Dy. Commissioner of Income Tax , (International Taxation )-1, Hyderabad V. Mohammed Mukhtar Ali Khan , Hyderabad

ITA 442/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5462 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 23-09-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 13-08-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUJUMDARDR
• Assessee Lawyers: LAXMINIVAS SHARMA
• Keywords: Question of law; Tax effect; Revenue expenditure
• Section: 143(3); 13; 28; 10

Judgement Text

ITA NO 442 OF 2018 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.442/HYD/2018 ASSESSMENT YEAR: 2012-13 AGROHA COOP. URBAN BANK LTD HYDERABAD PAN:AAIFA7028A VS. DY. C.I.T. CIRCLE -1 HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI LAXMINIVAS SHARMA REVENUE BY : SRI ROHIT MUJUMDAR,DR DATE OF HEARING: 10/08/2021 DATE OF PRONOUNCEMENT: 14/09/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2012-13 AGAIN ST THE ORDER OF THE CIT (A)-GUNTUR, DATED 27.12.2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE BANK AND FILED ITS RETURN OF INCOME FOR THE A.Y 2012- 13 ON 17.9.2012. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT THE BROKEN PERIOD OF INTEREST THAT HAS ACCRUED TO THE ASSESSEE FOR FR EE PURCHASE PERIOD, HAS BEEN INCLUDED IN THE PURCHASE OF THE SE CURITIES BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT AS PE R THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VIJAYA BANK VS. CIT REPORTED IN 187 ITR 541, INTEREST ELEMENT IN THE PU RCHASE OF SECURITIES IS NOT AN ALLOWABLE EXPENDITURE AGAINST THE INCOME ITA NO 442 OF 2018 PAGE 2 OF 6 ACCRUING ON THOSE SECURITIES. HE THEREFORE, TREATED THE BROKEN PERIOD INTEREST AS INCOME OF THE ASSESSEE FROM OTHE R SOURCES AND BROUGHT IT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE A SSESSING OFFICER ON THIS ISSUE AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED CIT (A) ERRED BY CONFIRMING THE ADD ITION OF EXPENDITURE AMOUNTING TO RS.1,67,087/- INCURRED BY THE APPELLANT TOWARDS BROKEN PERIOD INTEREST, WHICH IS ALLOWABLE BUSINESS EXPENSE AS HELD BY VARIOUS COURT S AND TRIBUNALS INCLUDING THE JURISDICTIONAL I.E. ITA T HYDERABAD IN VARIOUS CASES. 2. FOR THESE AND ANY OTHER GROUNDS WHICH MAY BE RAI SED ON OR BEFORE HEARING OF THE APPEAL . 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. CITI BANK NA I N CIVIL APPEAL NO.1549/2006 WHEREIN AFTER CONSIDERING THE DECISION S OF THE HON'BLE APEX COURT IN THE CASE OF VIJAYA BANK VS. CIT (SUPR A) AND ALSO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF AMERICAN EXPRESS IN ITA NO. 5374/MUM/2001(A.Y. 1998-99) I.T. A. NO.97/MUM/2001(A.Y. 1998-99), DATED 10.8.2012, IT W AS HELD IN FAVOUR OF THE ASSESSEE. HE ALSO RELIED UPON THE DEC ISION OF THE HON'BLE A.P HIGH COURT IN THE CASE OF A.P. GRAMEENA VIKAS B ANK WHEREIN THE ISSUE HAS BEEN HELD IN FAVOUR OF THE ASSESSEE. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. ITA NO 442 OF 2018 PAGE 3 OF 6 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE ARE SATISFIED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COU RT. THE RELEVANT PARAGRAPHS OF THE HON'BLE SUPREME COURT DECISION AR E REPRODUCED HEREUNDER: AGGRIEVED AGAINST THE JUDGMENT AND ORDER OF THE HIG H COURT OF BOMBAY DATED 16TH APRIL, 2003 PASSED IN ITR NO.278 OF 1997 , REVENUE HAS FILED THIS APPEAL. THE FOLLOWING QUESTION OF LAW HAS BEEN POSE D BEFORE US FOR CONSIDERATION: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE HIGH COURT WAS RIGHT IN LAW IN HOLDING, THAT, THE INTEREST PAI D FOR BROKEN PERIOD SHOULD NOT BE CONSIDERED AS PART OF THE PURCHASE PRICE, BU T SHOULD BE ALLOWED AS REVENUE EXPENDITURE IN THE YEAR OF PURCHASE OF SECU RITIES.' THE HIGH COURT IN THE IMPUGNED JUDGMENT IN THIS APP EAL HAS ANSWERED THE SAME IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVE NUE FOLLOWING ITS EARLIER DECISION IN THE CASE OF AMERICAN EXPRESS VS. CIT, R EPORTED IN 258 ITR 601 (BOM.). AGAINST THE SAID JUDGMENT, REVENUE PREFERRE D SPECIAL LEAVE PETITIONS BEING SLP(C) NOS.....(CC 301-303/2004) IN THIS COUR T WHICH WERE DISMISSED ON 27TH JANUARY, 2004 ON THE GROUND OF DELAY. ON TH E SAME DATE, ANOTHER SPECIAL LEAVE PETITION SEEKING TO RAISE THE SAME IS SUE BEING SLP(C)NO.3710/2004 ARISING FROM CC 345/2004 CAME UP FOR CONSIDERATION BEFORE ANOTHER BENCH, WHICH WAS DISMISSED BY THIS C OURT BY PASSING THE FOLLOWING ORDER: 'DELAY CONDONED. WE SEE NO REASON TO INTERFERE. THE SPECIAL LEAVE PETITION IS DISMISSED.' THE SAME IS NOW REPOR TED IN 266 ITR 106 (ST.). THEREAFTER A THREE JUDGE BENCH OF THIS COURT, ON TH E SAME ISSUE, AGAIN DISMISSED A SPECIAL LEAVE PETITION FILED BY THE REV ENUE BEING SLP(C) NO.3717 OF 2004 AFTER CONDONING THE DELAY BY ITS ORDER DATE D 27TH SEPTEMBER, 2004. ACCORDING TO THE COUNSEL APPEARING FOR THE ASSESSEE , IN VIEW OF THE ORDERS PASSED BY THIS COURT IN SLP(C) NOS.3710 OF 2004 AND 3717 OF 2004, REFERRED TO ABOVE, THE POINT IN ISSUE IS CONCLUDED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. LEARNED ASG APPEARING FOR THE REVENUE, RELYING UPON A JUDGMENT OF THIS COURT IN THE CASE OF VIJAYA BANK LTD. VS. ADDITIONA L COMMISSIONER OF INCOME TAX, BANGALORE REPORTED IN 1991 SUPP. (2) SCC 147, WHEREIN THIS COURT IN PARAS 4 & 5 OBSERVED AS UNDER: '4. IN IRC V. PILCHE R (1949) 2 ALL ER 1097, LORD JUSTICE JENKINS STATED : (ALL ER P.1103) 'IT IS A WELL SETTLED PRINCIPLE THAT OUTLAY ON THE PURCHASE OF AN INCOME- BEARING ASSET IS IN THE NATURE OF CAPITAL OUTLAY, A ND NO PART OF THE CAPITAL SO LAID OUT CAN, FOR INCOME TAX PURPOSES, BE SET OFF A S EXPENDITURE AGAINST INCOME ACCRUING FROM THE ASSET IN QUESTION.' 5. IN THE INSTANT CASE, THE ASSESSEE PURCHASED SECU RITIES. IT IS CONTENDED THAT THE PRICE PAID FOR THE SECURITIES WAS DETERMIN ED WITH REFERENCE TO THEIR ACTUAL VALUE AS WELL AS THE INTEREST WHICH HAD ACCR UED ON THEM TILL THE DATE OF PURCHASE. BUT THE FACT IS, WHATEVER WAS THE CONS IDERATION WHICH PROMPTED THE ASSESSEE TO PURCHASE THE SECURITIES, T HE PRICE PAID FOR THEM WAS IN THE NATURE OF A CAPITAL OUTLAY, AND NO PART OF IT CAN BE SET OFF AS EXPENDITURE AGAINST INCOME ACCRUING ON THOSE SECURI TIES. SUBSEQUENTLY WHEN THESE SECURITIES YIELDED INCOME BY WAY OF INTE REST, SUCH INCOME WAS ATTRACTED BY SECTION 18.' CONTENDS THAT THE POINT I N ISSUE IS CONCLUDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. WE MAY POINT OUT THAT IN AMERICAN EXPRESS (SUPRA), THE BOMBAY HIGH COURT DIS TINGUISHED THE ITA NO 442 OF 2018 PAGE 4 OF 6 DECISION IN VIJAYA BANK LTD.(SUPRA) BY OBSERVING TH US: 'BEFORE GOING FURTHER WE MAY MENTION AT THE VERY OUTSET THAT THE SECURITY IN THIS CASE WAS OF THE FACE VALUE OF RS.5 LAKHS. IT WAS BOUGHT FOR A LESSE R AMOUNT OF RS.4,92,000. THE DIFFERENCE WAS OF RS.8,000. THE ASSESSEE HAS RE VALUED THE SECURITY. THE ASSESSEE OFFERED THE NOTIONAL PROFIT FOR TAXATI ON, AS EXPLAINED HEREINABOVE, ON ACCRUAL BASIS IN THE APPROPRIATE AS SESSMENT YEAR DURING WHICH THE ASSESSEE HELD THE SECURITY. THIS DIFFEREN CE COULD HAVE BEEN TREATED BY THE DEPARTMENT AS INTEREST ON SECURITIES UNDER SECTION 18. HOWEVER, IN THE INSTANT CASE, THE DEPARTMENT HAS AS SESSED THE SAID DIFFERENCE UNDER SECTION 28 UNDER THE HEAD 'BUSINES S' AND NOT UNDER THE HEAD 'INTEREST ON SECURITIES'. HAVING TREATED THE D IFFERENCE UNDER THE HEAD 'BUSINESS', THE ASSESSING OFFICER DISALLOWED THE BR OKEN PERIOD INTEREST PAYMENT, WHICH GAVE RISE TO THE DISPUTE. IT WAS OPE N TO THE DEPARTMENT TO ASSESS THE ABOVE DIFFERENCE UNDER THE HEAD 'INTERES T ON SECURITIES' UNDER SECTION 18. HOWEVER, THEY CHOSE TO ASSESS THE INTER EST UNDER THE HEAD 'BUSINESS' AND, WHILE DOING SO, THE DEPARTMENT TAXE D BROKEN PERIOD INTEREST RECEIVED, BUT DISALLOWED BROKEN PERIOD INT EREST PAYMENT. IT IS IN THIS LIGHT THAT ONE HAS TO READ THE JUDGMENT OF THE KARN ATAKA HIGH COURT AND THE SUPREME COURT IN VIJAYA BANK LTD'S CASE [1991] 187 ITR 541. IN THAT CASE, THE FACTS WERE AS FOLLOWS. DURING THE ASSESSM ENT YEAR UNDER CONSIDERATION, VIJAYA BANK ENTERED INTO AN AGREEMEN T WITH JAYALAKSHMI BANK LIMITED, WHEREBY VIJAYA BANK TOOK OVER THE LIA BILITIES OF JAYALAKSHMI BANK. THEY ALSO TOOK OVER ASSETS BELONGING TO JAYAL AKSHMI BANK. THESE ASSETS CONSISTED OF TWO ITEMS, VIZ., RS.58,568 AND RS.11,630.00. THE SAID AMOUNT OF RS.58,568 REPRESENTED INTEREST, WHICH ACC RUED ON SECURITIES TAKEN OVER BY VIJAYA BANK FROM JAYALAKSHMI BANK AND RS.11,630 WAS THE INTEREST WHICH ACCRUED UP TO THE DATE OF PURCHASE O F SECURITIES BY THE ASSESSEE-BANK FROM THE OPEN MARKET. THESE TWO AMOUN TS WERE BROUGHT TO TAX BY THE ASSESSING OFFICER UNDER SECTION 18 OF TH E INCOMETAX ACT. THE ASSESSEE-BANK CLAIMED THAT THESE AMOUNTS WERE DEDUC TIBLE UNDER SECTIONS 19 AND 20. THIS WAS ON THE FOOTING THAT THE DEPARTM ENT HAD BROUGHT TO TAX, THE AFORESTATED TWO AMOUNTS AS INTEREST ON SECURITI ES UNDER SECTION 18. IT IS IN THE LIGHT OF THESE FACTS THAT ONE HAS TO READ TH E JUDGMENT IN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541 (SC). IN THE LIGHT O F THE ABOVE FACTS, IT WAS HELD THAT THE OUTLAY ON PURCHASE OF INCOME- BEARING ASSET WAS IN THE NATURE OF CAPITAL OUTLAY AND NO PART OF THE CAPITAL OUTLAY CAN BE SET OFF AS EXPENDITURE AGAINST INCOME ACCRUING FROM THE ASSET IN QUESTION. IN OUR CASE, THE AMOUNT WHICH THE ASSESSEE RECEIVED HAS BEEN BRO UGHT TO TAX UNDER THE HEAD 'BUSINESS' UNDER SECTION 28. THE AMOUNT IS NOT BROUGHT TO TAX UNDER SECTION 18 OF THE INCOME-TAX ACT. AFTER BRINGING TH E AMOUNT TO TAX UNDER THE HEAD 'BUSINESS', THE DEPARTMENT TAXED THE BROKEN PE RIOD INTEREST RECEIVED ON SALE, BUT AT THE SAME TIME, DISALLOWED BROKEN PE RIOD INTEREST PAYMENT AT THE TIME OF PURCHASE AND THIS LED TO THE DISPUTE. H AVING ASSESSED THE AMOUNT RECEIVED BY THE ASSESSEE UNDER SECTION 28, T HE ONLY LIMITED DISPUTE WAS-WHETHER THE IMPUGNED ADJUSTMENTS IN THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE- BANK SHOULD BE DISCARDED. THEREFORE, THE JUDGMENT IN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541 (SC) HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. IF TH E DEPARTMENT HAD BROUGHT TO TAX, THE AMOUNTS RECEIVED BY THE ASSESSEE-BANK UNDE R SECTION 18, THEN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541 (SC) WAS APPLICABLE. BUT, IN THE PRESENT CASE, THE DEPARTMENT BROUGHT TO TAX SUCH AM OUNTS UNDER SECTION 28 RIGHT FROM THE INCEPTION. THEREFORE, THE TRIBUNAL W AS RIGHT IN COMING TO THE CONCLUSION THAT THE JUDGMENT IN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541 (SC) DID NOT APPLY TO THE FACTS OF THE PRESENT CASE . HOWEVER, BEFORE US, IT WAS ARGUED ON BEHALF OF THE REVENUE, THAT IN VIEW O F THE JUDGMENT IN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541 (SC), EVEN IF T HE SECURITIES WERE TREATED AS PART OF THE TRADING ASSETS, THE INCOME THEREFROM HAD TO BE ASSESSED UNDER SECTION 18 OF THE ACT AND NOT UNDER SECTION 2 8 OF THE ACT AS INCOME FROM SECURITIES CAN ONLY COME WITHIN SECTION 18 AND NOT UNDER SECTION 28. WE DO NOT FIND ANY MERIT IN THIS ARGUMENT. FIRSTLY, AS STATED ABOVE, VIJAYA ITA NO 442 OF 2018 PAGE 5 OF 6 BANK LTD.'S CASE [1991] 187 ITR 541 (SC) HAS NO APP LICATION TO THE FACTS OF THIS CASE. SECONDLY, IN THE PRESENT CASE, THE TRIBU NAL HAS FOUND THAT THE SECURITIES WERE HELD AS TRADING ASSETS. THIRDLY, IT HAS BEEN HELD BY THE SUPREME COURT IN THE SUBSEQUENT DECISION REPORTED I N THE CASE OF CIT V. COCANADA RADHASWAMI BANK LTD. [1965] 57 ITR 306, TH AT INCOME FROM SECURITIES CAN ALSO COME UNDER SECTION 28 AS INCOME FROM BUSINESS. THIS JUDGMENT IS VERY IMPORTANT. IT ANALYSES THE JUDGMEN T OF THE SUPREME COURT IN UNITED COMMERCIAL BANK LTD.'S CASE [1957] 32 ITR 688, WHICH HAS BEEN FOLLOWED BY THE SUPREME COURT IN VIJAYA BANK LTD.'S CASE [1991] 187 ITR 541. IT IS TRUE THAT ONCE AN INCOME FALLS UNDER SEC TION 18, IT CANNOT COME UNDER SECTION 28. HOWEVER, AS LAID DOWN BY THE SUPR EME COURT IN COCANADA RADHASWAMI BANK LTD.'S CASE [1965] 57 ITR 306, INCOME FROM SECURITIES TREATED AS TRADING ASSETS CAN COME UNDER SECTION 28. IN THE PRESENT CASE, THE DEPARTMENT HAS TREATED INC OME FROM SECURITIES UNDER SECTION 28. LASTLY, THE FACTS IN THE CASE OF UNITED COMMERCIAL BANK LTD. [1957] 32 ITR 688 (SC), ALSO SUPPORT OUR VIEW IN THE PRESENT CASE. IN UNITED COMMERCIAL BANK LTD.'S CASE [1957] 32 ITR 68 8 (SC), THE ASSESSEE- BANK CLAIMED A SET-OFF UNDER SECTION 24(2) OF THE I NDIAN INCOMETAX ACT, 1922 (SECTION 71(1) OF THE PRESENT ACT), AGAINST IT S INCOME FROM INTEREST ON SECURITIES UNDER SECTION 8 OF THE 1922 ACT (SIMILAR TO SECTION 18 OF THE PRESENT ACT). IT WAS HELD THAT UNITED COMMERCIAL BA NK WAS NOT ENTITLED TO SUCH A SET-OFF AS THE INCOME FROM INTEREST ON SECUR ITIES CAME UNDER SECTION 8 OF THE 1922 ACT. THEREFORE, EVEN IN UNITED COMMERCI AL BANK LTD.'S CASE [1957] 32 ITR 688 (SC), THE DEPARTMENT HAD ASSESSED INCOME FROM INTEREST ON SECURITIES RIGHT FROM THE INCEPTION UNDER SECTIO N 8 OF THE 1922 ACT AND, THEREFORE, THE SET-OFF WAS NOT ALLOWED UNDER SECTIO N 24(2) OF THE ACT. THEREFORE, UNITED COMMERCIAL BANK LTD.'S CASE [1957 ] 32 ITR 688 (SC), HAS ALSO NO APPLICATION TO THE FACTS OF THE PRESENT CAS E IN WHICH THE ASSESSEE'S INCOME FROM INTEREST ON SECURITIES IS ASSESSED UNDE R SECTION 28 RIGHT FROM INCEPTION. IN FACT, IN UNITED COMMERCIAL BANK LTD.' S CASE [1957] 32 ITR 688 (SC), THE MATTER WAS REMITTED BACK AS IT WAS CONTEN DED ON BEHALF OF UNITED COMMERCIAL BANK THAT THE SECURITIES IN QUESTION WER E A PART OF THE