ACIT, Jaipur V. S B B J, Jaipur

ITA 29/JPR/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2074 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLLY AGARWAL
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business expenditure; Question of law
• Section: 143(3); 14A; 37; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 125/JP/2014 & 924/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2010-11. STATE BANK OF BIKANER & JAIPUR, TILAK MARG, C-SCHEME, JAIPUR. CUKE VS. ASSTT. COMMISSIONER OF INCOME- TAX/DCIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADCS 4750 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 29/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2010-11. ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-6, JAIPUR. CUKE VS. STATE BANK OF BIKANER & JAIPUR, TILAK MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADCS 4750 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLLY AGARWAL (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08.08.2017. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/08/2017. VKNS'K@ ORDER PER BENCH : THESE THREE APPEALS BY THE ASSESSEE AND REVENUE AR E DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT (APPEALS)-II, JAIPUR DAT ED 17.01.2014 AND 18.10.2012 PERTAINING TO A.Y. 2010-11. ITA NOS. 924/JP/2012 AN D 29/JP/2013 ARE CROSS APPEALS. 2 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. ALL THESE APPEALS ARE BEING DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FIRST, WE TAKE UP ASSESSEES APPEA L IN ITA NO. 125/JP/2014 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ORDER BY LD. COMMISSIONER OF INCOME TAX (APPEALS) U/S 154 IS ILL EGAL AND BAD IN LAW. 2. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED ON FACTS AND IN LAW IN DISALLOWING RS. 96,22,74,860/- ON ACC OUNT OF BROKEN PERIOD INTEREST PAID BY THE BANK BY RELYING ON THE DECISION OF RAJASTHAN HIGH COURT IN CASE OF CIT VS. BANK OF RAJASTHAN LTD ., 316 ITR 391 DATED 24.03.2008 BY INCORRECTLY DISTINGUISHING THE SUBSEQUENT JUDGMENT OF HONBLE SUPREME COURT IN CASE OF CIT VS . CITI BANK NA IN CIVIL APPEAL NO. 1549/2006 DATED 12.08.2008. 3. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED ON FACTS AND IN LAW IN MAKING THE ABOVE DISALLOWANCE BY MAKI NG VARIOUS INCORRECT OBSERVATIONS AND ALSO NOT CONSIDERING THE VARIOUS CONTENTIONS RAISED BY THE ASSESSEE. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED ON FACTS AND IN LAW IN NOT DEALING THE ALTERNATE ARGUMENT OF ASSESSEE THAT EVEN IF DISALLOWANCE IS TO BE MADE IT CAN BE MADE ONLY O F NET BROKEN PERIOD INTEREST PAID AS HAS BEEN MADE BY AO IN EARLIER YEA RS ON THE GROUND THAT THIS ISSUE IS NOT DECIDED BY HIS PREDECESSOR C IT (A). 5. APPELLANT CRAVES TO ADD, AMEND, ALTER OR MODIFY ANY OF THE GROUND OF APPEAL. 6. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT LD . CIT (A) RECTIFIED HIS ORDER UNDER SECTION 154 ON THE BASIS THAT THE IN THE APPE LLATE ORDER DATED 18.10.2012 THE LD. CIT (A) DID NOT CONSIDER THE JUDGMENT OF THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BANK OF RAJASTHAN, 316 ITR 391 (RAJ.) THEREBY THE LD. CIT (A) 3 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. CONFIRMED THE ADDITION ON ACCOUNT OF NET BROKEN PER IOD INTEREST. AGGRIEVED, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THIS TRIB UNAL. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF AND SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE ASSESSEES OWN CASE. 3.1. ON THE CONTRARY, THE LD. D/R OPPOSED THE SUBMI SSIONS. 3.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE HONBLE RAJASTHAN HIGH COURT IN D.B. INCOME TAX APPEAL NO. 446/2008 I N THE CASE OF CIT VS. SBBJ HAD FRAMED THE QUESTION OF LAW AS UNDER :- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ITAT HAS NOT ACTED ILLEGALLY AND PERVERSELY IN HOLDING THAT THE BROKEN PERIOD INTEREST ON PURCHASE OF SECURITIES IS DEDUCTIBLE U/ S 37 OF THE ACT AS BUSINESS EXPENDITURE ? THE HONBLE HIGH COURT AFTER CONSIDERING THE VARIOU S CASE LAWS DECIDED THE ISSUE AGAINST THE REVENUE. THEREFORE, RESPECTFULLY FOLLOW ING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE HEREBY DIRECT THE AO TO DELETE THE ADDITION. 4. OTHER GROUNDS RAISED ARE GENERAL IN NATURE AND N EEDS NO ADJUDICATION. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO. 924/JP/2012 PERTAINING TO ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 75,00,735/- 4 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. MADE BY AO UNDER SECTION 14A READ WITH RULE 8D OF T HE INCOME TAX ACT, 1961. 2. APPELLANT CRAVES TO ADD, AMEND, ALTER OR MODIFY ANY OF THE GROUND OF APPEAL. 3. THE APPROPRIATE COST BE AWARDED TO THE ASSESSE E. 7. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 29.02.2012. WHILE FRAMING THE ASSESSMENT, TH E AO MADE DISALLOWANCE OF RS. 75,00,735/-UNDER SECTION 14A READ WITH RULE 8D ON A CCOUNT OF EXEMPTED INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS, SUSTAINED THE DISALLOW ANCE MADE BY THE AO. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ADJUDICATED IDENTICAL GROUND IN THE ASSESSEES APPEAL IN ITA NO. 280/JP/2 009 FOR THE A.Y. 2006-07 WHEREIN WE HAVE DELETED THE ADDITION BY OBSERVING A S UNDER :- 4.5 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF T HE AUTHORITIES BELOW. WE FIND THAT LD. CIT(A) HAS MADE DISALLOWAN CE BY COMPUTING AS PER RULE 8D OF THE INCOME TAX RULES 1962. IN OUR VIEW, THE LD. CIT(A) WAS NOT JUSTIFIED IN COMPUTING THE DISALLOWA NCE AS PER RULE 8D, AS THE RULE 8D BECAME OPERATIONAL FROM THE A.Y. 200 8-09. FURTHER, THERE IS NOT DISPUTE WITH REGARD TO THE FACT THAT S IMILAR DISALLOWANCES WERE MADE U/S 14A IN THE ASSESSMENT YEAR 2000-01, 2 002-03 AND 2003-04 AND THE MATTER TRAVELED UP TO THE HONBLE R AJASTHAN HIGH COURT. THE HONBLE HIGH COURT IN DB INCOME TAX APP EAL NOS. 172/2008, 119/2010, 141/2010 AND 142/2010 WAS PLEAS ED TO HELD THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF GODREJ BOYCE MANUFACTURING COMPANY LTD. VS. DCIT. T HE ORDER OF 5 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. DISALLOWANCE WAS REVERSED. THE FACTS ARE IDENTICAL IN THE PRESENT YEAR AND ALSO THERE IS NO CHANGE INTO FACTS AND CIRCUMST ANCES. AS THE ASSESSEE BANK IS HAVING SUFFICIENT INTEREST FREE FU NDS WHICH HAS BEEN ACCEPTED BY BOTH THE AUTHORITIES BELOW. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONA L HIGH COURT, WE HEREBY DIRECT THE AO TO DELETE THE DISALLOWANCE. T HUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTA NCES OF THE CASE IN THE YEAR UNDER APPEAL AND ALSO FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT ON THIS ISSUE, THEREFORE, TAKING A CONSISTENT VIEW OF THE MATTER, WE DELETE THE ADDITION FOR THE YEAR UNDER CONSIDERATION. THE GROU ND OF THE ASSESSEE IS ALLOWED. 9. OTHER GROUNDS RAISED ARE GENERAL IN NATURE AND N EEDS NO ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 29/JP/2013 PERTAINING TO ASSESSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN (I) HOLDING THAT INTEREST ON GOVERNMENT AND OTHER SECUR ITIES NEEDS TO BE COMPUTED ON DUE BASIS AGAINST THE DECISION OF AO TO TAX THAT ON ACCRUAL BASIS. (II) DELETING ADDITION OF RS. 96,22,74,860/- FOR A.Y. 20 10-11 MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF BROKEN PERI OD INTEREST PAYMENT ON PURCHASES OF SECURITIES. (III) DELETING THE ADDITION OF RS. 45,15,94,870/- FOR A.Y . 2020-11 MADE BY THE AO IN RESPECT OF VALUATION OF INVESTMEN T BY ADOPTING GLOBAL METHOD OF VALUATION OF SECURITIES A S AGAINST CATEGORY WISE METHOD OF VALUATION FOLLOWED BY THE A SSESSEE. 6 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. (IV) DELETING THE ADDITION OF RS. 98,99,73,828/- FOR A.Y . 2010-11 MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF AMORTI ZATION IN RESPECT OF PERMANENT DIMINUTION IN THE VALUE OF SEC URITIES HELD BY THE BANK UNDER THE HEAD OF MATURITY CATEGORY. (V) DELETING THE ADDITION OF RS. 10,67,017/- FOR A.Y. 2 010-11 MADE ON ACCOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE I N VARIOUS HEADS BY TREATING THE SAME AS PRIOR PERIOD EXPENSE. 12. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL GROUNDS WERE RAISED IN THE APPEAL IN ITA NO. 438/JP/2009 PERTAINING TO A.Y. 2006-07 ON BEHALF OF THE REVENUE. HE SUBMITTE D THAT THE FACTS ARE IDENTICAL AS WERE IN THE A.Y. 2006-07. THE ISSUES ARE SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE PERTAINING TO A.Y. 1997-98 TO 2000-01 AND 2004-05. 12.1. THE D/R HAS NOT CONTROVERTED THIS FACT. 12.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD. BOTH THE RESPECTIVE REPRESENTATIVES OF THE PARTIES HAVE ADOP TED THE SAME ARGUMENTS AS WERE MADE IN THE REVENUES APPEAL IN ITA NO. 438/JP/2009 AND THE APPEAL OF THE REVENUE ON THE IDENTICAL GROUNDS RAISED MENTIONED HEREIN AB OVE HAVE BEEN DECIDED BY FOLLOWING JUDGMENT OF THE HONBLE HIGH COURT OF RAJ ASTHAN IN APPEALS PERTAINING TO THE ASSESSMENTS 1997-98 TO 2000-01 AND 2004-05. THE LD. COUNSEL HAS INVITED OUR ATTENTION, TO THE JUDGMENTS OF HONBLE HIGH COURT R ENDERED IN D.B. INCOME TAX APPEALS NO. 185/2014 AND 27/2015. THEREFORE, TAKING A CONSISTENT VIEW, WE DO NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF THE LD. CIT (A) IN THIS APPEAL ALSO, SAME IS HEREBY AFFIRMED. THE GROUNDS NO. (I) TO (IV ) OF REVENUES APPEAL ARE REJECTED. 7 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR. 13. GROUND NO. (V) RELATES TO DELETION OF ADDITION OF RS. 10,67,017/- FOR A.Y. 2010-11 ON ACCOUNT OF EXPENDITURE CLAIMED BY THE AS SESSEE UNDER VARIOUS HEADS BY TREATING THE SAME AS PRIOR PERIOD EXPENSES. 13.1. WE HAVE DISCUSSED THIS ISSUE IN THE APPEAL OF THE ASSESSEE IN ITA NO. 280/JP/2009 FOR THE A.Y. 2006-07 IN PARA 6.3 TO 6.5 OF THE ORDER. FOR THE DETAILED REASONS GIVEN THEREIN AND TAKING A CONSISTENT VIEW OF THE EARLIER ORDER OF THE ITAT, WE REJECT THIS GROUND OF THE REVENUE. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 15. IN TOTALITY, THE APPEAL OF THE REVENUE IS DISMI SSED WHEREAS THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/201 7. SD/- SD/- FOE FLAG ;KNO DQY HKKJR (VIKRAM SINGH YADAV) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/08/2017. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT/DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- STATE BANK OF BIKANER & JAIPUR, JAI PUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 125/JP/2014, 924/JP/2012 & 29/JP/2013} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 8 ITA NO. 125/JP/14, 924/JP/12 & 29/JP/13 STATE BANK OF BIKANER & JAIPUR, JAIPUR.