Appeal details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 9866 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-09-2018
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
28-10-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 6396 /MUM/20 1 6 (ASSESSMENT YEAR 20 12 - 13 ) DCIT 1(3)(2) ROOM NO. 540 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. THE SARASWAT COOPERATIVE BANK LTD. 4 TH FLOOR, ACCOUNTS DEPARTMENT, 953, APPASAHEB MARATHE MARG, PRABHADEVI MUMBAI - 400 025. PAN : AABAT4497Q ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI ANIL SATHE DEPARTMENT BY S HRI K. MADHUSUDAN DATE OF HEARING 24 . 9 . 201 8 DATE OF PRONOUNCEMENT 24 . 9 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 26 - 07 - 2016 PASSED BY LD CIT(A) - 2, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2012 - 13. THE GROUNDS UR GED BY THE REVENUE RELATE TO THE FOLLOWING TWO ISSUES: - (A) DISALLOWANCE MADE U/S 14A OF THE ACT. (B) DISALLOWANCE MADE U/S 36(1)(VIII) OF THE ACT. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF BANKING. THE FIRST ISSUE RELATES TO THE DISALLOWANCE MADE U/S 14A OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE EARNED TAX FREE DIVIDEND INCOME OF RS.470.84 LAKHS. THE AO COMPUTED DISALLOWANCE U/S 14A IN ACCORDANCE WITH RULE 8D AND ACCORDINGLY DISALLOWED A SUM OF RS.187.17 LAKHS OUT OF INTEREST EXPENSES AND RS.16.22 LAKHS OUT OF EXPENSES. THUS THE AGGREGATE DISALLOWANCE WORKED OUT BY THE AO WAS RS.203.39 LAKHS. THE ASSESSEE HAD M/S. THE SARASWAT COOPERATIVE BANK LTD . 2 VOLUNTARILY DISALLOWED A SUM OF RS.78.06 LAKHS. HENCE THE AO ADDED THE DIFFERENCE AMOUNT OF R.125.32 LAKHS TO THE TOT AL INCOME OF THE ASSESSEE. 3. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DIRECTED THE AO TO EXCLUDE STRATEGIC INVESTMENTS FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/S 14A OF THE ACT. 4. AT THE TIME OF HEARING, THE LD A.R FAIRLY ADMITTED THAT THE S TRATEGIC INVESTMENTS SHOULD NOT BE EXCLUDED FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/S 14A OF THE ACT, IN VIEW OF THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENTS RECENTLY. THE LD A.R SUBMITTED THAT THE OWN FUNDS/INTERES T FREE FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THE VALUE OF INVESTMENTS AND HENCE THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWERS LTD (313 ITR 340) HDFC BANK LTD (383 ITR 529) WOULD BE APPLICABLE TO TH E FACTS OF THE ASSESSEE. HE SUBMITTED THAT THE CO - ORDINATE BENCH HAS RESTORED AN IDENTICAL ISSUE IN THE ASSESSEES OWN CASE IN AY 2008 - 09 (ITA NO.1140/MUM/2012 & OTHERS DATED 11 - 08 - 2016) TO THE FILE OF THE AO. 5. WE HEARD LD D.R ON THIS ISSUE AND PERUS ED THE RECORD. SINCE THE ASSESSEE IS CLAIMING THAT THE OWN FUNDS/INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THE VALUE OF INVESTMENTS AND SINCE THIS FACT REQUIRES EXAMINATION, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR APPLYING THE R ATIO OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD (SUPRA). ACCORDINGLY THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IS SET ASIDE. 6. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF CLAIM MADE U/S 36(1)(VIII) OF THE AC T. THE ASSESSEE CREATED A RESERVE OF RS.15.00 CRORES AND CLAIMED DEDUCTION U/S 36(1)(VIII) OF THE ACT. THE AO DISALLOWED THE SAME ON THE REASONING THAT THE ASSESSEE HAS NOT DEBITED THE PROFIT AND LOSS ACCOUNT WITH THE ABOVE SAID AMOUNT. HOWEVER, IT WAS DEMONSTRATED BEFORE THE LD CIT(A) THAT THE ABOVE SAID AMOUNT WAS DEBITED IN PROFIT AND LOSS APPROPRIATION ACCOUNT. HENCE THE LD CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO. M/S. THE SARASWAT COOPERATIVE BANK LTD . 3 7. WE HEARD THE PARTIES ON THIS ISSUE. THE ASSESSEE FURNISHED A PART OF ANN UAL REPORT CONTAINING SCHEDULE 1 TO SCHEDULE 6. THE SCHEDULE 6 IS TITLED AS PROFIT AND LOSS ACCOUNT AND THERE IS APPROPRIATION OF RS.15.00 CRORES OUT OF THE SAME. SCHEDULE 2 CONTAINS DETAILS OF RESERVE FUND & OTHER RESERVES. ITEM (XIII) IS TITLED AS SPECIAL RESERVE U/S 36(1)(VIII) OF I.TAX ACT, 1961. THE BALANCE OUTSTANDING IN THIS ACCOUNT HAS INCREASED BY RS.15.00 CRORES DURING THE YEAR UNDER CONSIDERATION. 8. THUS WE NOTICE THAT THE ASSESSEE DID NOT DEBIT THE PROFIT AND LOSS ACCOUNT WITH THE AMOUNT OF RS.15.00 CRORES, BUT APPROPRIATED THE SAME OUT OF PROFIT AND LOSS ACCOUNT THROUGH THE SCHEDULE 6. OTHERWISE, THE PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS RS.235.56 CRORES. THUS WE NOTICE THAT THE ASSESSEE HAS, OTHERWISE, TRAN SFERRED THE AMOUNT OF RS.15.00 CRORES TO THE SPECIAL RESERVE ACCOUNT. THE LD CIT(A) HAS ALSO NOTICED THAT THE ELIGIBLE AMOUNT OF 20% OF PROFIT WORKS OUT TO RS.15.49 CRORES, WHERE AS THE ASSESSEE HAS CLAIMED ONLY RS.15.00 CRORES. UNDER THESE SET OF FACTS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION TAKEN BY LD CIT(A) ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 24 . 9 .201 8 . SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 9 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI M/S. THE SARASWAT COOPERATIVE BANK LTD . 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI
