ADDL CIT 10(1, MUMBAI V. ICICI HOME FINANCE CO.LTD, MUMBAI

ITA 7843/MUM/2011

• Counselvise Citation: 784319914 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 01-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: AARTI VISSANJI
• Keywords: Additional evidence
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI . . . . , ! ! ! ! '!! '!! '!! '!! !# !# !# !# , $ $ $ $ BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 462/MUM/2012 (ASSESSMENT YEAR: 2008-09) ICICI HOME FINANCE COMPANY LTD, ICICI BANK TOWERS, BANDRA-KURLA COMPLEX, BANDRA (EAST) MUMBAI -400 051 % .: PAN: AAACI 6285 N VS ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-10(1), R.NO.455, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI -400 021 %' (APPELLANT) ()%' (RESPONDENT) ITA NO. : 7843/MUM/2011 (ASSESSMENT YEAR: 2008-09) ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-10(1), MUMBAI -400 021 VS M/S ICICI HOME FINANCE COMPANY LTD, MUMBAI -400 051 % .: PAN: AAACI 6285 N %' (APPELLANT) ()%' (RESPONDENT) ASSESSEE BY : MS AARTI VISSANJI REVENUE BY : SHRI KISHAN VYAS *! + ,- /DATE OF HEARING : 01-12-2014 ./0 + ,- / DATE OF PRONOUNCEMENT : 20-02-2015 ORDER , , , , : :: : PER VIVEK VARMA, JM : CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE DEPARTMENT AGAINST THE ORDER OF THE CIT(A)-21, MUMBAI, DA TED 29.08.2011. 2. AS BOTH THE APPEALS EMANATE FROM THE SAME ORDER OF CIT(A), WE ARE DISPOSING OFF THE TWO APPEALS THROUGH THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIEN CE AND BREVITY. ICICI HOME FINANCE COMPANY LTD ITA NO. 462/MUM/2012 ITA NO. 7843/MUM/2011 2 ITA NO. 462/MUM/2012 : 3. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: [1] BEING AGGRIEVED BY THE ORDER BEARING NO. CIT(A)21/IT/253/2010-11 DATED AUGUST 29, 2011 ISSUED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) 21, MUMBAI (HEREINAFTER CALLED THE CIT(A)) UNDER SE CTION 250 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER CALLED THE ACT] AND COMMUNICATED TO THE APPELLANT ON NOVEMBER 22, 2011, THE APPELLANT APPEALS AGAINST AND ON THE FOLLOWING AMONGST OTHER GROUNDS WHICH ARE WITHOUT PREJUDICE TO EACH OTHER. (A) RE: DISALLOWANCE UNDER SECTION 14A READ WITH RU LE 8D [2] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANC E UNDER SECTION 14A MADE BY THE ASSESSING OFFICER BY APPLYING RULE 8D. [3] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO EVALUATE & VERIFY THE MET HOD FOR COMPUTING THE DISALLOWANCE UNDER SECTION 14A OFFERE D FOR TAXATION BY THE APPELLANT VOLUNTARILY IN ITS RE TURN OF INCOME. [4] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THE RATIO NAL GROUND CONSIDERED FOR COMPUTING DISALLOWANCE VOLUNTARILY FOR RS. 20,26,263/- UNDER SECTION 14A B ASED ON RATIONAL BASIS AND NOT ARBITRARILY. (B) RE: SPECIAL RESERVE DEDUCTION U/S 36(1)(VIII) [5] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN EXCLUDING THE FOLLOWING IN COME ON THE GROUND THAT THE SAME DO NOT QUALIFY FOR DEDU CTION UNDER SECTION 36(1)(VIII) WITHOUT ALLOWING AN OPPOR TUNITY TO THE APPELLANT TO EXPLAIN FURTHER: SRNO. PARTICULARS AMOUNT RS. 1 INTEREST ON BUYOUT PORTFOLIO 368,60,68,267 2 INTEREST - INCOME - SECURITISATION 38,64,83 ,233 3 PREMIUM BUYOUT INCOME (7,11,51,708) 4 INCOME - SECURITISATION OF HOME LOANS (22,11,395) [6] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE PROPERLY THE I NTEREST INCOME ON HOUSING LOANS FOR RS. 3,17,93,48,463/-, INCOME FROM SECURITISATION HOME LOAN FOR RS. (22,11,395) AND FEE INCOME FOR RS. 1,13,36,718/- AS INCOME FROM PROVIDING HOUSING FINANCE FOR CONSTRUCT ION OR PURCHASE OF RESIDENTIAL HOUSES IN INDIA WITHOUT ALL OWING AN OPPORTUNITY TO THE APPELLANT TO EXPLAIN FURTHER. [7] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN COMPUTING THE RATIO OF TOT AL INCOME FROM ELIGIBLE BUSINESS QUALIFIES UNDER SECTI ON 36(1)(VIII) WITH THE PROFITS AND GAINS FROM BUSINES S OR PROFESSION. [8] THE CIT(A) ALSO ERRED IN APPRECIATING THE FACT THAT INTEREST INCOME OF RS. 3,37,25,730/- EARNED FROM ICICI HOME FINANCE COMPANY LTD ITA NO. 462/MUM/2012 ITA NO. 7843/MUM/2011 3 FIXED DEPOSITS WITH BANKS, GOVT. SECURITIES WAS ALS O RELATED TO THE ELIGIBLE BUSINESS OF HOUSING FINANCE BUSINESS OF THE APPELLANT AS ACCORDING TO NATIONAL HOUSING BANK'S (NHB) REGULATIONS WHICH MANDATES HOUSING FINANCE COMPANIES IN INDIA TO INVEST IN CER TAIN SECURITIES IN ORDER TO MAINTAIN THE STATUTORY LIQUI DITY RATIO. THUS THESE INCOME ARE DERIVED FROM THE ELIGI BLE BUSINESS OF PROVIDING LONG TERM FINANCE AND ARE ELI GIBLE FOR DEDUCTION UNDER SECTION 36(1)(VIII) OF THE ACT. (C) GENERAL: THE APPELLANT CRAVES LEAVE AND RESERVES ITS RIGHTS TO VARY, AMEND, ALTER AND/OR ADD TO THE GROUNDS OF APP EAL AND TO PRODUCE SUCH ORAL AND DOCUMENTARY EVIDENCE A ND FILE SUCH COMPILATION OF DOCUMENTS AS MAY BE NECESS ARY AT THE TIME OF HEARING OF THE APPEAL. ITA NO. 7843/MUM/2011 : 4. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE DEPARTMENT: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE DE DUCTION U/S.36(1)(VIII) OF THE ACT WHEN THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION U/S,36(1)(VIII) OF THE ACT. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE CL AIM OF DEDUCTION U/S.36(1)(VIII) OF THE ACT AT RS. 1,30,18 ,027/-. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND, OR ALTER ANY GROUNDS OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 5. AT THE TIME OF HEARING, THE AR SUBMITTED THAT THE GRO UND NO. A ALONG WITH ITS SUB-GROUNDS OF THE ASSESSEES APPEA L IS NOT PRESSED. 6. SINCE THE GROUND IS NOT PRESSED, IT IS REJECTED. 7. IT WAS FURTHER POINTED OUT THAT VIDE LETTER DATED 28.11.2014, THE ASSESSEE HAD FILED CERTAIN ADDITIONAL EVIDENCE S UNDER RULE 29 OF THE INCOME TAX APPELLATE RULE, 1962, PERTAINING TO THE DISALLOWANCE MADE U/S 36(1)(VIII) OF THE INCOM E TAX ACT, 1961. ICICI HOME FINANCE COMPANY LTD ITA NO. 462/MUM/2012 ITA NO. 7843/MUM/2011 4 8. SINCE GROUNDS NO. B WITH SUB GROUNDS (5), (6), (7) & (8) IN ASSESSEES APPEAL AND GROUNDS NO. 1 & 2 IN DEPARTMENT APPEAL PERTAIN TO SECTION 36(1)(VIII), WE ARE OF THE OPINION THAT THE ISSUE IN THE ENTIRETY SHOULD BE RESTORED TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION. 9. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) ON THE ISS UE AND DIRECT THE AO TO ADJUDICATE THE ISSUE DE NOVO , TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE ITAT, WHICH HAS BEEN ACCEPTED BY US. NEEDLESS TO M ENTION THAT THE AO SHALL AFFORD REASONABLE AND ADEQUATE OPPORTU NITY TO PRESENT ITS CASE ON THE IMPUGNED ISSUE. 10. GROUND NO. B ALONG WITH ITS SUB GROUNDS, (5), (6), (7) & (8) ARE THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO. 1 AND 9 ARE GENERAL IN NATURE. 12. AS A RESULT, THE APPEAL AS FILED BY THE ASSESSEE IS TR EATED AS PARTLY ALLOWED. 13. AS MENTIONED ABOVE GROUNDS NO. 1 & 2 OF DEPARTMENT APPEAL ALSO PERTAIN TO DISALLOWANCE OF SECTION 36(1)(VIII) AND WE HAVE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION IN ITA NO. 462/MUM/2012, WE ARE OF THE OPINION THAT IDENTICAL DIRECTION BE GIVEN IN THIS APPEAL AS WELL, AS IN PARA 8, ABOVE. 14. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND R ESTORE THE ISSUE OF DISALLOWANCE MADE BY THE AO U/S 36(1)(VIII) TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION, NEEDLESS TO MENTION THAT THE AO SHALL AFFORD REASONABLE AND ADEQUATE OPPORTUNITY T O THE ASSESSEE. ICICI HOME FINANCE COMPANY LTD ITA NO. 462/MUM/2012 ITA NO. 7843/MUM/2011 5 15. GROUNDS NO. 1 & 2 ARE THEREFORE ALLOWED FOR STATISTICA L PURPOSES. 16. AS A RESULT, THE APPEAL AS FILED THE DEPARTMENT IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 462/MUM/2012 APPEAL BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 7843/MUM/2011 APPEAL BY THE DEPARTMENT IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY, 2015. SD/- SD/- (RAJENDRA) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 20 TH FEBRUARY, 2015 (,/ COPY TO:- 1) %' / THE APPELLANT. 2) ()%' / THE RESPONDENT. 3) THE CIT(A) -21, MUMBAI. 4) THE CIT MC-X, MUMBAI. 5) '!23 (,* , , / THE D.R. I BENCH, MUMBAI. 6) 34# 5 COPY TO GUARD FILE. 6* / BY ORDER / / TRUE COPY / / 7 / 8 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN, SR.PS