D.C.I.T Cir - 6,kolkata., Kolkata V. Allahabad Bank, Kolkata

ITA 649/KOL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1710 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIJUSH DE
• Assessee Lawyers: P K SRIHARI
• Keywords: Non-deduction of tax
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 127/KOL/201 1 ASSESSMENT YEAR : 2007-0 8 ALLAHABAD BANK, KOLKATA -VS- DCIT, CIRCLE-6, K OLKATA [PAN: AACCA 8464 F] (APPELLANT) (RESPONDE NT) I.T.A NO. 649/KOL/2013 ASSESSMENT YEAR : 2009-1 0 DCIT, CIRCLE-6, KOLKATA -VS- ALLAHABAD B ANK, KOLKATA [PAN: AACCA 8464 F] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI PIJUSH DE, FC A FOR THE RESPONDENT : SHRI P.K. SRIHARI, CIT DATE OF HEARING : 25.01.2018 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISE OUT OF THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VI, KOLKATA (HEREINAFTER REF ERRED TO AS LD CITA) IN APPEAL NO. 1014/CIT(A)/VI/2009-10/CIR-6/KOL DATED 15.11.20 10 FOR ASST YEAR 2007-08 AGAINST THE ORDER PASSED BY THE LEARNED DEPUTY COMM ISSIONER OF INCOME TAX, CIRCLE 6, KOLKATA (HEREINAFTER REFERRED TO AS LD AO) U/S 143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 3 1.12.2009. 2 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 2 1.1. THIS TRIBUNAL HAD ALREADY PASSED AN ORDER IN I TA NO. 127/KOL/2011 FOR ASST YEAR 2007-08 DATED 27.4.2016. AGAINST THIS ORDER, THE ASSESSEE PREFERRED A MISCELLANEOUS APPLICATION AND THE SAME WAS DISPOSED OFF BY THIS TRIBUNAL IN M.A. NO. 160/KOL/2017 DATED 15.9.2017 WHEREIN THE ORDER PASSED BY THIS TRIBUNAL ON 27.4.2016 WAS RECALLED FOR THE LIMITED PURPOSE OF A DJUDICATION OF ADDITIONAL GROUND RAISED BY THE ASSESSEE FOR THE ASST YEAR 2007-08. ITA NO. 127/KOL/2011 ASST YEAR 2007-08 ASSESSEE APPEAL 2. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS AS UNDER:- THAT THE LEARNED ASSESSING OFFICER MAY BE DIRECTED TO ALLOW DEDUCTION OF RS 77,90,374/- AND RS 21,41,903/- IN RESPECT OF INTERE ST AND RENT RESPECTIVELY AFTER VERIFICATION OF ALL NECESSARY DOCUMENTS IN SU PPORT OF CLAIM OF THE APPELLANT BANK. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO DISALLOWED A SUM OF RS 3,17,32,734/- U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX A T SOURCE BASED ON TAX AUDIT REPORT U/S 44AB OF THE ACT. SINCE THIS DISALLOWANCE WAS M ADE VOLUNTARILY BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME, IT WAS NOT CONTES TED BY THE ASSESSEE IN APPEAL BEFORE THE LD CITA. IN THE ASSESSMENT FOR THE ASST YEAR 2008-09, THE DEDUCTION WAS CLAIMED IN THE RETURN AND THE SAME WAS DISALLOWED B Y THE LD AO. THIS DISALLOWANCE WAS CONTESTED IN APPEAL BEFORE THE LD CITA, WHO VID E HIS ORDER DATED 13.6.2012 ALLOWED DEDUCTION TO THE EXTENT OF RS 96,38,366/- A FTER EXAMINATION OF COPIES OF CHALLANS AND OTHER DOCUMENTS. SUBSEQUENT TO PASSIN G OF ORDER DATED 13.6.2012 BY THE LD CITA, THE ASSESSEE BANK OBSERVED THAT IN RES PECT OF DISALLOWANCE AMOUNTING TO RS 99,32,277/- ( 77,90,374 + 21,41,903) , THE PROVI SIONS OF TDS U/S 194A AND 194I OF THE ACT RESPECTIVELY ARE NOT APPLICABLE AT ALL, IN THE OPINION OF THE ASSESSEE. THE 3 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 3 ASSESSEE PAID INTEREST TO DEPOSITORS TO THE TUNE OF RS 77,90,374/- WITHOUT DEDUCTION OF TAX AT SOURCE AND THE SAME REPRESENTS - A) INTEREST PAID TO SAVINGS DEPOSIT HOLDERS B) INTEREST PAID TO RECURRING DEPOSIT HOLDERS C) FORM 15G FILED BY THE DEPOSIT HOLDERS D) INTEREST PAID TO AGRICULTURAL SECTOR HENCE IN THE OPINION OF THE ASSESSEE, THE INTEREST PAID IN THE SUM OF RS 77,90,374/- DOES NOT REQUIRE DEDUCTION OF TAX AT SOURCE U/S 194 A OF THE ACT AND CONSEQUENTIAL DISALLOWANCE U/S 40(A)(IA) OF THE ACT OUGHT NOT TO HAVE BEEN MADE BY THE ASSESSEE AT THE FIRST INSTANCE AND CONFIRMED BY THE LD AO IN HI S ASSESSMENT ORDER. 3.1. IN RESPECT OF DISALLOWANCE OF RENT FOR GENERAT OR AMOUNTING TO RS 21,41,903/- , TAX DEDUCTION WAS NOT NECESSARY AS THE PAYMENT MADE / CREDITED TO THE PAYEE DID NOT EXCEED THE THRESHOLD LIMIT PRESCRIBED U/S 194I OF T HE ACT. HENCE IN THE OPINION OF THE ASSESSEE, THE INTEREST PAID IN THE SUM OF RS 21 ,41,903/- DOES NOT REQUIRE DEDUCTION OF TAX AT SOURCE U/S 194I OF THE ACT AND CONSEQUENTIAL DISALLOWANCE U/S 40(A)(IA) OF THE ACT OUGHT NOT TO HAVE BEEN MADE BY THE ASSESSEE AT THE FIRST INSTANCE AND CONFIRMED BY THE LD AO IN HIS ASSESSMENT ORDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ASSESSEE HAD RAISED AN ADDITIONAL GROUND TO ADDRESS ITS GRIEVANCE IN THIS REGARD VIDE ITS PETITION DATED 15.11.2012 FILED IN THIS OFFICE ON 15.5.2013. THE LD AR ARGUED THAT THE ASSESSEE NEVER HAD ANY OCCASION TO ADDRESS THIS ISSUE BEFORE THE LOWER AUTHORITIES AND HENCE HAD NO OTHER OPTION BUT TO FILE IT AS AN ADDITIONAL GROUND BEFORE THIS TRIBUNAL. HOWEVER, THE LD AR FAIRLY STATED THAT SINCE THIS IS SUE WAS NEVER EXAMINED BY THE LOWER AUTHORITIES TO APPRECIATE THE AFORESAID CONTE NTIONS OF THE ASSESSEE, IT COULD BE REMANDED TO THE FILE OF THE LD AO FOR ADJUDICATION ON MERITS. THE CONTENTIONS OF THE 4 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 4 LD AR WAS ACCEPTED BY THE LD DR WITH A RIDER THAT I T WOULD RESULT IN ASSESSMENT BEING FRAMED AT LESSER THAN THE RETURNED INCOME. IN THIS REGARD, WE WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF MAYNAK PODDAR (HUF) VS WTO REPORTED IN (2003) 262 I TR 633 (CAL) . IN THIS DECISION, THE COURT OBSERVED : '....... AN ASSESSEE IS LIABLE TO PAY TAX ONLY UPON SUCH INCOME AS CAN BE IN LAW INCLUDED IN HIS TOTAL INCOME AND WHICH CAN HE LAWFU LLY ASSESSED UNDER THE ACT. THE LAW EMPOWERS THE ITO TO ASSESS THE INCOME OF AN ASSESSEE ACCORDING TO LAW AND DETERMINE THE TAX PAYABLE THEREON. IN DOING SO, HE CANNOT ASSESS AN ASSESSEE ON AN AMOUNT, WHICH IS NOT TAXABLE IN LAW, EVEN IF THE SAME, IS SHOWN BY AN ASSESSEE. THERE IS NO ESTOPPEL BY CONDUCT AGA INST LAW NOR IS THERE ANY WAIVER OF THE LEGAL RIGHT AS MUCH AS THE LEGAL LIAB ILITY TO BE ASSESSED OTHERWISE THAN ACCORDING TO THE MANDATE OF THE LAW (SIC). IT IS ALWAYS OPEN TO AN ASSESSEE TO TAKE THE PLEA THAT THE FIGURE, THOUG H SHOWN IN HIS RETURN OF TOTAL INCOME, IS NOT TAXABLE IN LAW. ........' IT IS NOW WELL SETTLED THAT THERE IS NO ESTOPPEL AG AINST THE STATUTE. THE ASSESSEE IS ONLY PLEADING FOR CLAIM OF DEDUCTION WHICH HAD BEEN ERRONEOUSLY DISALLOWED BY IT IN THE RETURN OF INCOME AND CONSIDERED AS SUCH BY THE LD AO IN THE ASSESSMENT. THOUGH THERE WAS NO OCCASION FOR THE REVENUE TO ADJUDICATE THIS ISSUE ON MERITS, THE REVENUE COULD NOT TAKE ADVANTAGE OF THE MISTAKE COMMITTED B Y THE ASSESSEE. THE SCHEME OF TAXATION IS PRIMARILY GOVERNED BY THE PRINCIPLES LA ID DOWN IN THE CONSTITUTION OF INDIA AND AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA, NO TAX SHALL BE LEVIED OR COLLECTED UNLESS BY AN AUTHORITY OF LAW. WHEN A PA RTICULAR ITEM IS NOT TO BE TAXED AS PER THE STATUTE, THEN TAXING THE SAME WOULD AMOUNT TO VIOLATION OF CONSTITUTIONAL PRINCIPLES AND REVENUE WOULD BE UNJUSTLY ENRICHED B Y THE SAME. HENCE IN THE PROCESS OF VERIFICATION BY THE LD AO, IF THE STAND OF THE ASSESSEE IS FOUND TO BE CORRECT AND IF IT RESULTS IN INCOME BEING ASSESSED LOWER TH AN THE RETURNED INCOME, THAT WOULD BE THE TRUE AND CORRECT INCOME OF THE ASSESSEE AND IT WOULD BE THE DUTY OF THE REVENUE TO ASSESS THE CORRECT TAX LIABILITY OF THE ASSESSEE . IN VIEW OF THESE FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF 5 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 5 JUSTICE AND FAIRPLAY, TO REMAND THIS ISSUE TO THE F ILE OF THE LD AO FOR ADJUDICATION ON MERITS. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 649/KOL/2013 ASST YEAR 2009-10 ASSESSEE APPEAL 5. THIS APPEAL OF THE REVENUE ARISE OUT OF THE ORDE R OF THE LD CITA IN APPEAL NO. 15/CIT(A)-VI/CIR-6/11-12/KOL DATED 12.12.2012 FOR A SST YEAR 2009-10 AGAINST THE ORDER PASSED BY THE LD AO U/S 143(3) OF THE ACT ON 29.12.2011. THIS TRIBUNAL HAD ORIGINALLY DISPOSED OFF THE APPEAL IN ITA NO. 649/K OL/2013 FOR ASST YEAR 2009-10 AND MISCELLANEOUS APPLICATION WAS PREFERRED BY THE ASSESSEE POINTING OUT CERTAIN MISTAKES THAT HAD CREPT IN THE ORIGINAL ORDER. TH E SAID MISCELLANEOUS APPLICATION WAS DISPOSED OFF BY THIS TRIBUNAL IN M.A. NO. 77/KO L/2011 DATED 30.11.2017 BY RECALLING THE ORDER FOR THE LIMITED PURPOSE OF ADJU DICATION OF DISALLOWANCE MADE BY THE LD AO ON ACCOUNT OF AMORTIZATION OF PREMIUM PAI D FOR PURCHASE OF SECURITIES. 6. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 91,30,00,0 00/- BEING AMORTIZATION OF PREMIUM PAID FOR PURCHASE OF SECURITIES IN THE FACTS AND CI RCUMSTANCES OF THE CASE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THIS TRIBUNAL IN AS SESSEES OWN CASE FOR THE ASST YEAR 2008-09 IN ITA NO. 1199 & 1282/KOL/2012 DATED 1.6. 2016, WHICH WAS THE BASIS FOR RECALLING OF THE ORDER IN THE MISCELLANEOUS APPLICA TION PROCEEDINGS. WE FIND THAT THIS TRIBUNAL FOR THE ASST YEAR 2008-09 IN ASSESSEE S OWN CASE HAD HELD AS UNDER:- 42. WE HAVE CONSIDERED THE RIVAL SUBMIS SIONS. THE ASSESSEE WHILE COMPUTING ITS TOTAL INCOME CLAIMED DEDUCTION UNDER THE HEAD AMORTIZATION OF PREMIUM ON PURCHASE OF SECURITIES HELD TO MATURITY. THE ASSESSEE IN THE COURSE OF ITS BANKING BUSINESS, TO MEET THE STATUTORY LIQUIDITY R ATIO REQUIREMENTS PRESCRIBED BY THE 6 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 6 RBI, HAS TO MAKE INVESTMENTS IN CENTRAL AND STATE G OVERNMENT SECURITIES. AS PER RBI DIRECTIONS SUCH INVESTMENTS ARE CLASSIFIED INTO THREE CATEGORIES AS UNDER : I) AVAILABLE FOR SALE (AFS) II) AVAILABLE FOR TRADING (AFT) III) HELD TO MATURITY (HTM). THE ASSESSEE POINTED OUT THAT THE INVESTMENTS WHICH WERE MADE BY THE ASSESSEE AND CATEGORIZED AS HTM WERE PURCHASED AT A PRICE WHICH WAS HIGHER THAN ITS REDEEMABLE VALUE. IN OTHER WORDS, THESE SECURITIES WERE PURCHASED AT A PREMIUM. THE DIFFERENCE BETWEEN THE ACTUAL COST OF THESE INV ESTMENTS AND THE FACE VALUE OF SUCH INVESTMENTS WERE SPREAD OVER TO THE LIFE OF THE INV ESTMENTS AND PROPORTIONATE DEDUCTION WAS CLAIMED BY THE ASSESSEE UNDER THE HEA D 'AMORTIZATION OF HTM'. THE FURTHER CLAIM OF THE ASSESSEE WAS THAT ALL THE SECU RITIES HELD BY THE ASSESSEE WERE HELD AS STOCK-IN-TRADE BY THE ASSESSEE. THE FACE VALUE OF THE SECURITIES HELD IN HTM CATEGORY IS ALONE SHOWN IN THE BOOKS AS COST AN D THE PREMIUM IS NOT CLAIMED AS COST OF THE SECURITIES, AS THE PREMIUM IS CLAIMED B Y WAY OF AMORTIZATION OF PREMIUM OVER THE LIFE OF THE SECURITY. THE REVENUE CAN HAV E GRIEVANCE ONLY WHERE THE COST PRICE OF THE INVESTMENT AS RECORDED IN THE INVESTME NT TRADING ACCOUNT INCLUDES PREMIUM PAID AT THE TIME OF ACQUISITION AND ALSO TH E SAME PREMIUM IS SEPARATELY CLAIMED IN THE PROFIT AND LOSS ACCOUNT AGAIN AS A D EDUCTION. THE PLEA OF THE ASSESSEE THAT THERE IS NO SUCH DOUBLE CLAIM FOR SAME COST HA S BEEN FOUND TO CORRECT BY THE CIT(A). THE ORDER OF THE AO IS SILENT ON THIS ASPE CT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE ASSUMPT ION THAT FULL PURCHASE CONSIDERATION OF ALL THE SECURITIES WAS INCLUDED IN THE SAID INVESTMENT TRADING ACCOUNT AND AMORTIZATION AMOUNT IS CHARGED SEPARATE LY IN THE PROFIT AND LOSS ACCOUNT AGAIN AND HE THEREFORE HELD THAT THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED IN COMPUTATION OF TOTAL INCOME. THIS FACTUAL ASSUM PTION OF THE AO IS WRONG AS FOUND BY THE CIT(A) WHICH HAS NOT BEEN DISPUTED BEFORE US . IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT C ALL FOR ANY INTERFERENCE. CONSEQUENTLY GR.NO.1 & 2 RAISED BY THE REVENUE IS D ISMISSED. RESPECTFULLY FOLLOWING THE SAID JUDICIAL PRECEDENT , WE FIND NO INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. ACCORDINGLY, THE GRO UND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 127/KOL/2011 FOR ASST YEAR 2007-08 WITH REGARD TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE REVENUE I N ITA NO. 649/KOL/2013 FOR THE 7 ITA NO.127/KOL/2011 I.T.A. NO. 649/KOL/2013 ALLAHABAD BANK A.YRS. 2007-08 & 2009-10 7 ASST YEAR 2009-10 WITH REGARD TO DELETION OF ADDITI ON ON ACCOUNT OF AMORTIZATION OF PREMIUM PAID FOR PURCHASE OF SECURITIES IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 07.02.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 07.02.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ALLAHABAD BANK, 2, NETAJI SUBHAS ROAD, KOLKATA-7 00001 2. DCIT, CIRCLE-6, KOLKATA, AAYAKAR BHAWAN, P-7, CH OWRINGHEE SQUARE, KOLKATA -700069. 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S