DCB BANK LTD, MUMBAI V. ACIT CIR 2(3), MUMBAI

ITA 820/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2672 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 29-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SRIVASTAVA
• Keywords: Depreciation; Earning of tax free income; Question of law; Cost of acquisition
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER / I .TA NO. 820/MUM/2014 ( / ASSESSMENT YEAR:2010-11 DCB BANK LTD., FORMERLY DEVELOPMENT CREDIT BANK LTD., 6 TH FLOOR, PENINSULLA BUSINESS PARK, TOWER A, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI-400 013 / VS. THE ACIT-CIRCLE 2(3), AAYAKAR BHAVAN, MUMBAI-400 020 / I .TA NO. 615/MUM/2014 ( / ASSESSMENT YEAR:2010-11 THE ACIT-CIRCLE 2(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. DCB BANK LTD., FORMERLY DEVELOPMENT CREDIT BANK LTD., 6 TH FLOOR, PENINSULLA BUSINESS PARK, TOWER A, LOWER PAREL, MUMBAI-400 013 ./ ./ PAN/GIR NO. : AAACD 1461F ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY: SHRI SATISH MODY / REVENUE BY: SHRI A.K. SRIVASTAVA / DATE OF HEARING :29.10.2015 !' / DATE OF PRONOUNCEMENT : 04.11.2015 #$ / O R D E R ITA. NOS. 615 & 820/M/2014 2 PER N.K. BILLAIYA, AM: THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-6, MU MBAI DATED 21.10.2013 PERTAINING TO ASSESSMENT YEAR 2010-11. B OTH THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 820/M/2014 ASSESSEES APPEAL 2. THE GRIEVANCE OF THE ASSESSEE READ AS UNDER: 1. THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DISALLOWING EXPENSES OF RS. 10,35,789/- U/S. 14A OF THE I.T. ACT, 1961 READ WITH RULE 8D OF THE I.T. RULES, 1961 . 2. THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DISALLOWING BROKEN PERIOD INTEREST OF RS. 11,50,42, 776/-. 3. WITHOUT PREJUDICE TO GROUND NO.2, IF THE BROKEN PERIOD INTEREST IS NOT ALLOWED AS BUSINESS EXPENSE, THEN BROKEN PERIOD INTEREST SHOULD BE ALLOWED AS COST OF ACQUISITION OF SUCH SECURITIES. ANY LONG TERM CAPI TAL GAIN (LTCG) ON SALE OF SUCH SECURITIES SHOULD BE TAXED @ 20% AFTER ALLOWING INDEXED COST OF ACQUISITION (CURRENT LY PROFIT ON SALE OF SUCH SECURITIES ARE TAXED @ 30% AS BUSIN ESS INCOME.) 3. THE FIRST GROUND RELATES TO THE DISALLOWANCE MAD E U/S. 14A OF THE ACT. 3.1. THIS ISSUE HAS BEEN CONSIDERED BY THE AO AT PA GE-10 IN PARA-5 OF HIS ORDER WHEREIN THE AO OBSERVED THAT THE ASSES SEE HAS BOTH EXEMPT INCOME YIELDING INVESTMENT AS WELL AS BUSINE SS ASSETS IN THE ITA. NOS. 615 & 820/M/2014 3 BALANCE SHEET. THE AO FURTHER FOUND THAT THE ASSES SEE MAINTAINS A CONSOLIDATED ACCOUNT. THE ASSESSEE WAS ASKED TO S HOW CAUSE AS TO WHY DISALLOWANCE U/S. 14A OF THE ACT R.W. RULE 8D S HOULD NOT BE MADE. THE ASSESSEE CLAIMED THAT DISALLOWANCE OF RS . 99,865/- SHOULD SUFFICE THE PROVISIONS OF SEC. 14A. IT WAS CLAIMED THAT THE RULE 8D IS NOT APPLICABLE. IT WAS FURTHER CLAIMED THAT THE AS SESSEE CAN EARN BOTH TAX FREE AS WELL AS TAXABLE INCOME FROM THE SAME IN VESTMENTS CANNOT BE CONSIDERED TO CALCULATE DISALLOWANCE UNDER RULE 8D. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WIT H THE AO WHO PROCEEDED BY COMPUTING THE DISALLOWANCE AT RS. 15,6 3,697/-. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED WHAT HAS BEEN STATED DURING THE COURSE OF THE ASSESSMENT PRO CEEDINGS. IT IS THE SAY OF THE LD. COUNSEL THAT SINCE THE ASSESSEE IS HOLDING SHARES BOTH AS INVESTMENT AND AS BUSINESS ASSETS, THE COMP UTATION OF DISALLOWANCE IS NOT CORRECT. RELYING UPON THE DECI SION OF THE CO- ORDINATE BENCH IN THE CASE OF M/S. DERIVE TRADING PVT. LTD., IN ITA NO. 878/M/2013, THE LD. COUNSEL STATED THAT THE DIS ALLOWANCE IF ANY SHOULD BE MADE IN ACCORDANCE TO THE DECISION OF THE CO-ORDINATE BENCH (SUPRA). 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES. WE HAVE GIVEN A THOUGHTFUL CONSIDERAT ION TO THE ORDERS OF THE AUTHORITIES BELOW. WE ARE INCLINED TO ACCEP T THE CONTENTION OF ITA. NOS. 615 & 820/M/2014 4 THE LD. COUNSEL. IN OUR CONSIDERED OPINION, THE FA CTS IN ISSUE BEFORE US ARE SIMILAR TO WHAT HAS BEEN CONSIDERED BY THE C O-ORDINATE BENCH IN THE CASE OF DERIVE TRADING PVT. LTD (SUPRA) WHE REIN THE CO- ORDINATE BENCH HAS CONSIDERED THE DECISION IN THE C ASE OF RMKUMAR VENUGOPAL INVESTMENTS PVT. LTD VS ACIT IN ITA NO. 6 324/M/2012, DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CA SE OF CCL LTD. VS JCIT 250 CTR 291 AND ALSO THE THIRD MEMBER DECISIO N IN THE CASE OF D.H. SECURITIES LTD. VS DCIT 41 TAXMANN.COM 352. THE RELEVANT PART OF THE DECISION OF THE TRIBUNAL READS AS UNDER: WE MAY OBSERVE THAT THE ISSUE RELATING TO THE DISALLOWANCE UNDER SECTION 14A IN RELATION TO SHARE S HELD IN STOCK IN TRADE WAS DISCUSSED BY THE CO-ORDINATE BEN CH OF MUMBAI TRIBUNAL IN THE CASE OF D.H. SECURITIES (P) LTD. VS. DCIT (2014) 41 TAXMANN.COM 352 AND THE MATTER WAS REFERRED TO THE THIRD MEMBER. THE DECISION OF THE H ONBLE KARNATAKA HIGH COURT IN THE CASE OF CCI LTD. VS. J CIT (2012) 250 CTR (KAR) 291 WAS REFERRED TO AND DISCUSSED BEF ORE THE TRIBUNAL AND IT HAS BEEN HELD THAT IN VIEW OF THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT [2010] 328 ITR 81 (BOM) AND THE HONBLE KOLKATA HIGH COURT IN THE CAS E OF DHANUKA & SONS VS. CIT [2011] 339 ITR 319, SECTIO N 14A IS ATTRACTED EVEN IN THE CASE OF DIVIDEND INCOME FROM SHARES HELD AS STOCK IN TRADE. WHILE HOLDING SO,IT HAS BEEN OBS ERVED BY THE TRIBUNAL THAT THE INVESTMENT COMPONENT OR ELEMENT I S IN BUILT IN THE EXPENDITURE INCURRED FOR PURCHASE AND SALE O F SHARES EVEN HELD AS STOCK IN TRADE FOR BUSINESS PURPOSES. THE EXPENDITURE ATTRIBUTABLE TOWARDS EARNING OF EXEMPT INCOME, IMMATERIAL OF THE FACT WHETHER SUCH EXEMPT INCOME W AS ACTUALLY EARNED OR NOT, IS EMBEDDED IN THE EXPENDIT URE INCURRED FOR SHARE TRADING ACTIVITY AND IS LIABLE TO BE APPO RTIONED IN THE LIGHT OF THE PROVISIONS OF SECTION 14A OF THE ACT. THE DECISION OF THE HONBLE KARNATAKA HIGH COURT RELIED UPON BY THE ASSESSEE HAS BEEN DULY DISCUSSED AND DISTINGUISHED IN THE TH IRD MEMBER CASE OF D.H. SECURITIES (P) LTD. VS. DCIT(SUPRA). HOWEVER, IT HAS BEEN FURTHER OBSERVED IN THE SAID T HIRD MEMBER DECISION OF THE TRIBUNAL THAT THE SHARES WHI CH YIELD TAX EXEMPT DIVIDEND INCOME, INTEREST QUA WHICH IS TO BE DISALLOWED, ITA. NOS. 615 & 820/M/2014 5 WHEN HELD AS STOCK IN TRADE, YIELD TAXABLE INCOME A LSO. IN FACT, THE SHARES ARE BOUGHT AND HELD PRIMARILY FOR THE PU RPOSE OF EARNING INCOME FROM TRADING IN SHARES. HENCE, WHILE CALCULATING THE INTEREST DISALLOWANCE UNDER RULE 8D (2)(II), THE DISALLOWANCE OF THE ENTIRE AMOUNT IS NOT JUSTIFIED. THE TRIBUNAL THEREFORE HELD THAT THE AMOUNT CALCULATED AS PER RU LE 8D(2)(II) WOULD NEED TO BE SCALED DOWN AS THE INCOME EARNED F ROM SHARE TRADING IS OFFERED FOR TAXATION. THE TRIBUNAL OBSER VED THAT WHILE SCALING DOWN THE SAID AMOUNT NO HARD AND FAST RULE CAN BE APPLIED AND THE SAME CAN BE DETERMINED ONLY ON ADHO C BASIS. THE TRIBUNAL ALSO OBSERVED THAT WHERE THE SHARE TRA DING IS THE DOMINANT OBJECT OF PURCHASE AND SALE OF SHARES, THE TURNOVER OF THE YEAR WOULD BE VERY HIGH IN COMPARISON TO THE AV AILABLE SHARE HOLDING BECAUSE OF THE CONTINUOUS ACTIVITY OF SALE AND PURCHASE OF SHARES. HENCE, MECHANICAL APPLICATION O F RULE 8D(2)(II) WOULD BE WRONG. THE TRIBUNAL, ACCORDINGLY , PURPOSED TO RESTRICT THE DISALLOWANCE TO 20% OF THE AMOUNT I N RELATION TO INTEREST DISALLOWANCE UNDER RULE 8D(2)(II), I.E., I N RELATION TO INDIRECT EXPENSES. THE TRIBUNAL FURTHER HELD THAT S O FAR THE DIRECT EXPENSES ARE CONCERNED, NO SUCH DISALLOWANCE U/S.14A WAS ATTRACTED BECAUSE OF THE FACT THAT NO DIRECT EX PENDITURE IS INCURRED BY THE ASSESSEE FOR EARNING OF DIVIDEND IN COME WHEN THE PURPOSE OF SALE AND PURCHASE OF SHARES IS TRADI NG. THE ALMOST SIMILAR VIEW HAD BEEN MADE BY THE CO-ORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF DAMANI ESTATES & FINANC E PVT. LTD. (IN ITA NO. 3029/MUM/2012 DATED 17.07.2013). 