DCIT 2(3), MUMBAI V. INDUSIND BANK LTD, MUMBAI

ITA 6105/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2172 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 18-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A; 115JB; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , , , BEFORE SHRI G.S.PANNU, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.6105/M/14 ( / ASSESSMENT YEAR: 2003-04) DCIT 2(3) R. NO.552, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S. INDUSIND BANK LTD. 8 TH FLOOR, TOWER ONE, ONE INDIA BULLS CENTRE, 841, SENAPATI BAPAT MARG, ELPHINSTONE ROAD (W), MUMBAI - 400023 ./ ./ PAN/GIR NO. : AAACI1314G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 18.07.2016 /DATE OF PRONOUNCEMENT: 28.10.2016 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 26.06.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 6, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2003-04. ASSESSEE BY: SHRI BHAVIN SHAH DEPARTMENT BY: SHRI A.K.KARDAM ITA NO.6105/M/14 A.Y. 2003-04 2 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ANNULLING THE RELEVANT ORDER WHEN THE DEPARTMENT HAS FILED THE APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE VACATION OF THE ORDER U/S.263 BY THE HONBLE ITAT. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT A COMPANY AND PROVISIONS OF SEC.115JB WERE NOT APPLICABLE TO IT WHEREAS AS PER PROVISION OF SEC.2(17) OF THE I.T.ACT, THE STATUS OF THE ASSESSEE WAS THAT OF A COMPANY AND PROVISION OF SEC.115JB WERE APPLICABLE TO ALL THE COMPANIES. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 28.11.2003 DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL. THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) WAS COMPLETED ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.42,53,81,610/-. ON APPEAL FILED BY THE ASSESSEE, THE ASSESSEE GOT VARIOUS RELIEFS BEFORE VARIOUS APPELLATE AUTHORITIES. THE HONBLE ITAT HAS SET ASIDE THE ISSUE OF DISALLOWANCE U/S.14A OF THE ACT. ACCORDINGLY AN ORDER U/S.143(3) R.W. 254 WAS PASSED ON 27.11.2009. THEREAFTER, PROCEEDINGS U/S.263 OF THE ACT WERE INITIATED BY THE CIT- 2, IN RESPECT OF THE ORDER PASSED U/S.143(3) R.W.S. 254 OF THE ACT DATED 27.11.2009 ON THE GROUND OF THAT BOOK PROFIT U/S.115JB OF THE ACT CAB CONSIDERING THE REVISED DISALLOWANCE U/S.14A OF THE ACT HAD NOT BEEN ITA NO.6105/M/14 A.Y. 2003-04 3 RECOMPUTED. THE BOOK PROFIT U/S.115JB OF THE ACT SHOULD HAVE BEEN RAISED TO THE TUNE OF RS.3,22,17,93,315/-. THEREAFTER, THE ASSESSING OFFICER ASSESSED THE INCOME TO THE TUNE OF (-) RS.3,22,17,93,315/-. THE ASSESSEE PREFERRED AN APPEAL AND IN APPEAL THE CIT(A) ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1&2:- 3. ISSUE NO.1 AND 2 ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER ISSUE NO.1 THE CONTENTION OF THE REVENUE IS THAT THE REVENUE HAS FILED THE APPEAL BEFORE THE HONBLE HIGH COURT, THEREFORE THE ORDER PASSED U/S.263 OF THE ACT IS NOT LIABLE TO BE COMPLIED WITH. ANYHOW, THE ORDER U/S.263 OF THE ACT IS NOT IN EXISTENCE AND ACCORDINGLY FILING THE APPEAL BEFORE THE HONBLE HIGH COURT DOES NOT ITSELF BAR THE PROCEEDING BEFORE THE AUTHORITY CONCERNED WHO IS ENTITLED TO TAKE THE ACTION IN ACCIDENCE WITH LAW, THEREFORE IT IS QUITE CLEAR THAT THE ORDER U/S.263 OF THE ACT WHICH IS NOT IN EXISTENCE NOW, CAN BE TREATED AS BAR FOR FURTHER PROCEEDING. THE OTHER QUESTION WHICH HAS BEEN RAISED IN THE ISSUE NO.2 IS THAT WHETHER THE PROVISION U/S.115JB OF THE ACT IS APPLICABLE TO THE CASE OF ASSESSEE OR