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

ITA 4842/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5119 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTANU KUMAR SAIKIN
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 244A; 142(1); 115JB; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 4842/MUM/17 2007-08 DCIT-2(1)(1), MUMBAI M/S. BANK OF INDIA, STAR HOUSE, C-5, G-BLOCK, BANDRA-KURLA COMPLEX (E). MUMBAI [PAN: AAACB0472C] 4922/MUM/17 2007-08 BANK OF INDIA, 8 TH FLOOR, TAXATION DEPARTMENT, STAR HOUSE, C-5, G-BLOCK, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI [PAN: AAACB0472C] ASST. COMMISSIONER OF INCOME TAX-2(1)(1), MUMBAI REVENUE BY : SHRI SANTANU KUMAR SAIKIN, CIT-DR ASSESSEE BY : SHRI C. NARESH, AR DATE OF HEARING : 03-01-2019 DATE OF PRONOUNCEMENT :- 25-01-2019 O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE CROSS-APPEALS FILED BY BOTH ASSESSEE AS WELL AS REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSI ONER OF INCOME TAX (APPEALS)-3, MUMBAI, DATED 10-04-2017 FO R THE AY. 2007-08. SINCE THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON IN ITA NOS. 4842 & 4922/MUM/17 : 2 : THESE APPEALS, FOR THE SAKE OF CONVENIENCE BOTH THE APP EALS ARE HEARD TOGETHER AND DISPOSED-OF BY THIS CONSOLIDATED ORD ER. ASSESSEES APPEAL IN ITA NO. 4922/MUM/2017 : 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX 2(1)(1 ) (HEREIN AFTER REFERRED TO AS 'ACIT') HAS ERRED IN RE-OPENING THE ASSESSMENT PROCEEDINGS U/S. 147 OF THE INCOME-TAX ACT, 1961 (H EREIN AFTER REFERRED TO AS 'THE ACT') AND THE HON'BLE CIT(A) HAS ERRED I N UPHOLDING THE SAID RE- ASSESSMENT PROCEEDINGS. THE APPELLANT BANK PRAYS TH AT THE RE- ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT ARE INVA LID AND THE ORDER U/S. 143(3) R.W.S. 147 DATED MARCH 28, 2015 BE QUAS HED ACCORDINGLY. 2 WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, ASSUMING WITHOUT ACCEPTING THAT YOUR HONOURS IS OF THE VIEW THAT THE RE-OPENING OF ASSESSMENT PROCEEDINGS IS VALID, ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ACIT HAS ERRED IN DISALLOWING BROKEN PERIOD INTEREST OF RS.80,79,79,711 PAID ON P URCHASE OF SECURITIES DURING FY 2006-07 AND HELD AS STOCK-IN-TRADE AS ON MARCH 31, 2007 AND THE HON'BLE CIT(A) HAS ERRED IN UPHOLDING THE D ECISION OF THE LEARNED ACIT. THE LEARNED ACIT BE DIRECTED TO ALLOW BROKEN PERIOD INTEREST OF RS.80,79,79,711 PAID ON PURCHASE OF SEC URITIES DURING FY 2006-07 AND HELD AS STOCK-IN-TRADE AS ON MARCH 31, 2007 AS A DEDUCTION AND REDUCE THE TOTAL INCOME ACCORDINGLY. 2A WITHOUT PREJUDICE TO GROUND NO. 2 ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ASSUMING WITH OUT ACCEPTING THAT YOUR HONOURS IS OF THE VIEW THAT BROKEN PERIOD INTE REST OF RS.80,79,79,711 PAID ON PURCHASE OF SECURITIES DURI NG FY 2006-07 AND HELD AS STOCK-IN-TRADE AS ON MARCH 31, 2007 IS NOT AN ALLOWABLE DEDUCTION IN THE YEAR OF PURCHASE OF SUCH SECURITIE S, IN SUCH CASE, THE LEARNED ACIT BE DIRECTED TO ALLOW SUCH DEDUCTION IN THE SUBSEQUENT YEAR, I.E. FY 2007-08 RELEVANT TO AY 2008-09, BEING THE YEAR IN WHICH THE CORRESPONDING INTEREST RECEIVED ON SUCH SECURIT IES IS OFFERED TO TAX. 2B WITHOUT PREJUDICE TO GROUND NOS. 2 & 2A ABOVE, O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ASSUMI NG WITHOUT ACCEPTING ITA NOS. 4842 & 4922/MUM/17 : 3 : THAT YOUR HONOURS IS OF THE VIEW THAT BROKEN PERIOD INTEREST OF RS.80,79,79,711 PAID ON PURCHASE OF SECURITIES DURI NG FY 2006-07 AND HELD AS STOCK-IN-TRADE AS ON MARCH 31, 2007 IS NOT AN ALLOWABLE DEDUCTION IN THE YEAR OF PURCHASE OF SUCH SECURITIE S OR IN THE SUBSEQUENT YEAR, IN SUCH CASE, THE LEARNED ACIT BE DIRECTED TO DECREASE / INCREASE THE PROFITS / (LOSS), RESPECTIVELY, ON SALE OR MATU RITY OR REDEMPTION OR TRANSFER IN ANY MANNER, AS THE CASE MAY BE, OF SUCH SECURITIES BY THE AMOUNT OF THE CORRESPONDING BROKEN PERIOD INTEREST DISALLOWED IN THE YEAR OF PURCHASE OF SUCH SECURITIES AND REDUCE THE TOTAL INCOME ACCORDINGLY. 2C WITHOUT PREJUDICE TO GROUND NOS. 2, 2A AND 2B AB OVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, AS SUMING WITHOUT ACCEPTING THAT YOUR HONOURS IS OF THE VIEW THAT BRO KEN PERIOD INTEREST OF RS.80,79,79,711 PAID ON PURCHASE OF SECURITIES DURI NG FY 2006-07 AND HELD AS STOCK-IN-TRADE AS ON MARCH 31, 2007 IS NOT AN ALLOWABLE DEDUCTION IN THE YEAR OF PURCHASE OF SUCH SECURITIE S, IN SUCH CASE, THE LEARNED ACIT BE DIRECTED TO ADD THE SAME TO THE COS T OF SUCH SECURITIES AND ALLOW LOSS ON VALUATION OF SUCH SECURITIES, IF ANY, FROM THE TOTAL INCOME OF THE YEAR UNDER APPEAL AND REDUCE THE TOTA L INCOME ACCORDINGLY. 3 THE APPELLANT BANK RESERVES THE RIGHT TO ADD, ALT ER, AMEND AND DELETE ANY OF THE GROUND(S) BEFORE OR DURING THE COURSE OF THE HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE IS A PUBL IC SECTOR BANK, ENGAGED IN THE BUSINESS OF BANKING AND OTHER RE LATED FINANCIAL SERVICES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR. 2007-08 ON 22-10-2007, DECLARING TOTAL INCOME OF RS. 7,27,32,515/- AND THE SAME WAS REVISED ON 18-02-2009 , DECLARING TOTAL INCOME OF RS. 5,48,88,965/-. THE CAS E WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/ S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT) ON 27-02-2009, DETER MINING TOTAL INCOME AT RS. 17,14,63,57,479/- BY MAKING VARIO US ITA NOS. 4842 & 4922/MUM/17 : 4 : ADDITIONS/DISALLOWANCES. THEREAFTER, ASSESSMENT HAS B EEN RE-OPENED U/S. 147 OF THE ACT FOR THE REASONS RECORDE D, AS PER WHICH THE INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT ON ACCOUNT OF DEDUCTION CLAIMED TOWARDS BROK EN PERIOD INTEREST ON SECURITIES PURCHASED AND TREATED AS STOCK IN TRADE. IN RESPONSE TO THE NOTICE, THE ASSESSEE VIDE ITS LETTER DT. 27-01-2014, REQUESTED TO TREAT THE RETURN FILED ON 18-02- 2009 AS RETURN FILED IN RESPONSE TO THE NOTICE U/S. 148. THE A SSESSEE ALSO REQUESTED FOR THE REASONS FOR REOPENING AND THE SAME WAS PROVIDED TO ASSESSEE. THEREAFTER, NOTICE U/S. 143(2) OF THE ACT ALONG WITH NOTICE U/S. 142(1) WAS ISSUED AND SERVED. IN RESPONSE TO NOTICES, THE LD. AR OF THE ASSESSEE APPEAR ED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO CA LLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY BROKEN PERIOD INTEREST PAID ON SECURITIES HELD AS STOCK IN TRADE SHALL NOT BE DISALLOWED? IN RESPONSE, ASSESSEE HAS FILED DETAILED SUBMISSIONS ALONG WITH CERTAIN JUDICIAL PRECEDENTS, INCLUDING DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF AMERICA EXPRESS INTE RNATIONAL BANKING CORPORATION VS. CIT (2002) [258 ITR 601] (BO M) TO ARGUE THAT BROKEN PERIOD INTEREST PAID ON SECURITIES IS AN ALL OWABLE ITA NOS. 4842 & 4922/MUM/17 : 5 : DEDUCTION. THE AO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE HELD THAT BROKEN PERIOD INTEREST PAID BY THE ASSESSEE IS NOTHING BUT THE PART OF PRICE PAID FOR THE SECURITIES FOR ACQUIR ING THE SAID SECURITIES. WHATEVER BE THE REASON THAT PROMP TED THE ASSESSEE TO PURCHASE THE SECURITIES, THE PRICE PAID FO R THEM IS IN THE NATURE OF CAPITAL OUTLAY. NO PART OF IT CAN BE SET-O FF AS EXPENDITURE AGAINST INTEREST ACCRUED ON THESE SECURITIES. ACCORDINGLY, HE DISALLOWED THE BROKEN PERIOD INTEREST PAID FOR RS. 80,79,79,711/-. 4.1. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), ASSESSEE HAS CHALLENGED RE-OPE NING OF THE ASSESSMENT ON THE GROUND THAT WHEN THE ASSESSMENT HAS BEEN RE-OPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT FINANCIAL YEAR, THERE SHOULD BE AN ALLEGATION BY THE AO ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMEN T, WHEREAS ASSESSEE HAS FILED COMPLETE DETAILS IN RESPECT OF BRO KEN PERIOD INTEREST DURING ASSESSMENT PROCEEDINGS, IN REPLY TO A S PECIFIC QUESTION RAISED BY THE AO AND THEREAFTER THE AO AFTER B EING SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE , ITA NOS. 4842 & 4922/MUM/17 : 6 : COMPLETED THE ASSESSMENT. THEREFORE, REOPENING ON THE SAME ISSUE WITHOUT THERE BEING ANY FRESH MATERIAL IS NOTHING BUT A MERE CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE UND ER THE LAW. ASSESSEE ALSO FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISSUE OF DEDUCTIBILITY OF BROKEN PERIOD INTEREST PAID ON SECURI TIES HELD AS STOCK IN TRADE, IN THE LIGHT OF THE DECISION OF THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF AMERICA EXPRESS INTERNATIONA L BANKING CORPORATION VS. CIT ((SUPRA)). THE ASSESSEE ALSO CHALLENGED COMPUTATION OF INTEREST PAYABLE TO THE ASSESSEE U/S. 244 A OF THE ACT. 6. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASS ESSEE, REJECTED THE GROUNDS TAKEN BY THE ASSESSEE, CHALLENGIN G THE REOPENING OF THE ASSESSMENT BY FOLLOWING HIS PREDECES SORS ORDER FOR THE AY. 2008-09 BY HOLDING THAT THE ASSESSMENT HAS BEEN VALIDLY RE-OPENED, WHERE THE AO HAS RECORDED CATEGOR ICAL REASONS, AS PER WHICH THE INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147. INSOFAR AS THE ISSUE INVOLVED IN MERITS, LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO BY FOLLOWING THE PREDECESSOR S ORDER FOR AY. 2008-09, WHERE IT WAS HELD THAT ASSESSEE HAS TA KEN OUT INTEREST ACCRUED IN PROFIT & LOSS A/C BUT HAS NOT SHOWN ANY ITA NOS. 4842 & 4922/MUM/17 : 7 : COMPUTATION OF INCOME AND EXPENDITURE HAS BEEN CLAIMED , WHICH MEANS THUS A REDUCTION OF TAXABLE PROFIT. THUS, IN THE LIGHT OF THE FACTS OF THE CASE, SUCH EXPENDITURE CANNOT BE ALLOW ED. THEREFORE, THE FINDINGS OF THE AO ARE APPROVED AND DI SALLOWANCE OF BROKEN PERIOD INTEREST EXPENDITURE IS SUSTAINED. IN SOFAR AS THE ISSUE OF ADJUSTMENT MADE TOWARDS BOOK PROFIT COMPUTED U/S. 115JB OF THE ACT, THE LD. CIT(A) BY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR THE AY. 2005-06, DEL ETED ADJUSTMENT MADE BY THE AO TOWARDS BOOK PROFIT COMPUTED U/ S. 115JB OF THE ACT IN RESPECT OF DISALLOWANCE OF BROKEN PERIOD INTEREST. 7. SIMILARLY, THE ISSUE OF COMPUTATION OF INTEREST DUE TO THE ASSESSEE U/S. 244A OF THE ACT, THE LD. CIT(A) BY FOLLO WING THE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE AY. 2004-05, RESTORED THE MATTER BACK TO THE FILE OF AO FOR FRESH CON SIDERATION. 7.1. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE AS WELL AS THE REVENUE HAVE FILED APPEALS BEFORE US. 8. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IN ASSESSEES APPEAL IS VALIDITY OF RE-OPENING OF ASSE SSMENT U/S. 147 OF THE ACT. LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT HAS BEEN REOPENED ON MERE CHANGE OF OPINI ON ITA NOS. 4842 & 4922/MUM/17 : 8 : WITHOUT THERE BEING ANY FRESH MATERIAL IN THE POSSESS ION OF THE AO, WHICH SUGGEST ESCAPEMENT OF INCOME, WITHIN THE MEA NING OF SECTION 147(B) OF THE ACT, WHICH IS EVIDENT FROM THE REA SONS RECORDED BY THE AO, AS PER WHICH THE AO IS REFERRING TO THE RETURN OF INCOME FILED BY THE ASSESSEE TO FORM A REASO NABLE BELIEF OF ESCAPEMENT OF INCOME. LD. AR FURTHER SUBMITTED THAT I N THIS CASE, THE ASSESSMENT FOR THE IMPUGNED YEAR HAS BEEN CO MPLETED U/S. 143(3) OF THE ACT. THE ASSESSMENT HAS BEEN RE-O PENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT AS SESSMENT YEAR, THEREFORE, WHEN THE ASSESSMENT HAS BEEN RE-OPEN ED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR, THE PROVISO TO SECTION 147 WILL COME INTO OPERATI ON AS PER WHICH AO CANNOT REOPEN THE ASSESSMENT UNLESS THERE IS AN ALLEGATION BY THE AO ON THE PART OF THE ASSESSEE TO DISC LOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETI ON OF ASSESSMENT. IN THIS CASE, WHEN WE GO THROUGH THE REAS ONS RECORDED BY THE AO, THERE IS NO SUCH FINDING FROM THE AO THAT FAILURE ON THE PART OF ASSESSEE TO DISCLOSE NECESSARY FACTS FOR COMPLETION OF ASSESSMENT. MOREOVER, DURING ASSESSMENT PROCEEDINGS, AO HAS ISSUED A SPECIFIC QUESTION ABOUT DEDUCTIBILITY OF BROKEN PERIOD INTEREST FOR WHICH THE ASSESSEE HAS FILED COMPLETE DETAILS. THE AO ON BEING SATISFIED UPO N THE ITA NOS. 4842 & 4922/MUM/17 : 9 : EXPLANATION OF THE ASSESSEE, COMPLETED THE ASSESSMENT. THEREFORE, RE-OPENING OF ASSESSMENT ON THE SAME ISSU E IS NOTHING BUT A MERE CHANGE OF OPINION, WHICH IS NOT PERMISSIBL E UNDER THE LAW. IN THIS REGARD, HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF IND IA LTD., (2010) [187 TAXMAN 312]. 9. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTING THE ORD ER OF LD. CIT(A), SUBMITTED THAT THERE IS NO MERIT IN THE ARGU MENTS ADVANCED BY THE LD. AR FOR THE ASSESSEE THAT ASSESSMENT HAS BEEN RE-OPENED ON MERE CHANGE OF OPINION AS THE AO H AS FORMED REASONABLE BELIEF OF ESCAPEMENT OF INCOME AS PER WHI CH INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED ASSESSMENT, IN RESP ECT OF EXCESS DEDUCTION CLAIMED TOWARDS BROKEN PERIOD INTERES T PAID ON SECURITIES ACQUIRED AND TREATED AS STOCK IN TRADE. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL A VAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CAREFULLY CONSIDERED THE CASE LAW CITED BY THE LD.AR FOR THE ASSESSEE. ADMITTEDLY IN THIS CASE, ASSES SMENT FOR THE IMPUGNED ASSESSMENT YEAR HAS BEEN COMPLETED U/S. 143(3) OF THE ACT. IT IS ALSO AN ADMITTED FACT THAT ASSESSMENT HA S BEEN RE-OPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ITA NOS. 4842 & 4922/MUM/17 : 10 : ASSESSMENT YEAR. WHEN THE ASSESSMENT HAS BEEN RE-OPEN ED AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVAN T ASSESSMENT YEAR, THE PRE-CONDITION FOR REOPENING OF ASSESSMENT IS THAT THERE SHOULD BE FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION O F ASSESSMENT. UNLESS THERE IS AN ALLEGATION BY THE AO ON THE PART OF THE ASSESSEE TO DISCLOSE NECESSARY FACTS FOR COMPL ETION OF ASSESSMENT, THE ASSESSMENT CANNOT BE RE-OPENED U/S. 147 OF THE ACT. IN THIS CASE, ON PERUSAL OF REASONS RECORDED BY THE AO, WE FIND THAT THERE IS NO FINDING FROM THE AO THAT THERE IS FA ILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT. WE FURTH ER NOTICED THAT THE AO HAS RECORDED REASONS ON THE BASIS OF RETURN OF INCOME FILED BY THE ASSESSEE, WITHOUT THERE BEING ANY F RESH MATERIAL IN HIS POSSESSION TO FORM A REASONABLE BELI EF OF ESCAPEMENT OF INCOME. FURTHER, THE ISSUE OF DEDUCTIBIL ITY OF BROKEN PERIOD INTEREST IS A SUBJECT MATTER OF CONSIDERATI ON BY THE AO DURING ASSESSMENT PROCEEDINGS, WHERE THE AO HAS IS SUED A SPECIFIC QUESTION FOR WHICH THE ASSESSEE HAS FILED C OMPLETE DETAILS. THE AO BEING SATISFIED WITH THE EXPLANATION F ILED BY THE ASSESSEE, COMPLETED THE ASSESSMENT. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT IT IS A CLEAR CASE OF CHANGE OF OPINION ITA NOS. 4842 & 4922/MUM/17 : 11 : WITHOUT THERE BEING ANY MATERIAL IN THE POSSESSION OF AO TO FORM A REASONABLE BELIEF OF ESCAPEMENT OF INCOME. FURTHER , THE AO HAS RE-OPENED THE ASSESSMENT WITHOUT MAKING AN ALLEGATIO N ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT. THIS LE GAL PROPOSITION IS SUPPORTED BY THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., ((SUPRA)), WHEREIN IT WAS CATEGORICALLY HELD THAT AO HAS POWER TO REOPEN, PROVIDED THERE IS A TANGIBLE MATERIAL TO COME TO A CON CLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. THIS LE GAL PROPOSITION FURTHER SUPPORTED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERNATIO NAL LTD., (2012) [25 TAXMANN.COM 200] (DEL) (FB). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO FAILURE ON THE PART OF ASSESSEE TO FURNISH FULLY AND TRULY ALL THE MATERIAL FACTS NECESSA RY FOR COMPLETION OF ASSESSMENT. SINCE THE ASSESSMENT HAS BEE N RE- OPENED AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR AND THERE IS NO ALLEGATION BY THE AO O N THE PART OF THE ASSESSEE REGARDING FURNISHING OF ALL THE MATER IAL FACTS NECESSARY FOR ASSESSMENT, REOPENING OF ASSESSMENT U/S . 147 OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. HENCE , WE QUASH THE RE-ASSESSMENT ORDER PASSED BY THE AO. ITA NOS. 4842 & 4922/MUM/17 : 12 : 11. THE ASSESSEE HAS TAKEN GROUNDS, CHALLENGING THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF BROKEN PERIOD INTEREST. SINCE, WE HAVE ALREADY QUASHED THE RE-ASSESSMENT PROC EEDINGS IN THE PRECEDING PARAGRAPHS, THE GROUNDS RAISED BY AS SESSEE BECOME ACADEMIC IN NATURE AND HENCE THE SAME ARE DISM ISSED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. REVENUES APPEAL IN ITA NO. 4842/MUM/2017 : 13. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ''ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 115JB OF THE INCOME TAX ACT, 1961, ARE NOT APPLICABLE TO THE ASSESSEE TO WHOM PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE CO MPANIES ACT, 1956, APPLIES I.E., COMPANIES WHICH ARE NOT REQUIRED TO P REPARE ITS PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH PART II & III OF SC HEDULE VI OF THE COMPANIES ACT, 1956 WITHOUT APPRECIATING THAT UNDER SECTION 115JB(2) OF THE INCOME TAX ACT, 1961, EVERY COMPANY IS MANDA TORILY REQUIRED TO PREPARE PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH TH E PROVISIONS OF PART II & III OF SCHEDULE VI OF THE COMPANIES ACT, 1956, FO R INCOME TAX PURPOSES'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE AMENDMENT TO SE CTION 115JB OF THE INCOME TAX ACT, 1961, TO BRING ALL THE COMPANIES (I NCLUDING COMPANIES TO WHOM PROVISO TO SUB-SECTION (2) OF SECTION 211 O F THE COMPANIES ACT, 1956, APPLIES IS NOT APPLICABLE IN THE ASSESSMENT Y EAR UNDER CONSIDERATION WITHOUT APPRECIATING THAT THE SAID AM ENDMENT IS CLARIFICATORY IN NATURE AND, THUS, RETROSPECTIVE IN EFFECT'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE INTEREST PORTIO N OF THE REFUND ISSUED EARLIER HAS TO BE IGNORED FOR THE PURPOSE OF CALCUL ATING INTEREST U/S 244A ITA NOS. 4842 & 4922/MUM/17 : 13 : OF THE INCOME TAX ACT, 1961, PAYABLE TO THE ASSESSE E, ON REFUND ARISING OUT OF THE ORDER GIVING EFFECT TO ORDER OF APPELLAT E AUTHORITY. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN INTERPRETING THE PROVISIONS OF S ECTION 244A OF THE INCOME TAX ACT, 1961, SO AS TO IGNORE INTEREST ALRE ADY GRANTED U/S 244A WHILE CALCULATING INTEREST IN ORDER GIVING EFF ECT TO THE APPELLATE AUTHORITY.' 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASID E AND THAT OF THE AO RESTORED. 14. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IN GROUND NOS. 1 & 2 OF THIS APPEAL IS APPLICABILITY OF PROVISIONS OF SECTION 115JB OF THE ACT TO THE BANKING COMPANIES. LD. AR FOR THE ASSESSEE, AT THE TIME OF HEARING SUBMITTED THAT THE IS SUE INVOLVED IN THESE GROUNDS IS COVERED IN FAVOUR OF AS SESSEE BY THE DECISION OF THE ITAT, B BENCH, MUMBAI IN ASSESSEE S OWN CASE FOR THE AYS. 2007-08 & 2009-10 IN ITA NOS. 2907 & 2908/MUM/2017, WHERE THE TRIBUNAL BY FOLLOWING ITS EA RLIER ORDER IN ASSESSEES OWN CASE HAS HELD THAT THE PROVISI ONS OF SECTION 115JB SHALL NOT BE APPLICABLE TO ASSESSEE. 15. HAVING REGARD TO CONTENTIONS OF BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE WHETHER RE-COMPUTATION OF BOOK PROFITS ON ACCOUNT OF DISALLOW ANCE MADE IN RESPECT OF BROKEN PERIOD INTEREST IS A SUBJECT MATTER OF DELIBERATIONS BY THE CO-ORDINATE BENCH OF ITAT, MUMBAI IN ITA NOS. 4842 & 4922/MUM/17 : 14 : ASSESSEES OWN CASE FOR THE AYS. 2007-08 & 2009-10, WHERE IT WAS OBSERVED THAT THE PROVISIONS OF SECTION 115JB OF THE ACT SHALL NOT BE APPLICABLE TO THE ASSESSEE-BANK. THE REL EVANT OBSERVATIONS OF THE BENCH ARE AS UNDER: 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSE D MATERIAL ON RECORD INCLUDING CITED CASE LAWS. THIS ISSUE IS A R ECURRING ISSUE IN ASSESSEES OWN CASE AND THE TRIBUNAL WAS PLEASED TO DECIDE THIS ISSUE OF NON-APPLICABILITY OF MINIMUM ALTERNATIVE TAX (PO PULARLY CALLED AS MAT) ON BOOK PROFITS U/S 115JB OF THE 1961 ACT IN THE CASE OF BANKS IN FAVOUR OF THE ASSESSEE VIDE APPELLATE ORDERS PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1498/MUM/2011 , VIDE ORDERS DATED 09.04.2014 FOR AY 2001-02 AND ORDERS PASSED BY TRIB UNAL IN ITA NO. 3002/MUM/2014 FOR AY 2005-06, VIDE ORDERS DATED 03. 08.2016. WHILE DECIDING APPEAL FOR AY 2001-02, THE TRIBUNAL HAS AL SO CONSIDERED THE AMENDMENT BROUGHT IN THE SECTION 115JB OF THE 1961 ACT BY FINANCE ACT,2012 W.E.F. 01.04.2013 WHICH WAS HELD TO BE NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE THE TRIB UNAL VIZ. AY 2001- 02 IN ITA NO. 1498/MUM/2011. THE IMPUGNED ASSESSMEN T YEAR BEFORE US IS AY 2007-08 WHICH IS ALSO PRIOR TO AMENDMENT I N SECTION 115JB BY FINANCE ACT, 2012 W.E.F. 01.04.2013. SIMILAR VIEW W AS TAKEN BY THE TRIBUNAL FOR AY 2005-06 IN ITA NO. 3002/MUM/2014 IN FAVOUR OF THE ASSESSEE VIDE ORDERS DATED 03.08.2016 IN ASSESSEES OWN CASE, WHEREIN TRIBUNAL FOLLOWED ITS OWN DECISION FOR AY 2006-07. SIMILAR VIEW AS TO NON APPLICABILITY OF MINIMUM ALTERNATE TAX (M AT) ON BOOK PROFITS COMPUTED U/S 115JB OF THE 1961 ACT WAS TAKEN BY KOL KATTA-TRIBUNAL IN ITA NO. 1768/KOL/2009 FOR AY 2002-03 IN UCO BANK V. DCIT , VIDE ORDERS DATED 27.11.2015, WHEREIN THE KOLKATTA TRIBU NAL CONCLUDED THAT AMENDMENT BROUGHT IN BY FINANCE ACT, 2012 IN SECTIO N 115JB READ WITH EXPLANATION 3 THEREON IS PROSPECTIVE IN NATURE AND SHALL BE APPLICABLE FROM AY 2013-14 ONWARDS IN LINE WITH NOTES TO CLAUS ES OF FINANCE ACT, 2012. ONE OF US NAMELY HON'BLE JUDICIAL MEMBER WAS PART OF THE DIVISION BENCH WHO PASSED THE APPELLATE ORDER IN TH E CASE OF UCO BANK(SUPRA). WE HAVE ALSO OBSERVED THAT HON BLE DELHI HIGH COURT IN THE CASE OF CIT(LTU) V. ORIENTAL INSURANCE COMPANY LIMITED IN I TA NO. 447 OF 2015 VIDE ORDERS DATED 30.08.2015 , HELD AS UNDER: ITA NOS. 4842 & 4922/MUM/17 : 15 : APPLICABILITY OF SECTION 115JB TO INSURANCE COMPAN IES 54. TURNING NOW TO ITA NO.447/2015, THE QUESTION CONCERNS THE APPLICABILITY OF SECTION 115JB OF THE ACT TO INSURANCE COMPANIES. THE ITAT HAS PERMITTED THE ASSESS EE TO RAISE THIS QUESTION SINCE, IN A LARGE NUMBER OF JUDGMENTS OF THE ITAT, THE QUESTION HAS BEEN ANSWERED IN FAVOUR OF THE ASSESSEE. 55. IT IS PLAIN, FROM A READING OF SECTION 44 READ WITH THE FIRST SCHEDULE OF THE ACT,THAT INSURANCE COMPANIES ARE REQUIRED TO PREPARE ACCOUNTS AS PER THE IA AND THE REGULATIONS OF THE IRDA AND NOT AS PER PARTS II AN D III OF SCHEDULE VI OF THE COMPANIES ACT. THE ASSESSEE PREPARES ITS ACCOUNTS AS PER THE IRDA PRINCIPLES. THE IRDA REGULATIONS GOVERN THE PREPARATION OF THE AUDITOR S REPORT. 56. CONSEQUENTLY, THE QUESTION FRAMED IN ITA NO.447/ 2015 IS ANSWERED IN THE AFFIRMATIVE, I.E. IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY HOLDING THAT SECTION115JB OF THE ACT DOES NOT APPLY TO INSURANCE COMPANIES. WE ARE REPRODUCING THE ORDER OF THE TRIBUNAL FOR AY 2005-06 IN ASSESSES OWN CASE IN ITA NO. 3002/MUM/2014 , AS UN DER: 2. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE BE FORE THE LD CIT(A) AGAINST THE ORDER PASSED BY THE AO TO GIVE EFFECT TO THE ORDER P ASSED BY THE FIRST APPELLATE AUTHORITY. AFTER GIVING EFFECT, THE TOTAL INCOME BEC AME A NEGATIVE FIGURE AND HENCE THE AO ASSESSED THE TOTAL INCOME BY ADOPTING BOOK PRO FIT COMPUTED U/S 115JB OF THE ACT. THE LD CIT(A) CONFIRMED THE SAME BY FOLLOWING HI S ORDER PASSED IN THE FIRST ROUND OF PROCEEDINGS. AGGRIEVED, THE ASSESSEE HAS CHAL LENGED THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 3.THE LD A.R SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN AY 2006-07, WHEREIN THE TRIBUNAL HAS FOLLOWED THE DECIS ION RENDERED IN THE ASSESSEES OWN CASE IN ITA NO.1498/MUM/2011 RELATIN G TO AY 2001-02. ACCORDINGLY HE PRAYED THAT THIS ISSUE MAY BE DECIDED IN ACCORDANC E WITH THE DECISION TAKEN BY THE CO-ORDINATE BENCHES. 4. WE HEARD LD D.R AND PERUSED THE RECORD. CONSISTENT WITH THE VIEW TAKEN IN AY 2006-07, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND HOLD THAT THE PROVISIONS OF SEC. 115JB SHALL NOT BE APPLICABLE FOR BOTH THE YEARS UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF MU MBAI-TRIBUNAL FOR AY 2005-06 IN ASSESSEES OWN CASE WHICH FOLLOWED THE D ECISION OF MUMBAI-TRIBUNAL FOR AY 2006-07 IN ASSESSEE S OWN CASE , WE HOLD THAT PROVISIONS OF SECTION 115JB SHALL NOT BE APPLICABLE TO THE ASSESSEE BANK FOR THE IMPUGNED ASSESSMENT YEAR UNDER CONSIDE RATION VIZ. AY 2007-08. THE GROUND NO. 1 AND 2 ARE DECIDED IN FAVO UR OF THE ASSESSEE. THE APPEAL OF THE REVENUE ON THESE GROUND NO. 1 AND 2 STOOD DISMISSED. WE ORDER ACCORDINGLY. ITA NOS. 4842 & 4922/MUM/17 : 16 : 15.1. IN THIS VIEW OF THIS MATTER AND CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE CONSIDERE D VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE L D. CIT(A) IN DIRECTING THE AO TO DELETE THE ADJUSTMENT MADE TOWARDS DISALLOWANCE OF BROKEN PERIOD INTEREST TO BOOK PROFITS COMPUTED U/S. 115JB OF THE ACT. HENCE, WE ARE INCLINED TO UPHO LD THE FINDINGS OF LD. CIT(A) AND REJECT THE GROUNDS RAISED BY REVENUE. THESE TWO GROUNDS OF REVENUE ARE DISMISSED. 16. THE NEXT ISSUE CAME UP FOR OUR CONSIDERATION IS COMPUTATION OF INTEREST PAYABLE U/S. 244A OF THE ACT ON REFUND ARISING OUT OF THE ORDER, GIVING EFFECT TO THE ORDER OF THE APPELLATE AUTHORITIES. WE FIND THAT THIS ISSUE IS ALSO COVERED I N FAVOUR OF ASSESSEE BY THE DECISION OF ITAT, MUMBAI IN ASSESSEE S OWN CASE FOR THE AYS. 2007-08 & 2009-10, WHERE THE CO-ORDINATE BENCH BY FOLLOWING ITS EARLIER ORDER FOR THE AY. 2005-06, R ESTORED THE ISSUE TO THE FILE OF AO WITH SIMILAR DIRECTIONS AS WER E GIVEN FOR THE AY. 2005-06. THE RELEVANT OBSERVATIONS OF THE CO-O RDINATE BENCH ARE AS UNDER: 7. THE NEXT GROUND NUMBER 3 AND 4 RAISED BY REVENU E IN ITS APPEAL FOR AY 2007-08 RELATES TO COMPUTATION OF GRANT OF INTER EST U/S 244A OF THE 1961 ACT PAYABLE TO THE ASSESSEE, ON REFUND ARISING OUT OF THE ORDER GIVING EFFECT TO ORDER OF THE APPELLATE AUTHORITY O R CONSEQUENT TO ORDER PASSED U/S 154 OF THE 1961 ACT. THE IDENTICAL ISSUE IS ALSO RECURRING ISSUE IN ASSESSEES OWN CASE WHEREIN TRIBUNAL HAS R ESTORED THE ISSUE ITA NOS. 4842 & 4922/MUM/17 : 17 : BACK TO THE AO WITH CERTAIN DIRECTIONS. THE TRIBUNA L ORDER IN ASSESSEE S OWN CASE FOR AY 2005-06 IN ITA NO. 3002/MUM/2014, V IDE ORDERS DATED 03.08.2016 IS REPRODUCED HEREUNDER: 5. THE NEXT ISSUE CONTESTED BY THE ASSESSEE RELATES TO THE GRANTING OF INTEREST U/S 244A OF THE ACT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BEEN RECEIVING REFUNDS UPON PASSING OF ORDERS BY THE APPELLATE AUTHORITIES O R UPON PASSING OF ORDERS U/S 154 OF THE ACT. THE LD A.R SUBMITTED THAT THE AO HAS MA DE ADJUSTMENT OF REFUND (CONSISTING OF TAX AND INTEREST) ALREADY GRANTED AG AINST THE REFUND OF TAX DUE IN EACH OF THE SUCCESSIVE ORDERS. THE LD A.R SUBMITTED THA T THE ENTIRE AMOUNT OF REFUND (BOTH TAX AND INTEREST) GRANTED SHOULD BE FIRS T ADJUSTED AGAINST THE INTEREST PORTION THAT HAS BECOME DUE AND THEN THE REMAINING AMO UNT, IF ANY, SHOULD BE ADJUSTED AGAINST THE TAX PORTION OF THE REFUND THAT HA S BECOME DUE. IN SUPPORT OF HIS CONTENTIONS, THE LD A.R PLACED RELIANCE ON THE DECI SION RENDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.5444 TO 5446/MU M/2013 DATED 22.12.2014 AND ALSO THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF UNION BANK OF INDIA (ITA NO.571 & 574/MUM/2013 DATED 23.6.2014). 6. WE HEARD THE PARTIES ON THIS ISSUE. SINCE IT IS MAT TER INVOLVING COMPUTATION OF ELIGIBLE AMOUNT OF INTEREST U/S 244A OF THE ACT, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. IN TH E DECISIONS RELIED UPON BY THE ASSESSEE, THE TRIBUNAL HAS FOLLOWED THE DECISION REND ERED BY HONBLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANISAT ION VS. CIT (361 ITR 646) AND ACCORDINGLY GIVEN DIRECTION TO THE AO TO FOLLOW THE SAID DECISION. CONSISTED WITH THE VIEW TAKEN BY THE TRIBUNAL, WE RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH BY FOLLOWING THE DECISION R ENDERED IN THE CASE OF INDIA TRADE PROMOTION ORGANISATION (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005-06, WE RESTORE THIS ISSUE TO THE F ILE OF THE AO WITH SIMILAR DIRECTIONS AS WERE GIVEN BY TRIBUNAL FOR AY 2005-06 IN ITA NO. 3002/MUM/2014 MORE PARTICULARLY IN THE LIGHT OF DEC ISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTI ON ORGANISATION (SUPA), VIDE ORDERS DATED 03.08.2016. THE GROUND NO . 3 AND 4 RAISED BY REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. WE OR DER ACCORDINGLY. 16.1. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH VI EW TAKEN BY THE CO-ORDINATE BENCH, WE RESTORE THE ISSUE TO THE FILE O F AO WITH A SIMILAR DIRECTION AS WERE GIVEN BY THE TRIBUNAL FOR THE AY. ITA NOS. 4842 & 4922/MUM/17 : 18 : 2005-06. GROUNDS RAISED BY REVENUE IN THIS REGARD AR E DISMISSED. 17. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 18. TO SUM-UP, THE APPEAL OF ASSESSEE IS ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF JANUARY, 2019 SD/- SD/- (SANDEEP GOSAIN) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /MUMBAI; /DATED : 25 TH JANUARY, 2019 TNMM