Appeal details
Counselvise Citation
68024514 RSA 2009
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-04-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
31-03-2011
Assessment Year
2005-2006
Appeal Filed On
05-06-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 680/PN/09 (ASST. YEAR: 2005-06) THE RATNAKAR BANK LTD., SHREE SHAHU MARKET YARD, KOLHAPUR .. APPELLANT PAN AABCT 3335M VS. DY. COMMISSIONER OF INCOME-TAX .. RESPONDEN T CIR.2 KOLHAPUR APPELLANT BY : SHRI S.U. PATHAK RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR DATED 29.1.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.12.2007 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IN THIS APPEAL RELATES TO THE DIS ALLOWANCE OF INTEREST AMOUNTING TO RS 59,62,000/- UNDER SECTION 14A OF THE ACT. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSE E MENTIONED THAT THIS APPEAL HAS TO BE SET ASIDE TO THE FILES OF THE AO I N LINE WITH THE DECISION OF THE TRIBUNAL IN THE APPELLANTS OWN CASE, WHICH WERE DECI DED BY THE TRIBUNAL IN ITA NO. 136/PN/07 & OTHERS DATED 19.11.2010. THE COUNSE L MENTIONED PARA 4 OF THE ORDER FOR THE PROPOSITION THAT THE MATTER HAS TO BE REFERRED TO THE FILES OF THE AO. 2 4. WE HAVE HEARD THE LEARNED DR AND HAVE ALSO GONE TH ROUGH THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE. PARA 4 OF THE SAID ORDER READS AS FOLLOWS: HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ON SIMILAR SET OF FACTS, THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT V UTTAMCHAND JAIN(2010) 320 ITR 554 (BOM) (SI--AND COR RECT CITATION IS GODREJ & BOYCE MFG. CO. LTD. V DCIT 328 ITR 81 (BOM ) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ADMITTEDLY, THE INVESTMENT IN TAX FREE INVESTME NT WAS MUCH LOWER THAN THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE FOR INVEST MENT. THUS, IT CAN BE SAFELY SAID THAT BORROWED FUNDS WERE NOT UTILIZED TO MAKE INVESTM ENT IN TAX FREE BONDS ETC. THE ASSESSEE IS ENGAGED IN BANKING ACTIVITY. THE INVESTMENTS A RE MADE IN THE COURSE OF BANKING BUSINESS. SIMILARLY, SALE OF INVESTMENTS WAS ALSO A PART OF THE BANKING ACTIVITY. THE BORROWED FUNDS IN THE NATURE OF DEPOSITS WERE UTIL IZED IN THE BANKING BUSINESS AND THE INTEREST ON BORROWED FUNDS IS ALLOWABLE UNDER THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT. THE INTEREST ON CAPITAL BORROWED IS ALLOWAB LE EVEN THOUGH A PART OF THE FUNDS MIGHT HAVE BEEN INVESTED IN SECURITIES. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ANDS RESTORE THE ISSUE TO THE FILE OF THE AO FOR DE NOVO ASSESSMENT IN THE LIGHT OF THE FACTS AND LAW AVAILABLE AT THE RELEVANT POINT OF TIME AND AFTER TAKING INTO CONSIDERATION THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V UTTAMCHAND JAIN (SUPRA) AFTER PROVIDING DUE OP PORTUNITY OF HEARING TO THE ASSESSEE. CONSEQUENTLY, THE APPEALS OF THE ASSESSEE ARE TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. 5. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE GROUNDS RAISED BY THE ASSESSEE HAVE TO BE SET ASIDE WITH IDENTICAL DI RECTIONS. 6. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 06TH DAY OF APRIL, 2011. SD/- SD/- (I.C. SUDHIR) (D. KARUNAKA RA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 6 TH APRIL, 2011 B COPY TO:- 1) ASSESSEE 2) DCIT CIR. 2, KOLHAPUR 3) CIT(A), KOLHAPUR 4) CIT KOLHAPUR 5) THE DR, A BENCH, ITAT., PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE 3
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