DDIT (I.T) 2(1), MUMBAI V. M/s. SOCIETE CENERALE, MUMBAI

ITA 6571/MUM/2004

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71128 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 29-08-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 13-09-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDER KUMAR
• Assessee Lawyers: BRIJMOHAN POORANMAL AGA RWAL
• Keywords: Business income; Opportunity of being heard; Earning of tax free income; Bad and doubtful debts
• Section: 14A; 115JB

Judgement Text

L IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI . . , . , BEFORE SHRI B.R. MITTAL, JM AND SHRI D. KARUNAKARA RAO, AM ./ I.T.A. NO. 6571/M/2004 (AY: 2000 - 2001) DDIT (IT) - 2(1), R.NO.120, 1 ST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI - 400 038. / VS. M/S. SOCIETE GENERALE, MAKER CHAMBERS - IV, J. BAJAJ MARG, NARIMAN POINT, MUMBAI - 400 021. ./ PAN : AABCS 4784 C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MR. NARENDER KUMAR / RESPONDENT BY : MR. BRIJMOHAN POORANMAL AGARWAL / DATE OF HEARING : 4 .9.2 013 / DATE OF PRONOUNCEMENT : 20. 9.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 13.9.2004 IS AGAINST THE ORDER OF CIT (A) - XXXI, MUMBAI DATED 28.6.2004 FOR THE ASSESSMENT YEAR 2000 - 2001. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE BROKER PERIOD INTEREST OF RS. 9,46,99,208/ - PAID ON SECURITIES PURCHASED BY THE AS SESSEE, TREATING THE SECURITIES PURCHASED AS STOCK IN TRADE AND NOT INVESTMENT OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF GUARANTEE COMMISSION OF RS. 2,03, 280/ - WITHOUT APPRECIATING THE FACT - (I) THAT THE TRANSACTION INVOLVING BANK GUARANTEE IS ONLY IN THE YEAR IN WHICH GUARANTEE IS GIVEN. BANK RECEIVES THE RIGHT TO RECEIVE GUARANTEE COMMISSION, THE MOMENT THE GUARANTEE IS GIVEN FOR ANY PERIOD. THE ASSESSE E DOES NOT RECEIVE ANY RIGHT IN SUBSEQUENT YEARS FOR ANY GUARANTEE COMMISSION. AS PER THE MERCANTILE SYSTEM OF ACCOUNTING, WHEREVER ASSESSEE RECEIVES ANY RIGHT TO RECEIVE INCOME WHETHER RECEIVED OR NOT, THE SAME IS CONSIDERED AS ACCRUED TO THE ASSESSEE. ( II) THAT THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. BANK OF TOKYO LTD ( 71 TAXMANN 85) IS NOT APPLICABLE TO THIS CASE. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DELETING THE DISALLOWANCE MADE O F RS. 70,55,593/ - ON ACCOUNT OF INTEREST EXPENDITURE INCURRED FOR EARNING INTEREST ON TAX FREE BONDS ON THE GROUND THAT NO NEXUS HAS BEEN PROVED BETWEEN THE TAX FREE BONDS AND THE INTEREST BEARING FUNDS, WITHOUT APPRECIATING THE FACT - (I) THAT THE ASSESSEE FAILED TO ESTABLISH THE INVESTMENTS IN THE TAX FREE BONDS WERE NOT MADE FROM THE BORROWED FUNDS; (II) THAT THERE HAS TO BE CERTAIN EXPENDITURES IN THE NATURE OF ADMINISTRATIVE EXPENSES HOWSOEVER SMALL IT MAY BE, WHICH HAVE BEEN INCURRED FOR EARNING THE EX EMPT INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ADJUSTMENT IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS WAS MADE IN ACCORDANC E WITH THE PROVISIONS CONTAINED IN CLAUSE (C) OF EXPLANATION TO SECTION 115JA OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DECIDING THAT THE CAPITAL GAINS (LONG TERM CAPITAL GAINS OF RS. 2,16,80,556/ - AN D SHORT TERM CAPITAL GAINS OF RS. 37,97,5 9,752/ - ) ERRED BE THE PRINCIPAL IS NOT TO BE TAXED AS PER THE INCOME ATTRIBUTABLE TO THE PE IN INDIA. 3. BEFORE US, AT THE OUTSET, MR. BRIJMOHAN POORANMAL AGARWAL, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTIO N TO THE ORDER OF THE TRIBUNAL DATED 9.1.2013 IN THE ASSESSEES OWN CASE AND MENTIONED THAT GROUND NO.1, 2, 3 AND 4 ARE STAND COVERED . REFERRING TO THE SAID ORDER VIDE ITA NO.2977, 3347, 6246/MUM/2004 & 936/MUM/2005 FOR THE AYS 1998 - 1999 TO 2001 - 2002, LD DEMONSTRATED AND EXPLAINED HOW THE SAID GROUNDS STAND COVERED. 4. REFERRING TO GROUND NO. 1 RELATING TO THE ISSUE OF BROKEN PERIOD INTEREST , LD COUNSEL BROUGHT OUR ATTENTION TO PARA 7 & 8 APPEARING AT PAGE 6 OF THE TRIBUNALS ORDER AND MENTIONED THAT THE REVENUE RAISED SIMILAR GROUNDS IN THE AY 1998 - 1999 AND THE GROUND WAS DISMISSED BY THE TRIBUNAL VIDE PARA 8 . HE READ OUT THE RELEVANT PORTIONS OF THE SAID ORDER IN HIS FAVOUR. 5 . ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 6 . WE HAVE HEARD BO TH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE TRIBUNALS ORDER DATED 9.1.2013 AND WE FIND THAT THE FACTS ARE IDENTICAL IN SUBSTANCE. WE HAVE ALSO PERUSED THE RELEVANT PARA 7 & 8 3 OF THE TRIBUNALS ORDER (SUPR A) AND FOR THE SAKE OF COMPLETENESS OF THE ORDER, THE SAID PARAS ARE REPRODUCED HERE UNDER: 7. FIRST GROUND OF THE REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION TOWARDS BROKEN PERIOD INTEREST OF RS. 3,28,07,147 PAID ON SECURITIES PURCHASED BY THE AS SESSEE TREATING THE SECURITIES PURCHASED AS STOCK - IN - TRADE AND NOT INVESTMENT OF THE ASSESSEE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COVERED , AS STATED BY THE LD. AR, BY THE J UDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION V. CIT [(2002) 258 ITR 601 (BOM.)] IN WHICH IT HAS BEEN HELD THAT ONCE THE BROKEN PERIOD INTEREST RECEIVED BY THE ASSESSEE BANK ON GOVERNMEN T SECURITIES WAS CHARGED TO TAX AS BUSINESS INCOME U/S 28, DEDUCTION FOR PAYMENT MADE FOR BROKEN PERIOD INTEREST AT THE TIME OF PURCHASE OF THESE SECURITIES COULD NOT BE DENIED WHEN THE ASSESSEES METHOD OF ACCOUNTING DOES NOT RESULT IN LOSS OF TAX / REVEN UE FOR THE DEPARTMENT. THE RELIANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE CONTRARY JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. BANK OF RAJASTHAN LIMITED [(2009) 316 ITR 391 (RAJ.)] HOLDING THAT THE AMOUNT PAID BY THE BAN K TOWARDS BROKEN PERIOD INTEREST ON SECURITIES PURCHASED BY IT IS NOT AN ALLOWABLE DEDUCTION, CANNOT BE APPLIED DUE TO THE AVAILABILITY OF THE DIRECT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT ON THE POINT IN THE CASE OF AMERICAN EXPRESS INTERNATION AL BANKING CORPORATION (SUPRA) . THE LD. DR WAS FAIR ENOUGH TO CONCEDE THAT THE ALBEIT THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT IS IN FAVOUR OF THE REVENUE, BUT THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES FAVOUR IS ALSO DIR ECT ON THE POINT. THERE IS HARDLY ANY NEED TO EMPHASIZE THAT THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNAL. AS IT IS NOT DENIED THAT THE SECURITIES ARE STOCK IN TRADE OF THE BANK, THE ASSESSEE IS ENTITLED TO DEDUCTION FO R SUCH BROKEN PERIOD INTEREST . WE, H OWEVER DIRECT THE AO TO VERIFY AND ENSURE THAT THE PRECEDING YEARS BROKEN PERIOD INTEREST NOT ALLOWED BY HIM BUT FINALLY ALLOWED AT THE APPELLATE LEVEL, IS NOT TAKEN AS A PART OF THE COST OF SECURITIES SO THAT THERE IS NO CORRESPONDING REDUCTION OF INCOME AT THE TIME OF SALE OF SUCH SECURITIES. IN OTHER WORDS, THE COST OF THE SECURITIES FOR THE PURPOSES OF COMPUTING PROFIT AT THE TIME OF THEIR SALE SHOULD BE TAKEN AT THE NET OF BROKEN PERIOD INTEREST FIGURE AND NOT THE GROSS FIGURE. THIS GROUND IS, .. , NOT ALLOWED. 7 . FROM THE ABOVE, IT IS EVIDENT THAT THE ISSUE RELATES TO THE ADDITION ON ACCOUNT OF BROKEN PERIOD INTEREST IN BOTH THE YEARS AND THE SAME IS FOUND ALLOWABLE BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE . CON SIDERING THE SETTLED POSITION OF THE ISSUE AND RESPECTFULLY FOLLOWING THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE (SUPRA), GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED . 8 . REFERRING TO GROUND NO.2, LD COUNSEL MENTIONED THAT THE ISSUE RELATES TO THE A LLOWABILITY OF GUARANTEE COMMISSION , WHICH WAS DENIED BY THE AO AND THE CIT (A). IN THIS REGARD, LD COUNSEL MENTIONED THAT THE IDENTICAL ISSUE CAME UP FOR ADJUDICATION VIDE PARA 11 AND 12 OF THE SAID TRIBUNALS ORDER IN THE ASSESSEES OWN 4 CASE AND SUBMITT ED THAT THE ISSUE NEEDS TO BE SET ASIDE FOR A FRESH DECISION IN THE LIGHT OF THE RATIO LAID DOWN BY THE SPECIAL BENCH DECISION IN THE CASE OF DCIT (INTERNATIONAL TAXATION) VS. BANK OF BAHRAIN AND KUWAIT [2010] 132 TTJ (MUM.) (SB) 505. 9 . ON THE OTHER HAN D, LD DR DUTIFULLY, RELIED ON THE ORDER OF THE AO. 10 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDER OF THE REVENUE AUTHORITIES AS WELL AS THE SAID PARAS 11 AND 12 OF THE ORDER OF THE TRIBUNAL (SUPRA) IN THE ASSESSEES OWN CASE AND THE SAID RELEVANT PARAS ARE REPRODUCED HERE UNDER: 11. GROUND NO.3 OF THE DEPARTMENTAL APPEAL IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF GUARANTEE COMMISSION OF RS.9,47,373. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECO RD, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BANK OF BAHRAIN AND KUWAIT (SUPRA) . IT HAS BEEN HELD IN THIS CASE THAT IF THE GUARANTEE COMMISSION IS REFUNDABLE ON THE REVOCATION OF GUARANTEE, THEN IT CANNOT BE SAID THAT THE ABSOLUTE RIGHT TO THE COMMISSION HAS ACCRUED TO THE ASSESSEE AT THE TIME OF EXECUTION OF THE CONTRACT FOR FURNISHING THE GUARANTEE, AND THE COMMISSION IS TO BE SPREAD OVER THE PERIOD FOR WHICH THE GUARANTEE IS GIVEN. IN ALL OTHER CASES, I T HAS BEEN HELD BY THE SPECIAL BENCH THAT THE AMOUNT IS TO BE TAXED IN THE YEAR IN WHICH THE GUARANTEE HAS ACTUALLY BEEN GIVEN IRRESPECTIVE OF THE PERIOD OF GUARANTEE. IN VIEW OF THE AFORE - NOTED SPECIAL BENCH DECISION, WE SET ASIDE THE IMPUGNED ORDER ON TH IS ISSUE AND REMIT THE MATTER TO THE FILE OF A.O. FOR DECIDING IT AFRESH IN ACCORDANCE WITH THE RATIO LAID DOWN IN THE SPECIAL BENCH DECISION IN BANK OF BAHRAIN AND KUWAIT (SUPRA) . 11 . CONSIDERING THE CONCURRENCE OF BOTH THE PARTIES, WE REMIT THIS ISSUE RAISED IN GROUND NO.2 TO THE FILES OF THE AO WITH IDENTICAL DIRECTIONS. RELEVANT CONCLUSIONS OF THE CIT(A) ARE SET ASIDE. ACCORDINGLY, GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSE WITH THE IDENTICAL DIRECTIONS . 12 . GROUND NO.3 RELATES TO THE INTEREST EX PENDITURE INCURRED FOR EARNING OF INTEREST ON TAX FREE BONDS . AT THE OUTSET, LD REPRESENTATIVES OF BOTH THE PARTIES CONCURRED WITH THE PROPOSAL THAT THIS ISSUE REQUIRES TO BE ADJUDICATED IN THE SAME LINE OF THE CONCLUSIONS GIVEN BY THE TRIBUNAL VIDE PARA 13 AND 14 OF THE ITS ORDER (SUPRA). IN THIS REGARD, WE HAVE PERUSED THE SAID PARAS AND FOUND THAT THE CONCLUSIONS GIVEN ARE RELEVANT FOR ADJUDICATION OF GROUND NO.3 OF THE PRESENT APPEAL. THE SAID PARA 13 AND 14 OF THE TRIBUNALS ORDER READ AS UNDER: 13 . GROUND NO.4 OF THE REVENUES APPEAL IS AGAINST DELETION OF DISALLOWANCE OF 5 RS. 58,26,804 MADE ON ACCOUNT OF INTEREST EXPENDITURE INCURRED FOR EARNING INTEREST ON TAX FREE BONDS ON THE GROUND THAT NO NEXUS HAS BEEN PROVED BETWEEN THE TAX FREE BONDS AND T HE INTEREST BEARING FUNDS. BRIEFLY STATED THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE EARNED INTEREST ON TAX FREE SECURITIES AMOUNTING TO RS. 73,39,468 WHICH WAS CLAIMED AS EXEMPT U/S 10(15)(IV)(H) ON GROSS BASIS. THE ASSESSING OFFICER, AFTER DISCUS SING THE ISSUE IN DETAIL, HELD IN PARA 10.8 OF THE ASSESSMENT ORDER THAT THE GROSS INTEREST FROM TAX FREE SECURITIES WAS NOT ELIGIBLE FOR EXEMPTION U/S 10. HE COMPUTED THE AMOUNT OF NET INTEREST BY APPLYING RATE OF 20.61% AFTER TAKING INTO ACCOUNT THE INCO ME AFTER REDUCING INTEREST COST BUT BEFORE INDIRECT EXPENSES. THIS LED TO RESTRICTING THE EXEMPTION U/S 10(15) TO `15,12,664. THE LEARNED CIT(A) WENT THROUGH THE DETAILS TABULATED BY THE ASSESSEE SHOWING ITS NET CAPITAL AND RESERVES AT RS. 34.68 CRORE (CAP ITAL AND RESERVE AT `85 .81 CRORE MINUS FIXED ASSETS AT RS. 51.12 CRORE). THIS AVAILABLE AMOUNT WAS SEEN AGAINST THE INVESTMENT IN BONDS TO THE TUNE OF RS. 3 CRORE ON WHICH SUCH EXEMPT INTEREST INCOME WAS EARNED. AS THE INVESTMENTS IN THE TAX FREE BONDS WAS MUCH LESS THAN THE AVAILABLE CAPITAL AND RESERVE, THE LEARNED CIT(A) HELD THAT THE ASSESSING OFFICER FAILED TO ESTABLISH NEXUS BETWEEN INVESTMENTS IN DEPOSITS AND DEPLOYMENT OF INTEREST BEARING FUNDS. HE, THEREFORE, SET ASIDE THE ACTION OF THE A.O. IN RES TRICTING THE AMOUNT OF EXEMPTION U/S 10(15)(IV)(H). THE REVENUE HAS COME UP AGAINST THIS FINDING OF THE LD. CIT(A) IN APPEAL BEFORE US. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT SIMILAR ISSUE C AME UP FOR ADJUDICATION BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF JCIT V. AMERICAN EXPRESS BANK LIMITED, IN ITA NO.5904/MUM/2000. VIDE ORDER DATED OCTOBER 2012, THE BENCH HAS HELD THAT THE EXEMPTION U/S 10(15)(IV) IS AVAILABLE ON GROSS BASIS. IT HAS ALSO BEEN HELD, BY RELYING ON ANOTHER ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DRESDNER BANK AG V. ADDL.CIT [(2007) 108 ITD 375 (MUM.)], THAT THE EXPENDITURE INCURRED IN RELATION TO EARNING OF SUCH EXEMPT INCOME IS TO BE DIS ALLOWED U/S 14A. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS SEEN THAT THE LEARNED CIT(A) HAS RECORDED A CATEGORICAL FINDING THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE IN THE SHAPE OF CAPITAL AND RESERVES ARE FAR IN EXCESS OF THE AMOUNT INVESTED IN BONDS. IN THAT VIEW OF THE MATTER THERE CAN BE NO DISALLOWANCE OF ANY INTEREST U/S 14A. HOWEVER, THE ADMINISTRATIVE AND OTHER EXPENSES ETC. ARE REQUIRED TO BE DISALLOWED U/S 14A ON SOME REASONABLE BASIS. THE ASSESSING OFFICER IS DIRECTED TO CO MPUTE SUCH DISALLOWANCE. THIS GROUND IS, THEREFORE, PARTLY ALL OWED. 13 . ON PERUSAL OF THE SAID PARAS AND AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE PRESENT ISSUE STANDS COVERED AND IN FACT NO DISALLOWANCE IS REQUIRED ON ACCOUNT OF INTEREST EXPENDIT URE U/S 14A READ WITH RULE - 8D(III) OF THE INCOME TAX RULES, 1962. HOWEVER, THE ADMINISTRATIVE EXPENSES AND OTHER EXPENSES ARE REQUIRED TO BE DISALLOWED ON SOME REASONABLE BASIS. AO IS ACCORDINGLY DIRECTED TO COMPUTE THE DISALLOWANCE IN ACCORDANCE WITH THE LINES DRAWN IN THE SAID PARA 13 AND 14 OF THE ORDER OF THE TRIBUNAL FOR THE AY 1998 - 1999. ACCORDINGLY, THE GROUND IS PARTLY ALLOWED PROTANTO . 6 14 . GROUND NO.4 RELATES TO ADJUSTMENTS IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS PERMITTED UNDER THE PROVISIONS OF CLAUSE (C) OF EXPLANATION TO SECTION 115JA OF THE ACT. 1 5 . AT THE OUTSET, LD COUNSEL BROUGHT OUR ATTENTION TO PAGE 15 OF THE ORDER OF THE TRIBUNAL (SUPRA) AND MENTIONED THAT THE ISSUE NEEDS TO BE SET ASIDE TO THE FILES OF THE AO FOR FRESH ADJ UDICATION ON THIS ISSUE, CONSIDERING THE RATIO OF THE DECISION OF THE TRIBUNAL IN THE CASE OF KRUNG THAI BANK PCL VS. JCIT (IT) IN IT A NO. 3390/MUM/2009 (AY 2004 - 2005) DATED 30.9.2010. HE READ OUT THE RELEVANT PARAS 26 AND 27 OF THE ORDER OF THE TRIBUNAL A ND THE SAME READ AS UNDER: 26. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KRUNG THAI BANK PCL V. JCIT (IT) IN ITA NO.3390/MUM/2009. IN THE LIGHT OF THIS ORDER, IT WAS PRAYED THAT THE VERY APPLICABILITY OF SECTION 115JA SHOULD BE CANCELLED AS THE ASSESSEE IS FOREIGN BANK NOT SUBJECT TO THE PROVISIONS OF THE COMPANIES ACT, 1956. THE LEARNED DEPARTMENTAL REPRESENTATIVE REQUESTED THAT SINCE THIS ISSUE HAS NOT BEEN DEALT WI TH BY THE AUTHORITIES BELOW, THE MATTER MAY BE REMITTED TO THE A.O. 27. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL IN THE CASE OF KRUNG THAI BANK PCL (SUPRA), VIDE ITS ORDER DATED 30.09 .2010, HAS HELD THAT THE PROVISIONS OF SECTION 115JB CAN APPLY ONLY WHEN THE ASSESSEE IS REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT. THE ASSESSEE BEING A FOREIGN BANK IN THAT CASE, WAS HELD TO BE NOT GOVERNED BY THE PROVISIONS OF SECTION 115JB. THE INSTANT ASSESSEE IS ALSO A FOREIGN BANK. IT IS ALSO NOT REQUIRED TO DRAW ITS PROFIT AND LOSS ACCOUNT AS PER THE COMPANIES ACT. IN THE ABSENCE OF ANY CONTRARY VIEW BROUGH T TO OUR NOTICE BY THE LD. DR, IT PRIMA FACIE APPEARS THAT THE ORDER IN THE CASE OF KRUNG THAI BANK PCL (SUPRA) IS APPLICABLE. AS THIS ISSUE HAS BEEN RAISED BEFORE US FOR THE FIRST TIME AND NEITHER TAKEN UP NOR CONSIDERED BY THE AUTHORITIES BELOW, IN OU R CONSIDERED OPINION, IT WILL BE IN THE FITNESS OF THINGS IF THE ASSESSING OFFICER IS DIRECTED TO DECIDE THIS ASPECT OF THE MATTER AS PER LAW. WE ORDER ACCORDINGLY. 16 . CONSIDERING THE CONCURRENCE OF BOTH THE PARTIES ON THIS ISSUE, RELYING ON THE CONTENT S OF PARA 26 AND 27 OF THE ORDER OF THE TRIBUNAL FOR THE AY 2000 - 2001, WE SET ASIDE THE FINDING OF THE CIT(A) AND REMIT THIS ISSUE TO THE FILES OF THE AO TO EXAMINE THE ISSUE AFRESH AS PER THE LAW AND THE PRECEDENTS AVAILABLE AT THE POINT OF TIME. ACCORDI NGLY, GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSE . 7 1 7 . REFERRING TO G ROUND NO.5 , LD COUNSEL MENTIONED THAT THE CIT (A) ERRED IN DECIDING THE CAPITAL GAINS (LONG TERM AS WELL AS SHORT TERM) EARNED BY THE PRINCIPAL IS NOT TO BE TAXED AS PER THE INCOME ATT RIBUTABLE TO THE PE IN INDIA. 1 8 . ON THIS ISSUE, BOTH THE PARTIES BROUGHT OUR ATTENTION TO THE PARA 12 AND ITS SUB - PARAS OF THE IMPUGNED ORDER AND MENTIONED THAT THE REVENUE AUTHORITIES DECIDED THE ISSUES AGAINST THE ASSESSEE ON THE WRONG ASSESSMENT OF THE FACTS. TO START WITH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSEE BEING A BANKER IS ALSO A BENEFICIAL FOREIGN INSTITUTIONAL INVESTOR (FII) WHICH IS NOT POSSIBLE CONSIDERING THE REGULATIONS IN FORCE IN INDIA. BOTH THE PARTIES MENTIONED THAT TH IS ISSUE REQUIRES A FRESH ADJUDICATION AND THEY PRAYED FOR REMANDING THE MATTER TO THE FILES OF THE AO. WITHOUT GOING INTO THE MERITS OF THE ISSUE, CONSIDERING THE REQUEST BY THE PARTIES, WE REMIT THE ISSUE INVOLVED IN GROUND NO.5 TO THE FILES OF THE AO F OR FRESH ADJUDICATION AND THE AO IS DIRECTED TO ADJUDICATE THIS ISSUE BRINGING RELEVANT BASIC FACTS INTO THE ORDER. AO IS FURTHER DIRECTED TO PASS A SPEAKING ORDER AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, WE S ET ASIDE THE FINDINGS OF THE REVENUE AUTHORITIES. ACCORDINGLY, GROUND NO.5 IS ALLOWED FOR STATISTICAL PURPOSE. 1 9 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED . ORDER IS PRO NOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER 2013. SD/ - SD/ - (B.R. MITTAL) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 20 .9.2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 8 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI