DCIT 2(1)(1), MUMBAI V. BANK OF BARODA, MUMBAI

ITA 3492/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5652 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 3492 /MUM/20 1 7 (ASSESSMENT YEAR 20 0 7 - 0 8 ) DCIT - 2(1)(1) ROOM NO. 561 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. B ANK OF BARODA C - 26, G BLOCK BARODA CORPORATE CENTRE, BANDAR KURLA COMPLEX, BANDRA - E MUMBAI - 400 051. PAN : AAACB1534F ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI C. NARESH DEPARTMENT BY MS. VIDISHA KALRA DATE OF HEARING 28 . 1 1 . 201 8 DATE OF PRO NOUNCEMENT 28 . 1 1 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10.2.2017 PASSED BY THE LEARNED CIT(A) - 3, MUMBAI AND IT RELATES TO A.Y. 2007 - 08. THE ONLY ISSUE URGED IN THIS APPEAL BY REVENUE IS WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF BROKEN PERIOD INTEREST CLAIMED BY THE ASSESSEE. 2. THE ASSESSEE IS BANKING COMPANY. THE ASSESSEE CLAI MED BROKEN PERIOD OF INTEREST PAID ON PURCHASE OF SECURITIES AS EXPE NDITURE. THE ASSESSING OFFICER TOOK THE VIEW THAT THE BROKEN PERIOD INTEREST SO PAID SHALL FORM PART OF COST PRICE OF SECURITIES. ACCORDINGLY, HE DISALLOWED THE BROKEN PERIOD INTEREST OF ` 17.66 CRORES CLAIMED BY THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) NOTICED THAT AS IDENTICAL ISSUE WAS ADJUDICAT ED BY HIM IN A.Y. 2008 - 09 IN FAVOUR OF THE ASSESSEE. A CCORDINGLY , FOLLOWING THE SAME , THE LEARNED CIT(A) DELETED THE DISALLOWANCE. AGGRIEVED BY THE ORDER PASSED BY THE LEARNED CIT(A), THE REV E NUE HAS FILED THIS APPEAL. M/S. BANK OF BARODA 2 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAD MADE IDENTICAL DISALLOWANCE IN A.Y. 2008 - 09 AND 2009 - 10 ALSO AND THE LEARNED CIT(A) HAD DELETED THE DISALLOWANCE SO MA DE IN BOTH YEARS. THE REVENUE CHALLENGED THE ORDER S SO PASSED BY THE LEARNED CIT(A) BY FILING APPEAL BEFORE THE TRIBUNAL AND ITAT , VIDE ITS ORDER DATED 1.3.2018 PASSED IN ITA NO. 5604 & 5605/MUM/2016 , HAS DELETED THE DISALLOWANCE BY FOLLOWING THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION VS. CIT (258 ITR 601). 4. ON THE CONTRARY, LEARNED DR SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 5. HAVING HEARD THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AS THE SAME IS IN ACCORDANCE WITH THE DECISION TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2008 - 09 & 2009 - 10 REFERRED SUPRA. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW OPERATIVE PORTION OF THE ORDER PASSED BY THE COORDINATE BENCH IN THE ABOVE SAID YEARS : - 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDER OF LOWER AUTHORITIES. THE ASSESSING OFFICER MADE THE DISALLOWANCE ON THE BASIS OF DECISION OF VIJAYA BANK LTD. VS. ACIT [197 ITR 541 SC)] ON HIS OBSERVATION THAT BROKEN PERIOD INTEREST IS A PART OF CAPITAL OUTLET FOR ACQUISITION OF SECU RITIES AND ALSO ON THE BASIS OF DECISION OF CIT VS. BANK OF RAJASTHAN THAT EXPENSES MADE BY BANK TOWARDS BROKEN PERIOD INTEREST ON SECURITIES PURCHASED BY IT IS NOT ALLOWABLE BUSINESS DEDUCTION. THE ASS ESSING OFFICER ALSO CONCLUDED THAT ASSESSEE IS NOT A TRADER IN SECURITY AND NOT ENTITLED FOR CLAIM OF BROKEN PERIOD INTEREST EXPENSES. 5. THE HON'BLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD 366 ITR 505 (BOM), WHILE RELYING ON THE RATIO LAID DOWN IN ITS EARLIER DECISION IN AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION VS. CIT REPORTED IN 258 ITR 601 (BOM), WHICH IN TURN, HAD DISTINGUISHED THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN VIJAYA BANK VS. CIT (SUPRA) AND THE HON'BLE HIGH COURT OF RAJ ASTHAN IN CIT VS. BANK OF RAJASTHAN LTD M/S. BANK OF BARODA 3 (SUPRA) AND HAD HELD THAT BROKEN PERIOD INTEREST IS ALLOWABLE AS DEDUCTION. FOLLOWING ITA NO. 5604/MUM/2016 - M/S BANK OF BARODA THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF BROK EN PERIOD INTEREST. 6. WE HAVE ALSO NOTED THAT THE HON'BLE APEX COURT IN CASE OF CIT VS. CITI BANK (SUPRA) HELD THAT BROKEN PERIOD INTEREST EXPENSES ARE ALLOWABLE EXPENSES. WE HAVE NOTED THAT THE ORDER PASSED BY LD. CIT(A) IS BASED ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION (SUPRA) AND THE DECISION OF HON'BLE SUPREME COURT IN CITI BANK (SUPRA). THE DECISION RELIED BY LD. DR WAS DISTINGUISHED BY HON' BLE APEX COURT IN CITI BANK (SUPRA). NO OTHER CONTRARY DECISION IS BROUGHT TO OUR NOTICE. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) IN DELETING THE DISALLOWANCE OF BROKEN PERIOD EXPENSES. IN THE RESULT, GROUNDS OF A PPEAL RAISED BY REVENUE ARE DISMISSED. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE . 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 28 . 1 1 .201 8 . SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 28 / 1 1 / 20 1 8 COPY OF T HE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI