ACIT 1(3), MUMBAI V. RABO INDIA FINANCE LTD, MUMBAI

ITA 3167/MUM/2011

• Counselvise Citation: 316719914 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-02-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMI
• Assessee Lawyers: DINESH BAFANA
• Keywords: Reopening of assessment
• Section: 43B; 147; 144; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.2510/MUM/2011 ( / ASSESSMENT YEAR :2002-03) RABO INDIA FINANCE LIMITED, FORBES BUILDING, 2 ND FLOOR, CHARANJIT RAI MARG, FORT, MUMBAI-400001 / VS. ASSTT. COMMISSIONER OF INCOME TAX, RANGE 1(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( / APPELLANT) .. ( !' / RESPONDENT) ./I.T.A. NO.3167/MUM/2011 ( / ASSESSMENT YEAR :2002-03) JT. COMMISSIONER OF INCOME TAX, RANGE 1(3), R NO.540/564, 5 TH FLOOR, AAYAKAR BHAVAN, NEW MARINE LINES M K ROAD, MUMBAI-400020 / VS. RABO INDIA FINANCE LIMITED, FORBES BUILDING, 2 ND FLOOR, CHARANJIT RAI MARG, FORT, MUMBAI-400001 ( / APPELLANT) .. ( !' / RESPONDENT) ./ $% ./ PAN/GIRNO.:AAACR6065R & / ASSESSEE BY : SHRI DINESH BAFANA !' ' & /REVENUE BY : SHRI MANJUNATHA SWAMI ( ) ' * + / DATE OF HEARING : 28.10.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 29.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDER DATED 1.2.2011 PASSED BY THE LD.CIT(A)-2, MUMBAI AND THEY RELATE T O THE ASSESSMENT YEAR 2002- 03. I.T.A. NO.2510 AND 3167/MUM/2011 2 2. IN THE APPEAL FILED BY THE ASSESSEE FOLLOWING TH REE ISSUES ARE URGED : A) VALIDITY OF RE-OPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (THE ACT); B) REJECTION OF CLAIM OF EXEMPTION U/S 10(23G) OF T HE ACT; AND C) REJECTION OF CLAIM OF DEDUCTION OF INTEREST OF R S.48,08,110/- RELATING TO FOREIGN CURRENCY NON-RESIDENTIAL (FCNR) LOANS UNDER SECTION 43B OF THE ACT. 3. IN THE APPEAL FILED BY THE REVENUE, THE SOLITARY GROUND URGED RELATES TO DELETION OF INTEREST CHARGED U/S 234D OF THE ACT. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.2 RELATING TO CLAIM OF EXEMPTION U/S 10(2 3G) OF THE ACT HAS SINCE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINAT E BENCH OF TRIBUNAL IN THE ASSESSEES OWN CASE, VIDE ITS ORDER DATED 18.3.201 0 IN ITA NO.3325/MUM/2009 AND CO NO.243/MUM/2009 RELATING TO THE AY-2004-05 . THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE COPY OF THE O RDER PASSED BY THE TRIBUNAL PLACED AT PAGES 46 TO 58 OF THE ASSESSEES PAPER BO OK. ON PERUSAL OF THE SAID ORDER, WE NOTICE THAT THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE ON NOTICING THAT THE DEDUCTION U/S 10(23G) IS BEING AL LOWED CONSISTENTLY FROM THE ASSESSMENT YEAR 2002-03 ONWARDS. FOR THE SAKE OF CO NVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY THE TRIBUNAL: 5. WE HAVE CONSIDERED THE ISSUE. AS THE ASSESSEE SATISFIED THE CONDITIONS FOR CLAIMING HE EXEMPTION UNDER SECTION 10(23G) AS MUCH AS IT INVOLVED IN LONG TERM FINANCING AND THEE ENTITIES W ERE ALSO NOTIFIED UNDER PROVISIONS OF SECTION 10(23G), THE CIT(A)S ORDER REQUIRE NO MODIFICATION. THE AOS REASONS FOR DENYING THE CLAIM THAT THE ASS ESSEE HAS NOT CLASSIFIED THE LOANS AS INVESTMENTS AND FURTHER THO SE COMPANIES HAVE NOT INVITED FUNDS BY OPEN OFFER FROM THE PUBLIC ARE NOT MATERIAL AS CLASSIFICATION OF AMOUNTS IN THE BOOKS OF ACCOUNTS ARE NOT A CRITERIA, FOR CONSIDERING THE LONG TERM FINANCE GIVEN BY THE ASS ESSEE AND FURTHER THERE IS NO STIPULATION THAT THERE SHOULD BE AN OPEN OFFE R IN INVITING LONG TERM FINANCE UNDER THE RULES. THE CONDITIONS CONSIDERED BY THE AO ARE NOT SUPPORTED BY THE PROVISIONS OF THE ACT AND THEREFO RE THE AOS ACTION IN DENYING THE CLAIM ON INFRUCTUOUS REASONS CANNOT BE UPHELD. AS RIGHTLY HELD BY THE CIT(A) BOTH THE ASSESSEE AND THOSE ENTITIES DO CLASSIFY UNDER THE PROVISIONS OF THE ACT AND ACCORDINGLY THE CLAIM OF 10(23G) IS ALLOWABLE. IT IS ALSO ON RECORD THAT THE CLAIMS WERE BEING CONSIS TENTLY ALLOWED FROM THE AY 2002-03 AND THERE IS NO NEED FOR DEVIATING FROM THE SAME STAND IN THE I.T.A. NO.2510 AND 3167/MUM/2011 3 YEAR UNDER CONSIDERATION. ACCORDINGLY THE GROUND RA ISED BY THE REVENUE IS DISMISSED. 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE REVENUE HAD PREFERRED APPEAL BEFORE THE HONBLE BOMBAY HIGH COU RT CHALLENING THE ORDER OF THE TRIBUNAL ON THE ISSUE RELATING TO SECTION 10(23 G) OF THE ACT AND THE HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 25.11.2012 P ASSED IN INCOME TAX APPEAL NO.6983 OF 2010 HAS DISMISSED THE APPEAL FIL ED BY THE REVENUE. THE LD. AR ALSO FURNISHED A COPY OF THE SAID ORDER OF HONB LE BOMBAY HIGH COURT. IN VIEW OF THE DECISION RENDERED BY THE TRIBUNAL WHICH HAS SINCE BEEN CONFIRMED BY THE HONBLE BOMBAY HIGH COURT, WE SET ASIDE THE ORD ER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSE E OF EXEMPTION U/S 10(23G) OF THE ACT. 6. WITH REGARD TO THE GROUND RELATING TO DISALLOWAN CE OF INTEREST ON (FCNR) UNDER SECTION 43B OF THE ACT, THE LD. COUNSEL SUBMI TTED THAT THE AO HAS SINCE DELETED THE ABOVE SAID DISALLOWANCE IN THE ORDER DA TED 10.5.2011 PASSED UNDER SECTION 154 OF THE ACT. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSEE IS NOT PRESSING THE SAID GROUND. ACCORDINGLY, THE SAID GR OUND IS DISMISSED AS NOT PRESSED. 7. THE LD. COUNSEL FURTHER SUBMITTED THAT THE G ROUND NO.1 RELATING TO VALIDITY OF REOPENING OF THE ASSESSMENT WOULD BECOME ACADEMIC, IF ALL THE ADDITIONS MADE BY ASSESSING OFFICER IS DELETED. IN THE EARLIER P ARAGRAPHS, WE HAVE DIRECTED THE AO TO ALLOW THE EXEMPTION U/S 10(23G) OF THE ACT AN D FURTHER DISALLOWANCE OF INTEREST HAS SINCE BEEN RECTIFIED BY THE AO IN THE ORDER PASSED U/S 154 OF THE ACT. HENCE, AS SUBMITTED BY THE LD. A.R, THE ISSUE REL ATING TO VALIDITY OF REOPENING OF ASSESSMENT HAS BECOME ACADEMIC AND HENCE WE DO NOT FIND IT NECESSARY TO ADJUDICATE THE SAME 8. WITH REGARD TO THE APPEAL FILED BY THE REVENUE , BOTH THE PARTIES HAVE AGREED THAT THE ISSUE RELATING TO INTEREST U/S 234D WOULD NOT ARISE, IF BOTH THE ADDITIONS MADE BY THE AO ARE DELETED. IN THE EARL IER PARAGRAPHS, WE HAVE DIRECTED THE AO TO ALLOW THE EXEMPTION U/S 10(23G) OF THE ACT AND FURTHER DISALLOWANCE OF INTEREST HAS SINCE BEEN RECTIFIED B Y THE AO IN THE ORDER PASSED I.T.A. NO.2510 AND 3167/MUM/2011 4 U/S 144 OF THE ACT. HENCE, AS AGREED BY BOTH THE PARTIES, THE QUESTION OF CHARGING INTEREST U/S 234D WOULD NOT ARISE. ACCORD INGLY, WE REJECT THE GROUND URGED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH OCT, 2014. ,- ( . /0 1 2 29TH OCT, 2014 - ' 3) 4 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI:29TH OCT,2014. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ( 6* ( ) / THE CIT(A)- CONCERNED 4. ( 6* / CIT CONCERNED 5. 6. 78 3 !*9 , + 9 , / ( ) / DR, ITAT, MUMBAI CONCERNED 3 : ) / GUARD FILE. ; ( / BY ORDER, TRUE COPY < $ (ASSTT. REGISTRAR) + 9 , / ( ) /ITAT, MUMBAI