INDUSIND BANK LIMITED, MUMBAI V. PR. COMMISSIONER OF INCOME TAX -2, MUMBAI

ITA 2588/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2298 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 25-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI M. BALAGANESH , A M AND SHRI AMARJIT SINGH, J M / I.T.A. NO. 2588 /MUM/201 9 ( / ASSESSMENT YEARS: 2013 - 14 ) M/S. INDUSIND BANK LTD 8 TH FLOOR, TOWER NO.1, ONE INDIA BU LLS CENTRE, 841, SENAPATI BAPAT MARG, ELPHISTONE ROAD, MUMBAI - 400013 . / VS. PR. CHIEF COMMISSIONER OF INCOME - TAX - 2 ROOM NO.344, 3 RD FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACI1314G ( / APPELLANT ) .. ( / RESPONDENT ) / DAT E OF HEARING: 07 /0 8 / 2019 /DA TE OF PRONOUNCEMENT: 28 / 0 8 / 2019 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 28 . 03 .201 9 PASSED BY THE PRINCIPAL COMMI SSIONER OF INCOME TAX - 2 , MUMBAI [HEREINAFTER REFERRED TO AS THE PCIT ] RELEVANT TO THE A.Y. 20 13 - 14 IN WHICH THE PRINCIP AL COMMISSIONER OF INCOM E TAX - 2 HAS INVOKED THE PROVISIONS U/S 263 OF THE I.T. ACT, 1961. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.11.2013 DECLARING T OTAL INCOME TO THE TUNE OF RS.1556,56,31,880/ - FOR THE A.Y. 2013 - 14. THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 28.12.2016 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.1725,96,68,536/ - . ON VERIFICATION, IT WAS FOUND THAT THE ORDER DA TED 28.12.2016 WA S PREJUDICIAL TO THE INTEREST OF THE REVENUE AND REQUIRES REVISION. THE NOTICE WAS ISSUED TO THE ASSESSEE ON THE FOLLOWING GROUNDS : - ON EXAMINATION OF THE RECORDS IT IS SEEN THAT DEDUCTION TO THE TUNE OF RS.3,22,50,564/ - HAS BEEN ALLOWED TO THE ASSESSEE U/S 35D OF THE I.T. ACT, 1961. HOWEVER, IT WAS NOTICED THAT THE SAID ASSESSEE BY: SHRI KARTHIK NATARAJAN (AR) REVENUE BY : SHRI AWUNGSHI GIMSON (DR) ITA NO. 2588 /M/201 9 A. Y. 2 013 - 14 2 DEDUCTION WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF THE ALLOTMENT OF SHARES TO QUALIFIED INSTITUTIONAL BUYERS (QIB). AS PER THE PROVISIONS OF SECTION 35D OF THE ACT, THE SAID DEDUCTION IS ALLOWABLE ONLY IN CASE OF PUBLIC SUBSCRIPTION OF SHARES. A LLOTMENT OF SHARES TO QIBS CANNOT BE TREATED AS PUBLIC SUBSCRIPTION OF THE SHARES MENTIONED IN SECTION 35D OF THE ACT. THEREFORE, THE ASSESSEE WAS NOT ELIGI BLE FOR DEDUCTION U/S 3 5D AMOUNTING TO RS.3,22,50,564/ - . THE ASSESSMENT ORDER DATED 28.12.2016 IS EVIDENTLY ERRONEOUS AND IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THIS POINT. 3. AFTER THE REPLY OF THE NOTICE, THE PR. CIT WAS OF THE OPINION THAT THE CLAIMED DEDUCT ION BY THE ASSESSEE U/S 35D OF THE ACT OF RS. 3,22,50,564/ - WAS NOT ALLOWABLE, HENCE, THE A O WAS DIRECTED TO MODIFY THE ASSESSMENT ACCORDINGLY. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPR ESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CLAIM RAISED U/S 35D OF THE ACT IN RESPECT OF PRELIMINARY EXPENSES OF RS .4.55 CRORE INCURRED IN CONNECTION WITH THE ISSUE OF SHARE TO QUALIFIED INSTITUTIONAL BUYER NOWHERE CAUSED ANY PREJUDI CE TO THE INTEREST OF THE REVENUE S PECIFICALLY IN THE CIRCUMSTANCES THAT THE CLAIM HAS ALREADY BEEN ALLOWED BY HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 4486 & 4464/M/2017 AND ITA. NO.3875 & 3876/M/2017 DATED 28.02.2019 FOR THE A.Y.2011 - 12 & 2012 - 13 , THEREFORE, THE ORDER PASSED U/S 263 OF THE ACT IS NOT JUSTIFIABLE AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE REVENUE HAS REFUTED THE SAID CONTENTION. COPY OF ORDER DAT ED 28.02.2019 IN THE ASSESSEES O WN CASE (SUPRA) IS ON THE FILE IN WHICH THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 17 TO 20 WHICH ARE HEREBY REPRODUCED AS UNDER: - 17. THE ISSUE RAISED IN GROUND NOS.4, 5 & 6 IS AGAINST THE ORDER OF LD. CIT(A) HOLDING THAT NEW CLAIM OF DEDUCTION UND ER SECTION 35D CAN BE ADMITTED FIRST TIME WHICH WAS NOT RAISED BEFORE THE AO AT ALL. 18. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS RAISED THE ISSUE OF NON GRANTING OF DEDUCTION UNDER SECTION 35D IN RESPECT OF PRELIMINARY EXPENSES OF RS.4.55 CRORE INCUR RED IN CONNECTION WITH ISSUE OF SHARES ITA NO. 2588 /M/201 9 A. Y. 2 013 - 14 3 UNDER QUALIFIED INSTITUTIONAL PLACEMENT. THE ASSESSEE HAS INCURRED EXPENDITURE OF RS.11.03 CRORES IN A.Y. 2010 - 11 AND RS.14.11 CRORES IN A.Y. 2011 - 12 RESPECTIVELY ON SHARES ISSUED UNDER QIP ROUTE. AS THE ISSUE WAS RAI SED BEFORE THE LD. CIT(A) FOR THE FIRST TIME, THE AO WAS ASKED TO GIVE HIS COMMENTS BY WAY OF REMAND REPORT WHICH WAS FILED BY THE AO VIDE REMAND REPORT BEARING NO.ACIT - 2(3)(2)/REMAND REPORT2016 - 17 DATED 27.06.2016 IN WHICH THE AO STATED THAT ASSESSEE HAS NOT CLAIMED THE SAID EXPENSES EITHER IN THE ORIGINAL OR IN THE REVISED RETURN AND SUBMITTED THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. 284 ITR 323 AND GURJARGRAVURS PVT. LTD. 111 ITR 1 WHEREIN IT HAS BEEN HELD THA T IF CLAIM IS NOT MADE BEFORE THE AO, THE AAC CAN NOT ENTERTAIN SUCH CLAIM IN THE APPEAL PROCEEDINGS. THE AO STATED THAT THE ASSESSMENT ORDER WAS PASSED AFTER GIVING REASONABLE AND ADEQUATE OPPORTUNITIES TO THE ASSESSEE AND THEREFORE REQUESTED TO UPHOLD TH E DISALLOWANCE. 19. THE LD. CIT(A) ADMITTED THE ISSUE AS LEGAL ISSUE BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM.) AND GRASIM INDUSTRIES LTD. 2016 - TIOL - 292 - HC - MUM - IT WHEREIN THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. (SUPRA) HAD BEEN CONSIDERED AND IT WAS HELD THAT APPELLATE AUTHORITIES HAVE POWER TO ENTERTAIN THE LEGAL ISSUES WHICH ARE RAISED FOR THE FIRST TIME. FOLLOWING THE RATIO LAID DOWN IN THE SAID DECISIONS, THE LD. CIT(A) RECORDED A FINDING OF FACT THAT SHARE ISSUE EXPENDITURE IS COVERED UNDER SECTION 35D OF THE ACT AND IS A LEGAL ISSUE AND THUS CAME TO THE CONCLUSION THAT THE ASSESSEE IS ELIGIBLE FOR DEDUC TION UNDER SECTION 35D EQUAL TO 1/5TH OF THE TOTAL PRELIMINARY EXPENSES. ACCORDINGLY THE LD CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DIRECTING THE AO TO ALLOW THE SAME. 20. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, W E FIND THAT THE REVENUE HAS CHALLENGED THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ISSUE OF GRANT OF DEDUCTION IN RESPECT OF SHARE ISSUE EXPENSES UNDER SECTION 35D WHICH WAS NOT RAISED BEFORE THE AO. AFTER PERUSING THE APPELLATE ORDER, WE FIND THAT THE APPELLATE AUTHORITY HAS PASSED THE ORDER AFTER FOLLOWING THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. AND GRASIM INDUSTRIES LTD. (SUPRA) WHEREIN THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. HAS BEEN CONSIDERED AND IT WAS HELD THAT THE FRESH ISSUE CAN BE ADMITTED BEFORE THE APPELLATE AUTHORITY. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY THE SAME IS UPHELD. WE ALSO NOT E THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN DCIT VS. DECCAN CHRONICLE HOLDING LTD. 60 TAXMANN.COM 240 AND TRANSPORT CORPORATION OF INDIA VS. ACIT IN ITA NO.117/HYD/2016. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DE CISIONS AS STATED HEREINABOVE UPHOLD THE ORDER OF THE LD. CIT(A) AND THE ISSUE RAISED BY THE REVENUE IN GROUND NOS.4 TO 6 IS DISMISSED. ITA NO. 2588 /M/201 9 A. Y. 2 013 - 14 4 4. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE FIND THAT THE CIT(A) HAS ALREADY BEEN ALLOWED THE CLAIM OF THE ASSE SSEE IN THE A.Y.2011 - 12 & 2012 - 13 WHICH WAS CONFIRMED BY HONBLE ITAT IN ITA. NO. 4486 & 4464/M/2017 AND ITA. NO.3875 & 3876/M/2017 DATED 28.02.2019 . SINCE THE ISSUE HAS ALREADY BEEN ADJUDICATED BY THE HONBLE ITAT IN THE ASSESSEES OWN CASE (SUPRA), THERE FORE, THE REASON FOR REVISING OF THE CASE OF THE ASSESSEE IN THE A.Y.2013 - 14 ON THE GROUND OF ALLOWANCE OF THE CLAIM OF ASSESSEE U/S 35D OF THE ACT ON ACC OUNT OF ALLOTMENT OF SHARES TO Q UALIF IED I NSTITUTIONAL BU Y ERS QIB NOWHERE SEEMS PREJUDICIAL TO THE INT EREST OF THE REVENUE, HENCE, THE ORDER U/S 263 OF THE I.T. ACT, 1963 DATED 28.03.2019 NOWHERE FOUND JUSTIFIABLE AND IN ACCORDANCE WITH LAW, THEREFORE, W E SET ASIDE THE SAME AND ALLOW THE APPEAL OF THE ASSESSEE. 5 . IN THE RESULT, THE APPEA L OF THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 / 0 8 / 2019 SD/ - SD/ - ( M. BALAGANESH ) (AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 28 / 08 / 2019 V IJAY /SR. PS ITA NO. 2588 /M/201 9 A. Y. 2 013 - 14 5 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//