TRADING ASSETS HELD BY THE ASSESSEE IN THE COURSE OF ITS BU SINESS AND THE INCOME BY WAY OF INTEREST ON SUCH SECURITIES WAS ASSESSABLE U NDER SECTION 10 OF THE INDIAN INCOME-TAX ACT, 1922 (SIMILAR TO SECTION 28 OF THE PRESENT ACT). IT IS FOR THIS REASON THAT IN THE SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN THE CASE OF COCANADA RADHASWAMI BANK LTD. [1965] 57 ITR 306, THE SUPREME COURT HAS OBSERVED, AFTER READING UNITED COMMERCIAL BANK LTD.'S CASE [1957] 32 ITR 688 (SC), THAT WHERE SECURITIES WERE PART OF TRADING ASSETS, INCOME BY WAY OF INTEREST ON SUCH SECURITIES COULD COME UNDER SECTION 10 OF THE INDIAN INCOME-TAX ACT, 1922. IN THE LIGHT OF WH AT WE HAVE DISCUSSED HEREINABOVE, WE FIND THAT THE ASSESSEE'S METHOD OF ACCOUNTING DOES NOT RESULT IN LOSS OF TAX/REVENUE FOR THE DEPARTMENT. T HAT, THERE WAS NO NEED TO INTERFERE WITH THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE- BANK. THAT, THE JUDGMENT IN THE CASE OF VIJAYA BANK LTD. [1991] 187 ITR 541 (SC), HAD NO APPLICATION TO THE FACTS OF THE CASE. THAT, HAVING ASSESSED INCOME UNDER SECTION 28, THE DEPARTMENT OUGHT TO HAVE TAXE D INTEREST FOR THE BROKEN PERIOD INTEREST RECEIVED AND THE DEPARTMENT OUGHT TO HAVE ALLOWED DEDUCTION FOR THE BROKEN PERIOD INTEREST PAID.' THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE FACTS IN AMERICAN EXPRESS (SUPRA ). AGREEING WITH THIS VIEW AND ACCEPTING THE DISTINCTION POINTED OUT BY THE BO MBAY HIGH COURT, THIS COURT DISMISSED THE TWO SPECIAL LEAVE PETITIONS FIL ED BY THE REVENUE, ONE OF WHICH WAS DISMISSED BY A THREE JUDGE BENCH. AFTER G OING THROUGH THE FACTS WHICH ARE SIMILAR TO THE FACTS IN AMERICAN EXPRESS (SUPRA), SINCE THE TAX EFFECT IS NEUTRAL, THE METHOD OF COMPUTATION ADOPTE D BY THE ASSESSEE AND ACCEPTED BY THE REVENUE CANNOT BE INTERFERED WITH. WE AGREE WITH THE VIEW EXPRESSED BY THE BOMBAY HIGH COURT IN AMERICAN EXPR ESS (SUPRA) THAT ON THE FACTS OF THE PRESENT CASE, THE JUDGMENT IN VIJA YA BANK LTD. (SUPRA) WOULD HAVE NO APPLICATION. FOR THE REASONS GIVEN AB OVE, THE QUESTION POSED ITA NO 442 OF 2018 PAGE 6 OF 6 BEFORE US IS ANSWERED IN THE AFFIRMATIVE I.E. IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS DISMISSED ACCORD INGLY. PARTIES TO BEAR THEIR OWN COSTS. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'B LE APEX COURT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 14 TH SEPTEMBER, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 AGROHA COOP. URBAN BANK LTD, 2 ND FLOOR, D.,NO.21-1-974, OPP TO HIGH COURT, GHANSI BAZAR, HYDERABAD 500002 2 DY.CIT , CIRCLE 1(1) HYDERABAD 3 CIT (A) - 1, GUNTUR 4 PR. CIT -1, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER