INDUSIND BANK LTD, MUMBAI V. ASST CIT RG 2(3), MUMBAI

ITA 3591/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3997 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2014
• Court: TRIBUNAL
• Department Lawyers: B C S NAIK
• Assessee Lawyers: VAIBHAVI PATEL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Revenue expenditure
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER I.T.A. NO. 3591/M/2014 (ASSESSMENT YEAR: 2010 - 201 1 ) INDUSIND BANK LTD., 8 TH FLOOR, TOWER 1, ONE INDIABULLS CENTRE, 841, S.B. MARG, ELPHINSTONE ROAD, MUMBAI 400 013. / VS. ACIT - RANGE 2(3), AAYAKAR BHAVAN, MUMBAI - 20. ./ PAN : AAACI1314G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MR. BHAVIN SHAH & VAIBHAVI PATEL / RESPONDENT BY : SHRI B.C.S. NAIK, CIT - DR / DATE OF HEARING : 04 .04.2016 / DATE OF PRONOUNCEMENT : 13 .04.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 21.5.2014 IS AGAINST THE ORDER OF THE CIT (A) - 6, MUMBAI DATED 27.2.2014 FOR THE ASSESSMENT YEAR 2010 - 2011. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF INTEREST AND OTHER EXPENDITURE U/S 14A AMOUNTING TO RS. 2.26 CRORES BY WRONGLY ATTRIBUTING IT TO EARNING EXEMPT INCOME U/S 10 . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C I T(A) ERRED IN CONFIRMING DENIAL OF EXEMPTION U/S 10(38) IN RESPECT OF LONG - TERM CAPITAL GAINS TO THE T U NE OF RS . 45,252/ - ON SALE OF SHARES HELD AS LONG TERM INVESTMENTS AND TAXING IT AS BUSINESS INCOME. 3. ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF AMORTIZATION OF EMPLOYEE STOCK OPTION PLAN (ESOP) EXPENSES OF RS. 1,05,00,000/ - WITHOUT APPRECIATING THAT IT IS A REVENUE EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS BEING EMPLOYEE COMPENSATION COST . 4. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF SOFTWARE EXPENDITURE TOWARDS LICENCES FEES AMOUNTING TO RS . 4,67,19,838/ - WITHOUT APPRECIATING THAT IT IS REVENUE EXPENDITURE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF BROKEN PERIOD INTEREST DEBITED TO THE PROFIT AND LOSS ACCOUNT AMOUNTING TO RS. 10,63,93,626/ - PAID AT THE TIME OF ACQUISITION OF THE SECURITIES HELD AS S T OCK IN TRADE WITHOUT APPRECIATING THE FACT THAT THIS METHOD OF 2 ACCOUNTING I S MANDATED BY THE RESERVE BANK OF INDIA AND CONSISTENTLY FOLLOWED BY THE APPELLANT SINCE AY 2001 - 2002. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BRIEFLY NARRATED THE FACTS OF THE CASE AND BROUGHT OUR ATTENTION TO THE PRAYER FOR REMANDING THIS APPEAL TO THE FILE OF THE AO FOR ADJUDICATING ALL THE ISSUES RAISED IN GROUND NOS. 1 TO 5. REFERRING TO GROUND NOS. 1 TO 4, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUES RAISED IN THESE GROUNDS ARE ONE AND THE SAME ADJUDICATED BY THE TRIBUNAL IN THE ASSE SSEES OWN CASE VIDE ITA NO.375/M/2012 AND OTHERS, DATED 12.11.2014. 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID DECISION OF THE TRIBUNAL (SUPRA), DATED 12.11.2014, WE REMAND ALL THE ISSUES RAISED IN GROUND NOS. 1 TO 4 OF THE APPEAL FOR FR ESH ADJUDICATION AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. AO IS DIRECTED TO DECIDE THE SAME STRICTLY IN THE LIGHT OF THE RATIO LAID DOWN IN THE SAID ORDER OF THE TRIBUNAL (SUPRA). ACCORDINGLY, GROUND NOS. 1 TO 4 ARE ALLOWED FOR STATISTICAL PURPOSES. 4. REFERRING TO GROUND NO.5, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME RELATES TO THE BROKEN PERIOD INTEREST DEBITED TO THE PROFIT & LOSS ACCOUNT AND THE SAME IS REQUIRED TO BE ADJUDICATED IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD IN INCOME TAX APPEAL NO.330 OF 2012, DATED 23.7.2014. AFTER HEARING BOTH THE PARTIES ON THIS ISSUE, WE REMAND THE GROUND NO.5 TO THE FILE OF THE AO AS DESIRED BY THE LD REPRESENTATIVES OF BOTH THE PARTIES FOR FRESH ADJUDICATION. AO IS DIRECTED TO ADJUDICATE THIS ISSUE IN THE LIGHT OF THE SAID JUDGMENT OF HONBLE HIGH COURT (SUPRA) COMPLYING WITH THE RATIO LAID DOWN IN THE SAID JUDGMENT ON THE ISSUE UNDER CONSIDERATION. ACCORDINGLY, GROUND NO.5 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 1 3 T H APRIL, 2016. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 3 .4.2016 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI