STATE BANK OF INDIA, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 3145/MUM/2009

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9201 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANTANU KUMAR SAIKIA
• Assessee Lawyers: K K VED WITH URVI MEHTA
• Keywords: Question of law
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH G, MU MBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO.3145/MUM/2009 (ASSESSMENT YEAR: 2006-07) STATE BANK OF INDIA, FINANCIAL REPORTING, COMPLIANCE & TAXATION DEPARTMENT, 14 TH FLOOR, CORPORATE CENTRE, MADAM CAMA ROAD, MUMBAI-400021. PAN: AAACS8577K VS. CIT -2, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. VED WITH URVI MEHTA (AR) REVENUE BY : SHRI SANTANU KUMAR SAIKIA (DR) DATE OF HEA RING : 13.06.2019 DATE OF PRONOUNCEMENT : 26.06.2019 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH, JM: 1. THIS WAS FILED BY THE ASSESSEE BANK CHALLENGING THE ORDER PASSED BY COMMISSIONER OF INCOME TAX (CIT) UNDER SECTION 263 DATED 17.09.2009. THE APPEAL WAS APPEAL WAS INITIALLY ADJ UDICATED BY TRIBUNAL VIDE ORDER DATED 06.06.2012, WHEREIN THE V ALIDITY OF THE ORDER UNDER SECTION 263 AND THE DEDUCTION UNDER SECTION 3 6(1)(VIIA) WAS HELD AGAINST THE ASSESSEE. HOWEVER, THE ISSUE OF DEDUCTI ON UNDER SECTION 36(1)(VIII) WAS DECIDED IN FAVOUR OF ASSESSEE BANK. THE ASSESSEE BANK FIELD MISCELLANEOUS APPLICATION FOR RECALLING THE O RDER DATED ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 2 06.06.2012 VIDE M.A. NO. 170/MUM/2013. THE M.A. NO. 170/MUM/2013 WAS PARTLY ALLOWED VIDE ORDER DATED 04 .06.2014 BY THE TRIBUNAL FOR LIMITED PURPOSE RELATES TO WITHDRAWAL OF DEDUCTION UNDER SECTION 36(1)(VIIA) IN RELATION TO PROVISION OF STA NDARD ASSET. THE ASSESSEE FILED APPEAL BEFORE HONBLE BOMBAY HIGH CO URT AGAINST THE ORDER DATED 04.06.2014 VIDE ITA NO. 1481 OF 2012. T HE HONBLE HIGH COURT VIDE ORDER DATED 17.12.2014 IN ITA NO. 1481 O F 2012 DIRECTED THE TRIBUNAL TO RE-HEAR THE APPEAL AND DECIDE IN AC CORDANCE WITH LAW. 2. THE REVENUE FILED APPEAL AGAINST THE ORDER DATED 06 .06.2012 WHEREIN THE ISSUE OF DEDUCTION UNDER SECTION 36(1)(VIII) WA S HELD IN FAVOUR OF ASSESSEE. THE APPEAL FILED BY REVENUE VIDE ITA NO. 269 OF 2013 WAS DISMISSED VIDE ORDER DATED 04.02.2015. 3. HOWEVER, THE TRIBUNAL WHILE HEARING OF THE APPEAL A S PER DIRECTION OF HONBLE BOMBAY HIGH COURT DATED 17.12.2014 WHILE HE ARING THE APPEAL AFRESH, THE ISSUE RELATING TO DEDUCTION UNDE R SECTION 36(1)(VIII) WAS HELD AGAINST THE ASSESSEE BANK VIDE ORDER DATED 06.09.2016. HOWEVER, ON MISCELLANEOUS APPLICATION FILED BY ASSE SSEE VIDE M.A. NO. 417/MUM/2016, THE ORDER DATED 06.09.2016 WAS RE CALLED QUA GROUND RELATED TO DEDUCTION UNDER SECTION 36(1)(VII I) VIDE ORDER DATED 18.05.2018. IN THE AFORESAID BACKGROUND, THE APPEAL QUA GROUND RELATED TO DEDUCTION UNDER SECTION 36(1)(VIII) CAME UP HEAR ING AFRESH. ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 3 4. THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSES SEE FURTHER SUBMITS THAT INITIALLY THE ASSESSEE CHALLENGED THE ORDER OF LD. CIT(A) PASSED UNDER SECTION 263 DATED 17.09.2009. THE APPEAL OF A SSESSEE WAS PARTLY ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 06.06.2012 . THE ASSESSEE FILED M.A ON 04.06.2014 WHEREIN THE ORDER DATED 06.06.201 2 WAS PARTLY RECALLED QUA THE GROUND RELATED WITH WITHDRAWAL OF DEDUCTION UNDER SECTION 36(1)(VIIA). THE REVENUE HAS CHALLENGED THE ORDER OF TRIBUNAL IN PARTLY ALLOWING THE GROUND QUA UNDER SECTION 36(1)( VIII) DATED 06.06.2012 BEFORE JURISDICTIONAL HIGH COURT. THE JU RISDICTIONAL HIGH COURT VIDE ORDER DATED 04.04.2015 DIRECTED THE TRIB UNAL VIDE ORDER DATED 04.02.2015 DISMISSED THE APPEAL OF REVENUE HO LDING THAT THE ASSESSEE BANK IS COVERED BY THE DEFINITION OF FINA NCIAL CORPORATION AS STATED IN EXPLANATION TO SECTION 36(1)(VIII). 5. THUS, THE HONBLE COURT HAD CONFIRMED THE ORDER DAT ED 06.06.2012 PASSED BY TRIBUNAL TO THE EXTENT IT HELD THAT THE A SSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 36(1)(VIII). T HE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE TRIBUNAL AFTER RE -HEARING THE APPEAL IN ACCORDANCE WITH THE DIRECTION OF HONBLE HIGH COURT WHILE DECIDING THE APPEAL DECIDED THE ISSUE RELATING TO DEDUCTION UNDE R SECTION 36(1)(VIII) AGAINST THE ASSESSEE, WHICH WAS RECALLED IN M.A. NO . 417/MUM/2016 DATED 07.12.2016. THE LD. AR OF THE ASSESSEE FURTHE R SUBMITS THAT IN THE ABOVE BACKGROUND AS EXPLAINED ABOVE WOULD SUBMIT TH AT INFACT THE ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 4 GROUND RELATED TO DEDUCTION UNDER SECTION 36(1)(VII I) IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE BOMBA Y HIGH COURT IN ASSESSEES OWN CASE IN ITA NO. 269/2013 DATED 04.02 .2015. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE ORDER DATED 04.02.2015 PASSED BY JURISDICTIONAL HIGH COUR T IS NOT CLEAR ON WHETHER THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 36(1)(VIII). 7. IN RESPONSE TO THE SUBMISSION OF LD. DR FOR THE REV ENUE, THE LD. AR OF THE ASSESSEE SUBMITS THAT ORDER OF HONBLE JURISDIC TIONAL HIGH COURT HAS TO BE READ ALONG WITH THE QUESTIONS WHICH WERE RAIS ED BEFORE THE HONBLE HIGH COURT. THE LD. AR FURTHER SUBMITS THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER ORIGINAL LY TAKEN A POSSIBLE VIEW WHICH HAS BEEN FORTIFIED BY THE DECISION OF TR IBUNAL IN CASE OF UNION BANK OF INDIA REPORTED IN [2011] 16 TAXMANN.C OM 304. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT IN PARA-8 & 9 OF THE HIGH COURT ORDER DATED 04.02.2015, THE ASSESSEE IS COVERED BY THE DEFINITION OF FINANCIAL CORPORATION AS STATED IN EXPLANATION TO SECTION 36(1)(VIII). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE ORDER OF TRIBUNAL DATED 06.06.2012 WHEREIN THE ISSU E RELATED WITH DEDUCTION UNDER SECTION 36(1)(VIII) WAS DECIDED IN FAVOUR OF ASSESSEE. AGAINST THE ORDER OF TRIBUNAL DATED 06.06.2012, THE REVENUE FILED ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 5 APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT VIDE ITA NO. 269 OF 2013, WHEREIN FOLLOWING QUESTION OF LAW WAS FRAM ED: '(1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW) THE ITAT WAS CORRECT IN ALLOWING THE DEDUCTION U/S. 36(1)(VIII) OF THE I. T. ACT) FOLLOWING THE DECISION IN THE CASE OF UNION BA NK OF INDIA VIS. ACIT [(2011) 16 TAXMANN.COM 304 ITAT (MUM)], IGNORING TH E DECISION OF THE KERALA HIGH COURT IN THE CASE OF FEDERAL BANK LTD. VIS. ACIT (198 TAXMANN 491) IN WHICH IT IS HELD THAT FINANCIAL COR PORATION ARE SEPARATE AND DISTINCT ENTITIES DIFFERENT FROM SCHEDULED BANKS WH ICH ARE COVERED BY THE PROVISIONS OF BANKING REGULATION ACT? 9. THE HONBLE HIGH COURT AFTER HEARING THE PARTIES PA SSED THE FOLLOWING ORDER: 3. WE FIND THAT THE IMPUGNED ORDER DATED 6 TH JUNE, 2012 HAS HELD THAT THERE WAS NO OCCASION FOR COMMISSIONER OF INCOME TAX TO E XERCISE ITS POWER OF THE REVISION UNDER SECTION 263 OF THE ACT ON THE QU ESTION OF DEDUCTION CLAIMED UNDER SECTION 6(1)(VIII) OF THE ACT. THIS C ONCLUSION WAS REACHED BY FOLLOWING ITS DECISION IN UNION BANK OF INDIA V/S. ACIT (2011) 16 TAXMANN.COM 304 HOLDING THAT DEDUCTION UNDER SECTIO N 36(1)(VIII) OF THE ACT IS TO BE ALLOWED TO THE GOVERNMENT BANKS EVEN F OR THE YEARS PRIOR TO ASSESSMENT YEAR 2007-08. THE AMENDMENT IN THE ASSES SMENT YEAR 2007-08 INCLUDES THE BANKING COMPANIES. 4. WE WERE AT THE VERY OUTSET FAIRLY INFORMED BY MR . SURESH KUMAR, LEARNED COUNSEL APPEARING FOR THE REVENUE THAT ON THE AFORE SAID ISSUE, THE DECISION OF THE TRIBUNAL IN UNION BANK OF INDIA (SUPRA) HAS BEEN ACCEPTED BY THE REVENUE. MR. SURESH KUMAR POINTS OUT THAT ALTHOUGH AN APPEAL HAS BEEN FILED BY THE REVENUE ON THE OTHER ISSUES, NO APPEAL HAS BEEN FILED ON THIS ISSUE. 5. WE HAVE ON AN EARLIER OCCASION IN THE CASE OF CI T V/S. SMT. VEENA G. SHROFF HAVE OBSERVED IN OUR ORDER DATED 27' JANUARY , 2015 THAT WHEN REVENUE CHALLENGES THE ORDER OF THE TRIBUNAL WHICH IN TURN RELIES UPON ANOTHER DECISION RENDERED BY IT ON THE SAME ISSUE, THEN IN CASES WHERE THE REVENUE HAS ACCEPTED THE ORDER BY NOT PREFERRING AN Y APPEAL AGAINST THE ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 6 EARLIER ORDER, THE REVENUE SHOULD NOT CHALLENGE THE SUBSEQUENT ORDER ON THE SAME ISSUE, IN CASE AN APPEAL IS PREFERRED FROM THE SUBSEQUENT ORDER, THEN THE MEMO OF APPEAL MUST INDICATE THE REASONS AS TO WHY AN APPEAL IS BEING PREFERRED IN LATER CASE WHEN NO APPEAL WAS PREFERRE D FROM THE EARLIER ORDER OF THE TRIBUNAL WHICH HAS MERELY BEEN FOLLOWED IN T HE LATER CASE. IN ANY CASE, THE OFFICER CONCERNED MUST ATLEAST FILE AN AF FIDAVIT BEFORE THE MATTER COMES UP FOR ADMISSION, POINTING OUT DISTINGUISHING FEATURES IN THE PRESENT CASE FROM THE EARLIER CASE, WARRANTING A DIFFERENT VIEW IN, CASE THE APPEAL IS BEING PRESSED. THE ABSENCE OF THIS BEING INDICATIVE OF NON-APPLICATION OF MIND, DOES UNDOUBTEDLY GIVE AN OPPORTUNITY TO THE R EVENUE TO ARBITRARILY PICK AND CHOSE THE ORDERS OF THE TRIBUNAL WHICH THE Y WOULD CHALLENGE IN THE APPEAL BEFORE THE THIS COURT. UNIFORMITY IN TREATME NT AT THE HANDS OF LAW IS A BASIC PREMISE OF RULE OF LAW. WE TRUST THAT THE R EVENUE WOULD TAKE APPROPRIATE STEPS TO ENSURE THAT THE AFORESAID DIRE CTIONS BE IMPLEMENTED IN ALL SUBSEQUENT MATTERS WHICH ARE PENDING ADMISSIONS BEFORE THIS COURT. IF THIS EXERCISE IS DONE BY THE OFFICERS OF THE REVENU E, PRECIOUS TIME OF ALL CONCERNED WOULD BE SAVED. 6. COUNSEL FOR THE REVENUE IS DIRECTED TO SERVE COP Y OF THIS ORDER TO THE CHIEF COMMISSIONER OF INCOME TAX FOR APPROPRIATE AC TION. 7. BE THAT AS IT MAY, IN THE FACTS OF THE PRESENT C ASE, THERE IS NO OCCASION FOR THE CIT TO EXERCISE HIS POWERS UNDER SECTION 263 OF THE ACT AS THE VIEW TAKEN BY THE ASSESSING OFFICER GRANTING DEDUCTION U NDER SECTION 36(1) (VIII) TO THE RESPONDENT-ASSESSEE WAS A POSSIBLE VIEW. THI S POSSIBLE VIEW IS FURTHER FORTIFIED BY THE DECISION OF THE TRIBUNAL I N UNION BANK OF INDIA (SUPRA) WHICH HAS ALSO BEEN ACCEPTED BY THE REVENUE . 8. BESIDES, EVEN EXPLANATION TO SECTION 36(1) (VIII ) OF THE ACT AS EXISTING AT THE RELEVANT TIME, A FINANCIAL CORPORATION HAS BEEN DEFINED TO INCLUDE A PUBLIC COMPANY AND THE GOVERNMENT COMPANY. 9. WE FAILED TO UNDERSTAND HOW THE RESPONDENT-ASSES SEE WOULD NOT BE COVERED BY DEFINITION OF 'FINANCIAL CORPORATION' AS STATED IN THE EXPLANATION TO SECTION 36(1) (VIII) OF THE ACT. 10. CONSIDERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, THE GROUND QUA THE DEDUCTION UNDER SECTION 36(1)(VIII) IS ALREADY HELD IN ITA NO. 314 5/M/2009 - STATE BANK OF INDIA 7 FAVOUR OF ASSESSEE AND AGAINST THE REVENUE. THEREFO RE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE NECESSARY DEDUCTION TO THE ASSESSEE. HENCE, THE GROUND NO. 3 TO 9 QUA THE DEDUCTION UNDE R SECTION 36(1)(VIII) ARE ALLOWED. 11. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH JUNE 2019 SD/- SD/- (M. BALAGANESH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 26/06/2019 S.K.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/