DCIT - 2(2)(1), MUMBAI V. State Bank of Hyderabad, MUMBAI

ITA 2608/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6140 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2015-2016
• Appeal Filed On: 26-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH JANPANGI
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH M UMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEM BER ITA NO.2608/MUM/2018 ( ASSESSMENT YEAR: 2015-16 ) DCIT-2(2)(1) ROOM NO.545, 5 TH FLOOR AAYKAR BHAWN, M.K.ROAD MUMBAI-40 0020 VS. M/S. STATE BANK OF HYDERABAD 3 RD FLOOR, SBI BHAWAN FRT DEPARTMENT MADAM CAMA ROAD NARIMAN POINT, MUMBAI-400 021 PAN/GIR NO. AADCS4009H ( APPELLANT ) .. ( RESPONDENT ) & ITA NO.2772/MUM/2018 ( ASSESSMENT YEAR: 2015-16 ) M/S. STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) FRT DEPARTMENT, 3 RD FLOOR, CORPORATE CENTRE MADAM CAMA ROAD NARIMAN POINT, MUMBAI-400 021 VS. ACIT, CIRCLE-2(2)(1) MUMBAI PAN/GIR NO. AADCS4009H ( APPELLANT ) .. ( RESPONDENT ) & ITA NO.2647/MUM/2018 ( ASSESSMENT YEAR: 2014-15 ) DCIT-2(2)(1) ROOM NO.545, 5 TH FLOOR AAYKAR BHAWN, M.K.ROAD MUMBAI-40 0020 VS. M/S. STATE BANK OF HYDERABAD 3 RD FLOOR, SBI BHAWAN FRT DEPARTMENT MADAM CAMA ROAD NARIMAN POINT, MUMBAI-400 021 PAN/G IR NO. AADCS4009H ( APPELLANT ) .. ( RESPONDENT ) STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 2 ITA NO.2771/MUM/2018 ( ASSESSMENT YEAR: 2014-15 ) M/S. STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) FRT DEPARTMENT, 3 RD FLOOR, CORPORATE CENTRE MADAM CAMA ROAD NARIMAN POINT, MUMBAI-400 021 VS. ACIT, CIRCLE-2(2)(1) MUMBAI PAN/GIR NO. AADCS4009H ( APPELLANT ) .. RESPONDENT ) ASSESSEE BY KETAN VED REVENUE BY NARENDRA SINGH JANPANGI DATE OF HEARING 03/10/2019 DATE OF PRONOUNCEMENT 15 /10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS THE REVENUE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICA L ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)5, MUMBAI, ALL DATED 31/01/2018 AND THEY PERTAINS TO AY 2014-15 AND 2015 -16. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS FILED BY THE ASSESSEE, A S WELL AS THE REVENUE WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 3 ITA.NOS 2608 & 2772/MUM/2018 FOR AYS 2015-16:- 2. AT THE TIME OF HEARING, THE LD. AR FOR THE ASSES SEE SUBMITTED THAT THE APPEALS FILED BY THE ASSESEE, AS WELL AS THE REVENUE FOR AY 2015-16 ARE NOT MAINTAINABLE, BECAUSE THE ASSESSEE, AS WELL AS THE REVENUE HAVE CHALLENGED THE FINDINGS OF THE LD.CIT( A) INSOFAR AS SET ASIDE THE ASSESSMENT TO THE FILE OF THE AO FOR VERIFICATION OF CERTAIN FACTS WITH REGARD TO ADDITIONS MADE BY THE AO TOWARDS DEDUCTION CLAIMED U/S 36(1) (VIIA) AND 36(1)(VIII) OF THE I.T.ACT, 1961. FURTHER, THE LD. AO IN ORDER GIVING EFFECT TO LD.CI T(A) ORDER DATED 31/01/2018 ALLOWED RELIEF TO THE ASSESSEE IN RESPEC T OF DISALLOWANCES OF DEDUCTION CLAIMED U/S 36(1) (VIIA) AND 36(1)(VIII) OF THE I.T.ACT, 1961. THEREFORE, THERE IS NOTHING TO C HALLENGE BEFORE THE ITAT BY THE ASSESSEE, AS WELL AS THE REVENUE AND HE NCE, PEEAL FILED BY THE ASSESSEE AND REVEUNE MAY BE DISMISSED. WE FI ND THAT THE LD. CIT(A) HAS SET ASIDE THE ISSUE OF ADDITIONS MAD E TOWARDS DISALLOWANCE OF DEDUCTION CLAIMED U/S 36(1) (VIIA) AND 36(1)(VIII) OF THE I.T.ACT, 1961AND SAID FINDINGS HAVE BEEN CHALLE NGED BY THE ASSESSEE, AS WELL AS THE REVENUE. WE, FURTHER NOTED THAT THE LD. AO HAD ALLOWED RELIEF TO THE ASSESSEE IN ORDER GIVING EFFECT TO LD.CIT(A) ORDER, IN ORDER DATED 29/03/2019. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE APPEALS FILED BY THE ASSES SEE, AS WELL AS THE REVENUE FOR AY 2015-16 BECOMES INFRUCTUOUS AN D HENCE, BOTH STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 4 APPEALS FILED BY THE ASSESSEE, AS WELL AS THE REVEN UE ARE DISMISSED AS NON MAINTAINABLE. 3. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AND REVENUE ARE DISMISSED. ITA.NO.2647 AND 2771/MUM/2018 FOR AYS 2014-15: 4. IN THESE CROSS APPEALS FILED BY THE ASSESEE, AS WELL AS THE REVENUE FACTS AND ISSUES ARE IDENTICAL TO THE FACTS AND ISSUES, WHICH WE HAD ALREADY CONSIDERED IN ITA NO.2608 AND 2772/M UM/2018 FOR AY 2015-16, EXCEPT LIMITED CHANGES IN FACT TO THE E XTENT OF PARTIAL RELIEF ALLOWED BY THE AO IN ORDER GIVING EFFECT TO THE ORDER OF THE LD.CIT(A), DATED 08/11/2018, IN RESPECT DISALLOWANC E OF DEDUCTION CLAIMED U/S 36(1)(VIII) OF THE I.T.ACT, 1961. THE L D. AR SUBMITTED THAT AS REGARDS DISALLOWANCES U/S 36(1)(VIIA) THERE IS N O DISPUTE, BECAUSE THE LD. AO HAS ALLOWED RELIEF TO THE ASSESSEE IN O RDER GIVING EFFECT TO THE ORDER OF THE LD.CIT(A). HOWEVER, IN RESPECT OF DISALLOWANCE U/S 36(1)(VIII) OF THE I.T.ACT 1961, THE LD. AO HAS ALLOWED RELIEF TO THE EXTENT OF RESERVES CREATED BY THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR AMOUNTING TO RS. 116 CRORES, AS AGAINST TOTAL DEDUCTION CLAIMED BY THE ASSESSEE FOR RS. 311 CRORES. THE LD. AR, FUR THER SUBMITTED THAT THE ASSESSEE LIMITED SUBMISSIONS IN THIS REGAR D IS THAT ANY AMOUNT TRANSFERRED TO SPECIAL RESERVE U/S 36(1)(VII I) OF THE I.T,.ACT, STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 5 1961 BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS RE LEVANT ASSESSMENT YEAR SHALL NEEDS TO BE CONSIDERED, INSTE AD OF RESERVES CREATED DURING THE RELEVANT FINANCIAL YEAR. IF, RES ERVE CREATED BY THE ASSESSEE DURING SUBSEQUENT FINANCIAL YEARS AND ALSO , AMOUNT TRANSFERRED TO GENERAL RESERVES HAVE BEEN CONSIDERE D, THEN AMOUNT TRANSFERRED TO SPECIAL RESERVE ACCOUNT U/S 36(1)(VI II) OF THE I.T.ACT, 1961 IS MORE THAN THE AMOUNT OF DEDUCTION CLAIMED U /S 36(1)(VII) FOR THE AY 2014-15 AND HENCE, NO DISALLOWANCE COULD BE MADE. IN THIS REGARD, HE RELIED UPON THE DECISION OF ITAT, BANGAL ORE BENCH IN THE CASE OF VIJAYA BANK VS JCIT (LTU) IN ITA NO. 750/BA NG/2017, VIDE ORDER DATED, 05/01/2018. 5. THE LD. DR, ON THE OTHER HAND SUBMITTED THAT AS REGARDS DISALLOWANCE OF DEDUCTION CLAIMED U/S 36(1)(VIII), THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS TRANS FERRED TO SPECIAL RESERVE ACCOUNT A SUM OF RS. 116 CRORES. THEREFORE , THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD.AO TO ALLO W ACTUAL AMOUNT TRANSFERRED TO SPECIAL RESERVE ACCOUNT DURING THE R ELEVANT FINANCIAL YEAR. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. INSOFAR STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 6 AS, DISALLOWANCE OF DEDUCTION CLAIMED U/S 36(1)(VII A), THERE IS NO DISPUTE, BECAUSE THE LD.AO IN ORDER GIVING EFFECT TO THE ORDER OF CIT(A), DATED 08/11/2019 ALLOWED RELIEF TO THE ASSE SSEE. THEREFORE, NOTHING IS SURVIVED TO CHALLENGE BEFORE THE AO, IN RESPECT OF SAID ADDITION AND HENCE, GROUND TAKEN BY THE ASSESSEE, A S WELL THE REVENUE IN THIS REGARD ARE REJECTED. INSOFAR AS, DI SALLOWANCE OF DEDUCTION CLAIMED U/S 36(1)(VIII) OF THE I.T.ACT, 1 961, AMOUNTING TO RS. 311 CRORES, THE LD. AO HAS ALLOWED AN AMOUNT OF RS. 116 CRORES, ON THE BASIS OF AMOUNT TRANSFERRED TO SPECI AL RESERVE ACCOUNT FOR THE YEAR UNDER CONSIDERATION AND BALANCE ADDITI ON HAS BEEN SUSTAINED. THE ASSESSEE HAS ARGUED FOR DELETION OF BALANCE AMOUNT SUSTAINED BY THE AO, IN THE LIGHT OF DECISION OF IT AT, BANGALORE BENCH, IN THE CASE OF VIJAYA BANK (SUPRA) AND ARGUE D THAT EVEN, RESERVE CREATED IN SUBSEQUENT/SUCCEEDING YEARS, HOW EVER BEFORE FINALIZATION GRANT OF DEDUCTION U/S 36(1)(VIII) OF THE I.T.ACT, 1961, I.E, AS PER DATE OF ORDER OF ASSESSMENT IS REQUIRED TO B E CONSIDERED, WHILE ALLOWING THE CLAIM FOR DEDUCTION U/S 36(1)(VI II) OF THE I.T.ACT, 1961. WE FIND THAT PROVISION OF SECTION 36(1)(VIII) IS VERY CLEAR AS PER WHICH DEDUCTION IS ALLOWED ONLY, IF ASSESSEE CREATS AND TRANSFERS AMOUNT TO SPECIL REASRVE ACCOUNT. UNLESS, THE ASSES SEE TRANSFERRED AMOUNT TO SPECIAL RESERVE ACCOUNTED CREATED AND MAI NTAINED SUBJECT TO CERTAIN CONDITIONS DURING THE RELEVANT F INANCIAL YEAR ITSELF, STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 7 DEDUCTION FOR THE SAME CANNOT BE ALLOWED U/S 36(1)( VIII) OF THE I.T.ACT, 1961. ALTHOUGH, THE CO-ORDINATE BENCH OF I TAT, BANGALORE HAS HELD THAT RESERVE CREATED IN SUBSEQUENT /SUCCEE DING YEARS HOWEVER, BEFORE THE FINALIZATION OF DEDUCTION U/S 3 6(1)(VIII) OF THE I.T.ACT, 1961 NEEDS TO BE CONSIDERED WHILE ALLOWING CLAIM FOR DEDUCTION, BUT ON CONSIDERATION OF PROVISIONS OF SE CTION 36(1)(VIII) OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE FIN DINGS RECORDED BY THE TRIBUNAL IS CONTRARY TO THE LAW AS SET OUT IN P ROVISIONS OF SECTION 36(1)(VIII) OF THE I.T.ACT, 1961 AND HENCE, THE CAS E LAWS RELIED UPON BY THE ASSESSEE IS NOT CONSIDERED. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDI NGS RECORDED BY THE LD. AO, WHILE ALLOWING RELIEF TO THE ASSESSEE TO TH E EXTENT OF RS. 116 CRORES, WHICH IS EQUIVALENT TO AMOUNT TRANSFERRED T O SPECIAL RESERVE ACCOUNT CREATED AND MAINTAINED BY THE ASSESSEE U/S 36(1)(VIII) OF THE I.T.ACT, 1961. ACCORDINGLY, WE REJECT GROUND TA KEN BY THE ASSESSEE, AS WELL AS THE REVENUE. 7. IN THE RESULT, APPEALS FILED BY THE ASSESSE, AS WELL AS THE REVENUE ARE DISMISSED. STATE BANK OF INDIA (SUCCESSOR TO STATE BANK OF HYDERABAD) 8 8. AS A RESULT, APPEALS FILED BY THE ASSESSEE AND R EVENUE FOR BOTH ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 /10/ 2019 SD/- (RAM LAL NEGI) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15/10/2019 THIRUMALESH SR.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//