NOT. BEFORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD:- ITA NO.6105/M/14 A.Y. 2003-04 4 2. IN THIS CASE, THE REGULAR ASSESSMENT U/S.143(3) WAS COMPLETED ON 29.03.2005 ASSESSING THE TOTAL INCOME OF THE APPELLANT AT RS.42,53,81,610/-. LATER ON, PROCEEDINGS UNDER SECTION 263 WERE INITIATED BY CIT-2, MUMBAI ON THE GROUND THAT BOOK PROFIT U/S.115JB HAD NOT BEEN COMPUTED BY CONSIDERING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT. LEARNED CIT-2, MUMBAI ACCORDINGLY PASSED ORDER DATED 05.03.2012 UNDER SECTION 263 OF THE ACT HOLDING THAT THE COMPUTATION OF BOOK PROFITS SHOULD BE ACCORDINGLY MADE AND DIRECTED THE AO TO ACCORDINGLY REFRAME THE ASSESSMENT AS PER LAW, AFTER VERIFICATION OF RECORDS AND THE ASSESSED INCOME SHOULD BE COMPUTED BY COMPARING THE BOOK PROFITS SO ARRIVED AT U/S.115JB, WITH THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. THE AO HAS ACCORDINGLY PASSED THE IMPUGNED ORDER AND HAS COMPUTED THE BOOK PROFITS UNDER SECTION 115JB AT RS.87,09,38,672/- IN THE FOLLOWING MANNER: PARTICULARS AMOUNT(RS.) AMOUNT(RS.) NET PROFIT AS PER PROFIT AND LOSS ACCOUNT 90,17,13,609 ADD: ADJUSTMENTS PURSUANCE TO CLAUSES (A) TO (I) OF EXPLN 1 OF SECTION 115JB 1.AMOUNT OF INCOME TAX (41,10,000) 2.PROVISION FOR DIMINUTION IN VALUE OF 4,15,511 ITA NO.6105/M/14 A.Y. 2003-04 5 INVESTMENTS 3.DISALLOWNACE U/S.14A 4,08,00,000 TOTAL 3,71,05,511 3,71,05,511 93,88,19,120 LESS: ADJUSTMENTS AS PER CLAUSE (I) TO (VIII) OF EXPLN 1 OF SECTION 115JB 1.INCOME EXEMPT U/S.10 6,78,80,448 6,78,80,448 TOTAL BOOK PROFIT AS PER S. 115JB 87,09,38,672 3. THE APPELLANT HAS PREFERRED APPEAL AGAINST THE ABOVE ORDER PASSED BY THE AO AND HAS SUBMITTED THAT THE ORDER PASSED BY LEARNED CIT-2, MUMBAI UNDER SECTION 263 OF THE ACT WAS CHALLENGED BY THE APPELLANT IN THE ITAT AND HONBLE ITAT HAS HELD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO A BANKING COMPANY. ACCORDINGLY, THE ORDER PASSED BY LEARNED CIT-2, MUMBAI UNDER SECTION 263 HAS BEEN QUASHED BY HONBLE ITAT. IN THE CIRCUMSTANCES THEREFORE, THE IMPUGNED ORDER GIVING EFFECT TO CITS DIRECTIONS UNDER SECTION 263 HAS BECOME NULL AND VOID. 4. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OF THE CASE. IT IS SEEN THAT THE ORDER PASSED BY LEARNED CIT-2, MUMBAI UNDER SECTION 263 HAS BEEN VACATED BY HONBLE ITAT AND IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO THE APPELLANT, WHICH IS A BANKING COMPANY. ACCORDINGLY, THE IMPUGNED ORDER PASSED BY ITA NO.6105/M/14 A.Y. 2003-04 6 THE AO ALSO DOES NOT SURVIVE AND DESERVES TO BE ANNULLED. I HOLD ACCORDINGLY. 4. ON APPRAISAL OF THE ABOVE SAID FINDING IT IS NOT IN DISPUTE THAT THE ORDER PASSED U/S.263 OF THE ACT HAS BEEN SET ASIDE BY THE ITAT AND ALSO HELD THAT PROVISION U/S.115JB OF THE ACT IS NOT APPLICABLE IN CASE OF ASSESSEE / BANKING COMPANY. COPY OF ORDER OF ITAT IN ITA NO.2921/MUM/2012 FOR THE A.Y.2003-04 IN THE ASSESSEES OWN CASE HAS BEEN PLACED ON RECORD. THE CASE IS FULLY COVERED BY THE SAID LAW IN WHICH IT IS HELD THAT THE PROVISION U/S.115JB OF THE ACT IS NOT APPLICABLE TO THE CASE OF ASSESSEE / BANKING COMPANY. IN VIEW OF THE SAID CIRCUMSTANCES IT IS QUITE CLEAR THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. 5. ACCORDINGLY, APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2016 SD/- SD/- (G.S.PANNU) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 28 TH OCTOBER, 2016 MP ITA NO.6105/M/14 A.Y. 2003-04 7 / 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. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI