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

ITA 5604/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0089 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S PADMAJA
• Keywords: Revised return
• Section: 143(3); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5605/MUM/2016 (ASSESSMENT YEAR- 2008-09) ITA NO.5604/MUM/2016 (ASSESSMENT YEAR- 2009-10) DCIT-2(1)(1) ROOM NO. 561, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 VS. M/S BANK OF BARODA C-26, G BLOCK, BARODA CORPORATE CENTRE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI- 400051 PAN: AAACB1534F (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. S. PADMAJA (CIT- DR) REVENUE BY : SHRI C. NARESH (AR) DATE OF HEARING : 01.03.2018 DATE OF PRONOUNCEMENT : 01.03.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THESE TWO APPEAL BY REVENUE UNDER SECTION 253 OF INC OME TAX ACT ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI, [FOR SHORT THE LD. CIT(A)] DATED 30.06.2016 AND 22.11. 2011 FOR ASSESSMENT YEAR 2008-09 AND 2009 -10 RESPECTIVELY. THE REVENUE IN BOTH THE APPEALS HAS RAI SED IDENTICAL GROUNDS OF APPEAL; HENCE BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDED BY COMMON ORDER. FOR APPRECIATION OF FACT, WE ARE DISCUSSING THE FACT FOR ASSESSMENT YEAR 2008-09. THOU GH THE REVENUE HAS RAISED TWO GROUND OF APPEAL, HOWEVER, A S PER OUR CONSIDERED VIEW THE SOLE GROUND OF APPEAL IS WHETHER LD. CIT(A) ERRED IN DELETING THE BROKEN PERIOD INTEREST EXPENDITU RE. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS BANKING CO MPANY. THE ASSESSEE IS CARRYING BANKING BUSINESS. THE ASSESSME NT FOR THE ASSESSMENT YEAR 2008-09 WAS COMPLETED ON 30.12.2010 UNDER ITA NO. 5604/MUM/2016- M/S BANK OF BARODA 2 SECTION 143(3). SUBSEQUENTLY, THE ASSESSMENT WAS REOPEN ED UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 31.12.201 3 WAS SERVED UPON THE ASSESSEE- BANK. IN RESPONSE TO THE NO TICE UNDER SECTION 148, THE ASSESSEE REQUESTED TO TREAT THE REVISED RETURN FILED ON 12.03.2010 AS RETURN IN RESPONSE TO THE SAID NOTICE. THE RE-ASSESSMENT WAS COMPLETED ON 26.03.2015 UNDER SECTI ON 143(3) R.W.S 147. THE ASSESSING OFFICER WHILE PASSING ASSE SSMENT ORDER MADE THE DISALLOWANCE OF BROKEN PERIOD INTEREST EXPEND ITURE OF RS. 30,51,30,523/- INCURRED ON PURCHASE OF SECURITIES. T HE ASSESSING OFFICER MADE THE DISALLOWANCE HOLDING THAT ASSESSEE B ANK IS NOT TRADER IN SECURITIES AND NOT ENTITLED FOR CLAIM OF BROK ER PERIOD INTEREST EXPENDITURE. THE ASSESSING OFFICER WAS ALSO O F THE VIEW THAT THE GOVERNMENT SECURITIES HELD BY ASSESSEE CANNOT BE TREATED AS A PART OF TRADING ASSET. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE OF BROKER PERIOD EXPENSES WAS DELET ED. HENCE, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. DR FOR THE REVENUE AND LD. AR O F THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. DR OF THE REVENUE ARGUED THAT THE ASSESSEE IS NOT ENTITLED F OR DEDUCTION ON ACCOUNT OF BROKEN PERIOD INTEREST EXPENSE S. IN SUPPORT OF HER SUBMISSIONS THE LD DR FOR THE REVENUE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF VIJAYA BANK VS. ACIT [187 ITR 541 (SC)]. THE LD DR FURTHER SUBMITS THAT INI TIALLY THE HONBLE BOMBAY HIGH COURT IN CASE OF AMERICAN EXPRES S INTERNATIONAL BANKING CORPORATION VS. CIT (258 ITR 60 1) HAS ALLOWED BROKEN PERIOD INTEREST EXPENSES, HOWEVER, THE SAME HAS BEEN DISTINGUISHED BY HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. BANK OF RAJASTHAN (2009) 178 TAXMAN 304 (RAJ ). ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORD ER OF LD CIT(A) AND SUBMITS THAT THE HONBLE SUPREME COURT IN C ASE OF ITA NO. 5604/MUM/2016- M/S BANK OF BARODA 3 CIT VS. CITY BANK IN C.A. NO. 1549 OF 2006 DATED `12 .08.2008 BY CONSIDERING THE DECISION OF HONBLE BOMBAY HIGH COUR T IN AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION VS. CIT (SUPRA) AND EARLIER DECISION OF HONBLE APEX COURT I N VIJAYA BANK VS. ACIT (SUPRA) ALLOWED THE BROKEN PERIOD INTEREST EX PENSES. THE HONBLE SUPREME COURT AFFIRMED THE VIEW TAKEN BY HONB LE BOMBAY HIGH COURT IN CASE OF AMERICAN EXPRESS INTERNA TIONAL BANKING CORPORATION VS. CIT (SUPRA) AND HELD THAT THE DECISION IN VIJAYA BANK (SUPRA) HAVE NO APPLICATION, THUS THE DEC ISION RELIED BY LD DR HAS BEEN REVERSED BY HONBLE SUPREME COURT IN CITI BANK (SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PARTIES AND HAVE GONE THROUGH THE ORDER OF LOWER AUTHORITIES. THE ASSESS ING OFFICER MADE THE DISALLOWANCE ON THE BASIS OF DECISION OF VIJ AYA BANK LTD. VS. ACIT [197 ITR 541 SC)] ON HIS OBSERVATION THAT BR OKEN PERIOD INTEREST IS A PART OF CAPITAL OUTLET FOR ACQUISITION OF SECURITIES AND ALSO ON THE BASIS OF DECISION OF CIT VS. BANK OF RA JASTHAN THAT EXPENSES MADE BY BANK TOWARDS BROKEN PERIOD INTEREST ON SECURITIES PURCHASED BY IT IS NOT ALLOWABLE BUSINESS D EDUCTION. THE ASSESSING OFFICER ALSO CONCLUDED THAT ASSESSEE IS NOT A TRADER IN SECURITY AND NOT ENTITLED FOR CLAIM OF BROKEN PERIO D INTEREST EXPENSES. 5. THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK L TD 366 ITR 505 (BOM), WHILE RELYING ON THE RATIO LAID DOWN IN ITS EARLIER DECISION IN AMERICAN EXPRESS INTERNATIONAL BANKING CO RPORATION VS. CIT REPORTED IN 258 ITR 601 (BOM), WHICH IN TUR N, HAD DISTINGUISHED THE RATIO LAID DOWN BY THE HONBLE SUPRE ME COURT IN VIJAYA BANK VS. CIT (SUPRA) AND THE HONBLE HIGH COU RT OF RAJASTHAN IN CIT VS. BANK OF RAJASTHAN LTD (SUPRA) AN D HAD HELD THAT BROKEN PERIOD INTEREST IS ALLOWABLE AS DEDUCTION. F OLLOWING ITA NO. 5604/MUM/2016- M/S BANK OF BARODA 4 THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSE E IS ENTITLED TO THE CLAIM OF BROKEN PERIOD INTEREST. 6. WE HAVE ALSO NOTED THAT THE HONBLE APEX COURT IN CASE O F CIT VS. CITI BANK (SUPRA) HELD THAT BROKEN PERIOD INTEREST EXPEN SES ARE ALLOWABLE EXPENSES. WE HAVE NOTED THAT THE ORDER PASSED BY LD. CIT(A) IS BASED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION (SU PRA) AND THE DECISION OF HONBLE SUPREME COURT IN CITI BANK (SU PRA). THE DECISION RELIED BY LD. DR WAS DISTINGUISHED BY HONB LE APEX COURT IN CITI BANK (SUPRA). NO OTHER CONTRARY DECISION IS B ROUGHT TO OUR NOTICE. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIR MITY IN THE ORDER PASSED BY LD. CIT(A) IN DELETING THE DISALLOWANCE OF BROKEN PERIOD EXPENSES. IN THE RESULT, GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. ITA NO. 5604/MUM/2016 FOR AY 2009-10 7. THE REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APPEA L AS RAISED FOR APPEAL FOR AY 2008-09. WE HAVE ALREADY DISMISSE D THE APPEAL FOR AY 2008-09. THUS, FOLLOWING THE PRINCIPLE OF CO NSISTENCY, THE APPEAL FOR AY 2009-10 IS ALSO DISMISSED WITH SIMILAR OBSERVATIONS. 8. IN THE RESULT, APPEAL FOR BOTH THE ASSESSMENT YEARS IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DAY OF MARCH 2018. SD/- SD/- ( B.R. BASKARAN) ( PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 01/03/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT, MUMB AI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C