GROUND OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 12. WE FIND THAT THE TRIBUNAL HAS FOLLOWED ITS OWN ORDE R AND HAS GIVEN A SIMILAR FINDING FOR A.Y. 04-05 & 05-06. RESPECTFULLY FOLLOW ING THE FINDINGS OF THE TRIBUNAL (SUPRA), WE DIRECT THE A.O ACCORDINGLY. G ROUND NO. 2 WITH ALL ITS SUB GROUND AND THE ADDITIONAL GROUND ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. GROUND NO. 3 RELATES TO THE DISALLOWANCE OF LOSS ON WRITE OFF OF PREFERENCE SHARES. 13. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O NOTICED THAT THE ASSESSEE HAS CLAIMED BAD DEBTS WRITTEN OFF AT RS. 67.60 CRORES, THE ASSESSEE PROVIDED A LIST WHICH INVOLVED 43 DEBTORS. ON PERUSING THE SAID LIST, THE A.O NOTICED THAT THE ASSESSEE HAS WRITTEN OFF R S. 11 CRORES AS PREFERENCE SHARES WRITTEN OFF. ASSESSEE WAS ASKED TO JUSTIFY THE SAME. ASSESSEE FILED AN EXPLANATION STATING THAT IT HAS ADVANCED MONEY T O SANGHI INDUSTRIES LTD. BY WAY OF TERM LOAN, IT WAS EXPLAINED THAT THE PREF ERENCE SHARES WERE ALLOTTED ON PRIVATE PLACEMENT BASIS TO THE BANK IN LIEU OF INTEREST ACCRUED AND OVERDUE ON SUCH PARENT TERM LOANS. IT WAS FURTHER E XPLAINED THAT THE OVERDUE INTEREST REPRESENTS MONEY LENT IN ORDINARY COURSE O F THE BANKING BUSINESS AND IF SUCH INVESTMENT BECOMES NON PERFORMING IN ACCORD ANCE WITH THE RBI GUIDELINES, IT IS BAD DEBT COVERED UNDER SECTION 36 (I)(VII) OF THE ACT. IT WAS CLAIMED THAT THIS IRRECOVERABLE ADVANCE IN THE FORM OF PREFERENCE SHARES HAS BEEN WRITTEN OFF. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 14 14. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE, THE A.O FOUND THAT THE QUERY RELATED TO THE PREFERENCE SHARES OF RS. 1 1 CRORES WHEREAS THE ASSESSEE HAS REPLIED FOR RS. 6.70 CRORES. HOWEVER, THE A.O DECLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT WRITE OFF OF PREFERENCE SHARES IS NOTHING BUT BAD DEBT WRITTEN OFF. THE A.O ACCORDINGLY MADE AN ADDITION OF RS. 11 CRORES. 15. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT(A), THE LD. CIT(A) WAS OF THE OPINION THAT THE A.O HAS INADVERTENTLY ACCEPTED THE CLAIM OF WRITE OFF OF RS. 6.70 CRORES WHICH NEEDS ENHANCEMENT AND ACCORDI NGLY NOTICE FOR ENHANCEMENT WAS ISSUED AND SERVED UPON THE ASSESSEE . THE ASSESSEE STRONGLY SUPPORTED ITS CLAIM IN THE LIGHT OF THE ACCOUNTING STANDARD AS-31. IAS-32 ISSUED BY THE ICAI AND IASB. IT WAS STRONGLY CONTEN DED THAT THE NATURE AND THE SUBSTANCE OF THE TRANSACTION WAS NOT UNDERSTOOD BY THE A.O IN THE RIGHT PERSPECTIVE. FOR THE BANK, THE FUNDS DEPLOYMENT IS IN THE NATURE OF TRADING ASSETS . THE ASSETS UNDER REFERENCE HAVE ALSO BEEN SHOWN AS CURRENT ASSETS. THEY CONSTITUTE THE ROLLING INVENTORY FOR THE BANK. IT WAS CLAIMED THAT EVEN OTHERWISE THE ASSESSEE WAS ENTITLED TO SO TREAT THI S DEPLOYMENT TO VALUE THE SAME AT COST OR MARKET VALUE WHICHEVER IS LOWER AND CLAIM THE DIFFERENTIAL AS ITS BUSINESS LOSS. THE DETAILED EXPLANATION AND TH E RELIANCE ON THE ACCOUNTING STANDARD BY THE ASSESSEE DID NOT FIND AN Y FAVOUR WITH THE FIRST APPELLATE AUTHORITY WHO WAS OF THE FIRM BELIEF THAT ORIGINALLY THE AMOUNT MIGHT BE LENDING BUT ONCE THE SAME IS CONVERTED INT O SHARES, IT IS NO LONGER LENDING IN THE ORDINARY COURSE OF BANKING BUSINESS, THE LD. CIT(A) WAS OF THE OPINION THAT THE PREFERENCE SHARES WILL REMAIN INVE STMENT EVEN IN SUBSTANCE. THE LD. CIT(A) ACCORDINGLY DISALLOWED THE LOSS CLAI MED BY THE ASSESSEE AS ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 15 WRITE OFF AND ENHANCED THE ADDITION OF RS. 6.7 CROR ERS AND CONFIRMED THE DISALLOWANCE AT RS. 17.7 CRORES. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT THE PREFERENCE SHARES ALLOTTED TO THE ASSESSEE WERE IN LIEU OF THE LOANS GIVEN BY THE ASSESSEE AND THE ASSESSEE, BEING A BANK, IS IN THE BUSINESS OF LENDING MONEY AND AS PER RBI GUIDELINES, THE ASSESSEE HAS V ALUED THE SHARES AT NIL AND WROTE OFF THE AMOUNT IN ITS BOOKS. 16. FOR THE FIRST TIME, THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UCO BANK 2 40 ITR 355 CLAIMING THAT THE INVESTMENTS/SECURITIES HELD BY A BANK ARE IN THE NATURE OF STOCK IN TRADE AND HAS TO BE VALUED AS PER THE NORMS/GUIDELI NES FIXED FOR THE VALUATION OF INVENTORIES. IT IS THE CLAIM OF THE LD. COUNSEL THAT EVEN OTHERWISE, THE ASSESSEE IS ENTITLED TO VALUE ITS SECURITIES AT NIL WHEN THE RECOVERABLE VALUE IS ZERO. IT IS THE CONTENTION OF THE LD. COUNSEL THAT EVEN OTHERWISE, THE ASSESSEE IS ENTITLED FOR THE CLAIM OF WRITE OFF. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 17. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TS IN ISSUES. WE HAVE ALSO CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UCO BANK (SUPRA). WE FIND FORCE IN THE CONTENTION O F THE LD. COUNSEL THAT AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COUR T IN THE CASE OF UCO BANK (SUPRA), THE BANK IS FREE TO VALUE ITS INVENTO RIES SECURITIES AT COST OR MARKET PRICE WHICHEVER IS LOWER. SINCE THE ENTIRE I SSUE OF WRITE OFF HAS NOT BEEN LOOKED UPON BY THE LOWER AUTHORITIES IN THIS P ERSPECTIVE, WE, THEREFORE, ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 16 RESTORE THE MATTER TO THE FILES OF THE A.O. THE A.O IS DIRECTED TO EXAMINE THIS ISSUE IN THE LIGHT OF THE RATIO LAID DOWN BY THE HO NBLE SUPREME COURT IN THE CASE OF UCO BANK (SUPRA) AND BANKING REGULATION ACT AND DECIDE AFRESH AFTER GIVING A REASONABLE AND SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. GROUND NO. 3 IS TREATED AS ALLOWED FOR ST ATISTICAL PURPOSE. 18. GROUND NO. 4 RELATES TO THE CLAIMS NOT ALLOWED RELA TING TO EXEMPT INCOME OF RS. 3606 LAKHS, HTM INVESTMENTS-8803 LAKHS AND FORE IGN EXCHANGE FLUCTUATION-6.29 LAKHS. WE FIND THAT THESE CLAIMS W ERE NOT ENTERTAINED BY THE REVENUE AUTHORITIES, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT GIVEN IN THE CASE OF GOETZE INDIA LTD. 284 ITR 323 SINCE THE ASSESSEE HAS NOT MADE THE CLAIM BY FILING A REVISED RETURN OF IN COME, THE CLAIM WAS DENIED. HOWEVER, THIS ISSUE IS NO MORE RES INTEGRA AS IT IS NOW A WELL SETTLED PROPOSITION OF LAW THAT THE ASSESSEE CAN MAKE A NEW CLAIM AS HELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. 349 ITR 336. IN THE LIGHT O F THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT, WE RESTORE THE ENTIR E ISSUE TO THE FILES OF THE A.O. THE A.O IS DIRECTED TO DECIDE THE CLAIMS O F THE ASSESSEE AS PER THE PROVISIONS OF LAW; GROUND NO. 4 IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSE. 19. ITA NOS. 1015 & 1129/AHD/2011 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE FOR ASSESSMENT YEAR 2007-08. ITA NO. 1015/AHD/2011 ASSESSEES APPEAL ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 17 20. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF DEPRECI ATION ALLOWANCE OF RS. 62.66 LACS ON WIND ENERGY GENERATORS. 21. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US AT LENGTH IN ASSESSEES APPEAL IN ITA NO. 577/AHD/2011. FOR OUR DETAILED DISCUSSION THEREON, THIS GROUND IS ALLOWED. 22. GROUND NO. 2 RELATES TO THE DISALLOWANCE MADE U/S. 14A OF THE ACT. 23. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ASSESSEES APPEAL FOR A.Y. 2006-07 IN ITA NO. 577/AHD/2011 QUA GROUND NO. 2 AND ADDITIONAL GROUND OF THAT APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, THIS GROUND IS ALLOWED. 24. GROUND NO. 3 RELATES TO THE ADDITION MADE TOWARDS G AIN ON SECURITIZATION AMORTIZED AS PER RBI GUIDELINES. 25. THE A.O HAS CONSIDERED THIS ISSUE AT PARA 7 ON PAGE 14 OF HIS ORDER WHEREIN THE OFFICER MADE THE FOLLOWING OBSERVATIONS:- 7.1 ON PERUSAL OF THE SIGNIFICANT ACCOUNTING POLICIES T O THE FINANCIAL STATEMENT, IT IS SEEN THAT THE NOTE ON 'SECURITIZATION 1 (PARA 4.4) READS AS UNDER: THE BANK ENTERS INTO PURCHASE/ SALE OF CORPORATE AN D RETAIL LOANS THROUGH DIRECT ASSIGNMENT/ SPECIAL PURPOSE VEHICLE (SPV). IN MOST CASE, POST SECURITIZATION, THE BANK CONTINUES TO SERVICE THE LOANS TRANSFERRED TO THE A SSIGNEE/ SPV. THE BANK ALSO PROVIDES CREDIT ENHANCEMENT IN THE FORM OF CASH COLLATERALS AND/ OR BY SUBORDINATION OF CASH FLOWS TO SENIOR PASS THROUGH CERTIFICATE (PTC) HOLDERS. I N RESPECT OF CREDIT ENHANCEMENTS PROVIDED OR RECOURSE OBLIGATIONS (PROJECTED DELINQU ENCIES, FUTURE SERVICING ETC.) ACCEPTED BY THE BANK, APPROPRIATE PROVISION/ DISCLOSURE IS M ADE AT THE TIME OF SALE IN ACCORDANCE WITH AS-29- PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 18 GAINS ON SECURITIZATION TRANSACTION IS RECOGNIZED O VER THE PERIOD OF THE UNDERLYING SECURITIES ISSUED BY THE SPV. LOSS ON SECURITIZATIO N IS IMMEDIATELY DEBITED TO PROFIT AND LOSS ACCOUNT. 7.2.FURTHER, IT IS SEEN THAT 'NOTES TO ACCOUNT' (PA RA 5.1.15) READS AS UNDER:- 31.03.07 (RS IN CR.) NUMBER OF LOAN ACCOUNTS SECURITIZED 2.00 BOOK VALUE OF LOAN ASSETS SECURITIZED 547.16 SALE CONSIDERATION RECEIVED FOR THE SECURITIES ASSE TS 550.09 NET GAIN/ LOSS OVER NET BOOK VALUE 2.93 7.3 THE ASSESSEE WAS ASKED TO EXPLAIN WHERE THE ABO VE AMOUNT OF RS. 2.93 CRORES HAS BEEN OFFERED AS INCOME IN ITS ANNUAL ACCOUNTS. IN T HIS REGARD, THE ASSESSEE CONTENDED AS UNDER: GAIN ON SECURITIZATION OF ASSET OF RS. 2.93 CRORES AS PER PARA 5.1.15 OF THE AUDITED ACCOUNTS DURING THE HEARING HELD ON 10.11.2009, YOU HAVE REQ UESTED US TO PROVIDE EXPLANATION THAT WHERE THE NET GAIN OF RS. 2.93 ON SECURITIZATI ON TRANSACTIONS, AS PER PARA 5.1.15 (PAGE NO. 60 OF THE ANNUAL REPORT), HAS BEEN ACCOUN TED IN THE PROFIT AND LOSS. IN THIS REGARD WE SUBMIT AS FOLLOWS: FOR THE YEAR UNDER CONSIDERATION, THE BANK HAS RECO GNIZED INCOME OF RS. 2,00,28,097 UNDER THE HEAD OTHER INCOME, (SCHEDULE 14, SUB-CLAU SE, VII, MISCELLANEOUS INCOME) AND RS. 93,13,051 WAS SHOWN UNDER THE HEAD OTHER LIABIL ITIES AND PROVISIONS (SCHEDULE 5, SUB CLAUSE VII, OTHERS INCLUDING PROVISIONS). THE METHO D OF ACCOUNTING FOLLOWED IN THIS REGARD IS AS PER THE RBI GUIDELINES. IN TERMS OF THE RBI NOTIFICATION, A COPY OF WHICH I S ENCLOSED FOR YOUR REFERENCE, ANY LOSS ARISING ON ACCOUNT OF THE SALE PURSUANT TO SECURITI ZATION PROPOSAL SHOULD BE ACCOUNTED AND CHARGED TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR DURING WHICH THE SALE UPON SECULARIZATION IS EFFECTED AND ANY PROFIT/PREMIUM A RISING ON ACCOUNT OF SUCH SALE SHOULD ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 19 BE AMORTIZED OVER THE LIFE OF THE SECURITIES ISSUED OR TO BE ISSUED BY THE SPV (SPECIAL PURPOSE VEHICLE). AS PER THE RBI DIRECTIVES, (PLEASE REFER SIGNIFICAN T ACCOUNTING POLICIES AT PARA 4.4 UNDER THE HEAD 'SECURITISATION 1 , ON PAGE NO. 51 OF THE ANNUAL REPORT), GAIN ON SEC URITIZATION IS RECOGNIZED OVER THE PERIOD OF THE UNDERLYING SECURI TIES ISSUED BY THE SPV AND LOSS ON SECURITIZATION IS DEBITED TO PROFIT AND LOSS ACCOUN T 26. THE EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O. WHO WENT ON TO MAKE AN ADDITION OF RS. 93,13,051/-. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND REITERATED WHAT HAS BEEN STATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS STRONGLY CONTENDE D THAT WHAT IS RELEVANT FOR INCOME TAX IS REAL INCOME. IT WAS FURTHER BROUG HT TO THE NOTICE OF THE FIRST APPELLATE AUTHORITY THAT RBI GUIDELINES ARE E XPRESSLY MADE MANDATORY FOR ALL BANKS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS OF THE OPINION SINCE THE ASSESSEE HAS SOLD THES E IMPUGNED ASSETS, THEREFORE, THE ASSESSEE HAS NO LIABILITY WHATSOEVER ON THESE TRANSACTIONS AFTERWARDS. SINCE THERE IS NO UNCERTAINTY TO THE IN COME ON THESE TRANSACTIONS THERE IS NO QUESTION OF POSTPONING THE INCOME. THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O. BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE ONCE AGAIN STATED THAT BEING A BANK IT HAS TO MANDATORIL Y FOLLOW THE GUIDELINES ISSUED BY THE RBI. IT IS THE SAY OF THE LD. COUNSEL THAT IT IS NOT THE CASE OF THE REVENUE AUTHORITIES THAT THE ASSESSEE HAS NOT FOLLO WED THE GUIDELINES OF THE RBI. THEREFORE, THE ACTION OF THE A.O AND ALSO OF T HE LD. CIT(A) ARE AGAINST THE FACTS OF THE CASE. PER CONTRA, THE LD. D.R. STR ONGLY RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 20 27. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFUL LY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IT IS A SETTLED PROPOSITI ON OF LAW THAT WHAT IS RELEVANT FOR INCOME TAX ON THE BASIS IS THE REAL IN COME AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF GODHRA ELECTRI CITY CO. LTD. 225 ITR 746. VARIOUS HIGH COURTS HAVE GIVEN DUE RECOGNITION TO RBI GUIDELINES WHICH DETERMINED THE TAXATION OF BANKS/NBFC. THE HO NBLE UTTARANCHAL HIGH COURT IN THE CASE OF NAINITAL BANK LTD. 309 I TR 335, HONBLE ALLAHABAD HIGH COURT IN THE CASE OF KAILASH AUTO FI NANCE LTD. 320 ITR 394 AND ALSO HONBLE HIGH COURT OF DELHI IN THE CASE OF ELGI FINANCE LTD. 293 ITR 357. 28. IN OUR CONSIDERED OPINION, THE AMORTIZATION MERELY REPRESENTS A TIMING DIFFERENCE AND SINCE THE BANK IS CONSISTENTLY MAKIN G PROFITS AND PAYING TAX AT THE HIGHEST RATE WITHOUT CLAIMING ANY TAX HOLIDA Y BENEFIT, IT CAN BE SAFELY CONCLUDED THAT THE METHOD FOLLOWED IS REVENUE NEUTR AL. WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE HIGH COURT OF BOMB AY IN THE CASE OF NAGRI MILLS CO. LTD. 33 ITR 681. 29. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE JUDICIAL DECISIONS REFERRED TO HEREINABOVE, WE DO NOT FIND ANY MERIT IN THE FIN DINGS OF THE LD. CIT(A). WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CI T(A) AND DIRECT THE A.O TO DELETE THE ADDITION OF RS. 93.13 LACS. GROUND NO. 3 IS ACCORDINGLY ALLOWED. 30. GROUND NO. 4 RELATES TO THE LEVY OF INTEREST U/S. 2 34 OF THE ACT. THE LEVY IS MANDATORY THOUGH IT SHOULD BE UPON THE RETURNED INC OME OF THE ASSESSEE. WE ACCORDINGLY DIRECT THE A.O. TO CHARGE INTEREST AS P ER THE PROVISIONS OF THE LAW ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 21 ON THE RETURNED INCOME OF THE ASSESSEE. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1129/AHD/2011 REVEN UES APPEAL 31. THE SOLE GRIEVANCE OF THE REVENUE RELATES TO THE AD DITION MADE BY THE A.O U/S. 14A OF THE ACT WHICH HAS BEEN PARTLY ALLOWED B Y THE LD. CIT(A). THIS ISSUE HAS CONSIDERED AT LENGTH IN ASSESSEES APPEAL IN ITA NO. 1015/AHD/2011 WHEREIN WE HAVE FOLLOWED OUR DETAILED DECISION GIVEN IN ASSESSEES APPEAL FOR A.Y. 2006-07 IN ITA NO. 577/A HD/2011. FOR OUR DETAILED REASONS GIVEN THEREIN, APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 250/AHD/2012 ASSESSEES APPEAL FOR A.Y . 2004-05. 32. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-VI, AHMEDABAD DATED 28.11.2011 PERTA INING TO A.Y. 2004- 05. 33. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE RELATES TO THE WITHDRAWAL OF INTEREST OF RS. 1.60 CRORES. 34. IN THE ASSESSMENT ORDER MADE U/S. 143 (3) OF THE AC T DATED 31.01.2006, THE ASSESSEE WAS ALLOWED INTEREST U/S. 244A OF THE ACT WHICH WAS SUBSEQUENTLY WITHDRAWN BY THE A.O BY HIS ORDER MADE U/S. 154 OF THE ACT DATED 10.06.2010. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND RE- AGITATED THE ISSUE OF THE WITHDRAWAL OF INTEREST U/ S. 244A AND NOT GRANTING ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 22 PROPER INTEREST ON REFUND AROSE ON ACCOUNT OF TDS C REDITS GIVEN IN RECTIFICATION ORDER U/S. 154 OF THE ACT. AFTER CONS IDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; RECTIF ICATION ORDER AND APPELLANTS WRITTEN SUBMISSION. TO EXAMINE THE FACTS RELEVANT TO THE IS SUE IN DETAIL CALCULATION OF INTEREST IN VARIOUS ORDERS PASSED BY AO WERE REFERRED. IT IS SE EN THAT ASSESSING OFFICER GRANTED INTEREST UNDER SECTION 244A WHILE PROCESSING THE RE TURN UNDER SECTION 143 (1) WHICH WAS NOT WITHDRAWN EVEN WHEN ASSESSMENT UNDER SECTION 14 3 (3) RESULTED IN SUBSTANTIAL DEMAND MORE THAN THE REFUND GRANTED. ASSESSING OFFI CER FURTHER GRANTED INTEREST WHILE GIVING APPEAL EFFECT TO THE ORDER UNDER SECTION 250 . IN THE ORDER PASSED UNDER SECTION 154 WHILE GIVING CREDIT OF CERTAIN IDS CERTIFICATES, AS SESSING OFFICER WITHDREW PART OF THE INTEREST PAID UNDER SECTION 244A AND GRANTED ADDITI ONAL INTEREST ON REFUND WORKED OUT ON IDS CREDIT GIVEN IN THE ORDER. ALL THESE FACTS SHOW THAT CALCULATION OF INTEREST UNDER SECTION 244A IS NOT PROPERLY DONE BY THE ASSESSING OFFICER. IT IS POSSIBLE THAT AO HAS NOT WITHDRAWN CORRECT INTEREST U/S.244A . ASSESSING OFFICER IS THEREFORE DIRECTED TO WORK O UT INTEREST UNDER SECTION 244A ON THE BASIS OF THE ASS ESSED TOTAL INCOME IN LATEST ORDER CORRECTLY ON THE BASIS OF THE PROVISIONS OF THE ACT . 35. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. LD. C OUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE HONBLE H IGH COURT OF BOMBAY IN THE CASE OF LARSEN AND TOUBRO LTD. 330 ITR 340 AND STATED THAT INTEREST U/S. 244A CANNOT BE DENIED. PER CONTRA, THE LD. D.R. COU LD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 36. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD.CO UNSEL, THE ASSESSEE IS ENTITLED FOR THE INTEREST U/S. 244A OF THE ACT AS P ER THE PROVISIONS OF THE LAW. IF THE REFUND WAS NOT DELAYED FOR REASONS ATTRIBUTA BLE TO THE ASSESSEE. WE, ITA NO. 577 & 691/AHD/2011 ITA NOS. 1015 & 1129/ AHD/11 & 250/AHD/12 . A.YS. 2004 -05, 2006-07 & 2007-08 23 THEREFORE RESTORE THIS ISSUE TO THE FILES OF THE A. O. THE A.O IS DIRECTED TO RE- COMPUTE THE REFUND ALLOWABLE TO THE ASSESSEE AFTER GIVING APPEAL EFFECT AND ALLOW INTEREST U/S. 244A OF THE ACT. IF IT IS FOUND THAT THE DELAY IS NOT ATTRIBUTABLE TO THE ASSESSEE. 37. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 15 - 03 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD
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