4. IN OUR VIEW, TAKING INTO CONSIDERATION THE FACT THAT THE PRIMARY OBJECT OF HOLDING THE SHARES IS TRADING AND THE DIVIDEND INCOME IS INCIDENTAL AND FURTHER THAT DUE TO CONTIN UOUS ACTIVITY OF SALE AND PURCHASE OF THE SHARES, THE ANNUAL TURN OVER WOULD BE MUCH HIGHER IN CASE OF SHARE TRADING AS COMPARED TO THE INVESTMENTS MADE FOR THE PURPOSE OF EARNING OF EXEM PT INCOME, EVEN THE DISALLOWANCE @ 20% OF THE AMOUNT CALCULATE D UNDER RULE 8D(2)(II) WILL BE ON HIGHER SIDE. WE FEEL THAT IT WILL BE APPROPRIATE IF THE SAID DISALLOWANCE IS RESTRICTED TO 5% OF THE AMOUNT SO ARRIVED. 5. SO FAR THE DISALLOWANCE UNDER RULE 8D(2)(III) IS CONCERNED, SINCE IN THE SHARE TRADING ACTIVITY, INVESTMENT IS NOT MADE FOR THE PURPOSE OF EARNING EXEMPT INCOME, HENCE, THE MANAGERIAL/ADMINISTRATIVE EXPENSES IN RELATION TO D IVIDEND INCOME CALCULATED UNDER RULE 8D(2)(III) ARE ALSO RE QUIRED TO BE SCALED DOWN WHICH WE THINK THAT SHOULD BE RESTRICTE D TO 10% OF THE AMOUNT SO CALCULATED UNDER RULE 8D(2)(III). IN VIEW OF OUR ITA. NOS. 615 & 820/M/2014 6 ABOVE OBSERVATIONS, THE DISALLOWANCE U/S.14A READ W ITH RULE 8D IS, ACCORDINGLY, RESTRICTED TO 5% OF THE AMOUNT ARRIVED AT UNDER RULE 8D(2)(II) AND 10% OF THE AMOUNT CALCULAT ED BY THE A.O. UNDER RULE 8D(2)(III). 8. THE TRIBUNAL FURTHER OBSERVED AS UNDER: THEREFORE, THE DISALLOWANCE COMPUTED UNDER RULE 8D OF THE INCOME TAX RULES CANNOT BE MORE THAN THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE FOR THE DIVIDE ND INCOME EXCLUDING THE ACTIVITY OF SHARE TRADING WHICH IS TH E BUSINESS ACTIVITY OF THE ASSESSEE. EVEN THE COMPUTATION OF D ISALLOWANCE ARRIVED AS PER THE RULE 8D SHOULD BE RESTRICTED ONL Y TO THE EXTENT OF ACTUAL EXPENDITURE OR TO THE EXTENT OF THE EXPEN DITURE WHICH CAN BE ATTRIBUTABLE TO THE ACTIVITY OF THE DIVIDEND INCOME EXCLUDING THE BUSINESS ACTIVITY OF SHARE TRADING. A CCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE DIS ALLOWANCE U/S 14A WITH THE RIDER TO THE ACTUAL EXPENDITURE WHICH CAN BE ATTRIBUTABLE TO THE RECEIPT OR EARNING OF THE DIVID END INCOME EXCLUDING THE EXPENDITURE RELATED TO BUSINESS ACTIV ITY OF SHARE TRADING. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDI NATE BENCH, WE DIRECT THE AO TO RECOMPUTE THE DISALLOWANCE U/S. 14A WITH THE RIDER TO THE ACTUAL EXPENDITURE WHICH CAN BE ATTRIB UTABLE TO THE RECEIPT OR EARNING OF THE DIVIDEND INCOME EXCLUDING THE EXPENDITURE RELATED TO BUSINESS ACTIVITY OF SHARE TRADING. GRO UND NO. 1 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSE. 9. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF BRO KEN PERIOD INTEREST AMOUNTING TO RS. 11,50,42,776/-. 9.1. THIS ISSUE HAS BEEN CONSIDERED BY THE AO AT PA RA-3 OF HIS ORDER. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO NOT ICED THAT THE ASSESSEE HAS CLAIMED BY DEBITING BROKEN PERIOD INTE REST AMOUNTING TO RS. 11,50,42,776/- TO THE P&L ACCOUNT. THE ASSE SSEE WAS ASKED TO ITA. NOS. 615 & 820/M/2014 7 EXPLAIN WHY BROKEN PERIOD INTEREST SHOULD NOT BE DI SALLOWED AS THE AMOUNT NEEDS TO BE CONSIDERED AS THE PART OF COST PRICE OF THE SECURITIES ACQUIRED BY THE ASSESSEE. THE ASSESSEE EXPLAINED ITS CLAIM VIDE REPLY DATED 28.12.2012 WHEREIN STRONG RELIANC E WAS PLACED IN THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKING CORPN. 258 I TR 601. 9.2. AFTER CONSIDERING THE DETAILED SUBMISSIONS MAD E BY THE ASSESSEE, THE AO WAS OF THE OPINION THAT ON IDENTIC AL SET OF FACTS, THE DEPARTMENT HAS NOT ACCEPTED THE CLAIM IN THE CASE O F HDFC BANK , THEREFORE, THE SAME IS ALSO NOT ACCEPTED IN THE CAS E OF THE ASSESSEE. BROKEN PERIOD INTEREST WAS ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. 10. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STR AIGHTAWAY DREW OUR ATTENTION TO THE DECISION OF THE HONBLE HIGH C OURT OF BOMBAY IN THE CASE OF HDFC BANK LTD. 366 ITR 505 WHEREIN QUES TION NO. B READ AS UNDER: (B) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE BROKEN PERIOD IN TEREST IS ALLOWABLE AS A DEDUCTION, IN SPITE OF THE HON'BLE S UPREME COURT'S DECISION IN THE CASE OF VIJAYA BANK LTD. V. ADDL. CIT [1991] 187 ITR 541(SC) AND THE RAJASTHAN HIGH COURT 'S DECISION IN THE CASE OF CIT V. BANK OF RAJASTHAN LT D. [2009] 316 ITR 391? 11.1. THE HONBLE HIGH COURT ANSWERED THE QUESTION AS UNDER: EVEN AS FAR AS QUESTION (B) IS CONCERNED, WE FIND N O INFIRMITY IN THE ORDERS PASSED BY THE COMMISSIONER OF INCOME- TAX (APPEALS) OR THE INCOME-TAX APPELLATE TRIBUNAL. IN DECIDING T HIS ISSUE, THE ITA. NOS. 615 & 820/M/2014 8 COMMISSIONER OF INCOME-TAX (APPEALS) AND THE INCOME -TAX APPELLATE TRIBUNAL HAVE MERELY FOLLOWED THE JUDGMEN T OF THIS COURT IN THE CASE OF AMERICAN EXPRESS INTERNATIONAL BANKI NG CORPORATION V. CIT REPORTED IN [2002] 258 ITR 601 (BOM). ON GOI NG THROUGH THE SAID JUDGMENT, WE FIND THAT QUESTION (B) REPRODUCED ABOVE AND PROJECTED AS SUBSTANTIAL BY MR. SURESH KUMAR IS SQU ARELY ANSWERED BY THE JUDGMENT OF THIS COURT IN THE CASE OF AMERIC AN EXPRESS INTERNATIONAL BANKING CORPORATION (SUPRA). IN VIEW THEREOF, WE DO NOT FIND THAT EVEN QUESTION (B) GIVES RISE TO ANY S UBSTANTIAL QUESTION OF LAW THAT NEEDS TO BE ANSWERED BY THIS C OURT. 12. AS THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, WE SET ASIDE THE FINDINGS OF T HE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 11,50,4 2,776/- IN THE LIGHT OF THE DECISION IN THE CASE OF HDFC BANK (SUPRA). GROUND NO. 2 IS ACCORDINGLY ALLOWED. 13. GROUND NO. 3 IS WITHOUT PREJUDICE CLAIM RELATIN G TO GROUND NO.2. SINCE WE HAVE DELETED THE ADDITION IN GROUND NO.2, GROUND NO. 3 BECOME OTIOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 615/MUM/2014 REVENUES APPEAL 15. GRIEVANCE OF THE REVENUE READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIE F TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BE LOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED ALLOWING THE DEPRECIATION OF RS. 27,09,894/- ON ASSETS LEASED OUT, WHEN THE RELATED TRANSACTIONS WERE PURELY FINANCIAL TRANSACTION. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) ERRED IN NOT FOLLOWING THE DECISION O F ITA. NOS. 615 & 820/M/2014 9 SPECIAL BENCH IN THE CASE OF INDUSIND BANK, AS REPO RTED IN 135 ITD 165, AND THE RATIO LAID DOWN BY THE HON' BLE SUPREME COURT OF INDIA IN THE CASE OF ASIAN BROWN BOVERI LTD, AS REPORTED IN 54 TAXMAN 512 (SC). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN NOT ADHERING TO JUDICIA L DISCIPLINE IN NOT FOLLOWING THE DECISION OF A HIGHE R BENCH, GIVEN IN THE CASE OF INDUSIND BANK AS REPORTED IN ' 135 ITD 165.' 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.10,64,19,514/- ON ACCOUNT OF AMORTIZATION OF PRE MIUM ON HTM SECURITIES AND COMING TO A CONCLUSION THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION WITH RESPECT TO THE DIMIN UTION IN VALUE OF THE INVESTMENT HELD TO MATURITY ON THE GRO UND OF MANDATE BY RBI GUIDELINE WITHOUT APPRECIATING THE R ATION OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F SOUTHERN TECHNOLOGIES VS. CIT 320 ITR 577. 16. GROUND NO. 1,2 & 3 RELATE TO THE SAME ISSUE IN RELATION TO THE CLAIM OF DEPRECIATION ON LEASED ASSETS AMOUNTING TO RS. 27,09,894/-. 16.1. THE AO AT PARA-7.1 OF HIS ORDER HAS OBSERVED AS UNDER: THE LEASED ASSETS WERE PURCHASED AND LEASED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 1996-97, 1997-98, 199 8-99 AND 1999-2000. NO NEW ASSETS WERE PURCHASED FOR LEASING PURPOSE FOR THE INSTANT A.Y. FOR THE DETAILED REASONS GIVE N IN THE ASSESSMENT ORDERS FOR A.YS 1996-97 TO 2000-01 DEPREC IATION OF RS. 27,09,894/- IS DISALLOWED. 17. WE FIND THAT THE MATTER IN THE ASSESSMENT YEARS MENTIONED HEREINABOVE TRAVELLED UPTO THE TRIBUNAL AND THE TRI BUNAL BY A CONSOLIDATED ORDER MAINLY IN ITA NOS. 3006/M/01 AND 4892/M/03 AND ITA NO. 3620/M/01 ALONGWITH OTHER APPEALS ORDE R DATED 20.3.2013 HAS HELD AT PARA-34 AS UNDER: ITA. NOS. 615 & 820/M/2014 10 AFTER HAVING EXAMINED ALL THE TRANSACTIONS WHICH H AVE BEEN IMPUGNED BEFORE US, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEPRECIATION UNDER ALL THE THREE CIRCUMSTANCE I.E. SALE LEASE BACK, GENUINENESS OF T RANSACTION AND ASSET HAVING BEING PUT TO USE. WE, THEREFORE, ALLO W GROUND NO.1 OF THE ASSESSEES APPEAL AND DISMISS BOTH THE GROUN DS OF THE DEPARTMENTS APPEALS. 11. AS THE AO HAS FOLLOWED THE FINDINGS GIVEN IN EA RLIER ASSESSMENT YEAR AND AS THE DISALLOWANCE HAVE BEEN DELETED BY T HE TRIBUNAL IN EARLIER ASSESSMENT YEARS VIDE ITS ORDER (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). GROUND NO. 1,2 & 3 ARE ACCORDINGLY DISMISSED. 12. GROUND NO. 4 RELATES TO THE DELETION OF THE ADD ITION OF RS. 10,64,19,514/- ON ACCOUNT OF AMORTIZATION OF PREMIU M ON HTM SECURITIES. 12.1. THIS ISSUE HAS BEEN CONSIDERED BY THE AO AT P ARA-4 OF HIS ORDER WHEREIN THE AO OBSERVED THAT ON THE CLAIM OF RS. 10 ,64, 19,514/- BEING AMORTISATION OF PREMIUM ON HTM SECURITIES. T HE ASSESSEE WAS ASKED TO EXPLAIN WHY THE SAME SHOULD NOT BE DISALLO WED AS THERE IS NO PROVISION IN THE ACT FOR SUCH DEDUCTION. THE AO FURTHER AT PARA- 4.4. ON PAGE-9 OF HIS ORDER OBSERVED THAT A SIMILAR CLAIM HAS NOT BEEN ACCEPTED BY THE DEPARTMENT IN THE CASE OF HDFC BANK AND KEEPING IN VIEW THE STAND TAKEN BY THE DEPARTMENT IN THE CASE OF HDFC BANK EXPENSE OF RS. 10,64,19,514/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. WE FIND THAT IN THE CASE OF HDFC BAN K, THE HONBLE HIGH COURT OF BOMBAY IN 366 ITR 505 HAS CONSIDERED THE Q UESTION AS UNDER: ITA. NOS. 615 & 820/M/2014 11 (C) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL IS RI GHT IN LAW IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DE DUCTION WITH RESPECT TO THE DIMINUTION IN VALUE OF THE INVESTMEN T AND AMORTIZATION OF PREMIUM ON INVESTMENT HELD TO MATUR ITY ON THE GROUND OF MANDATE BY THE RBI GUIDELINES THEREBY IGNORING THE DECISION OF THE SUPREME COURT IN THE CASE OF SO UTHERN TECHNOLOGIES LTD. V. JOINT CIT [2010] 320 ITR 577(S C) ?' 13. THE HONBLE HIGH COURT ANSWERED THE QUESTION AS UNDER: AS FAR AS QUESTION (C) IS CONCERNED, WE FIND THAT A N IDENTICAL QUESTION OF LAW WAS FRAMED AND ANSWERED I N FAVOUR OF THE ASSESSEE BY THIS COURT IN ITS JUDGMENT DATED JU LY 4, 2014, IN INCOME TAX APPEAL NO. 1079 OF 2012, CIT V. LORD KRI SHNA BANK LTD. (NOW MERGED WITH HDFC BANK LTD.) [2014] 366 IT R 416(BOM). MR. SURESH KUMAR FAIRLY STATED THAT QUEST ION (C) REPRODUCED ABOVE IS COVERED BY THE SAID ORDER. IN V IEW THEREOF, WE ARE OF THE VIEW THAT EVEN QUESTION (C) DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW THAT REQUIRES AN ANSWER FROM US. 14. AS THE AO HAS FOLLOWED THE FINDINGS GIVEN IN TH E CASE OF HDFC BANK LTD., AND AS THE SAID ISSUE HAS BEEN DECIDED I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF HDFC (SUPRA), WE DEC LINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 4 IS ACCORDINGLY DISMISSED. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2015. SD/- SD/- (AMARJIT SINGH ) (N.K. BILLAIYA) %& # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ' ( MUMBAI; )# DATED : 4 TH NOVEMBER, 2015 . & . ./ RJ , SR. PS ITA. NOS. 615 & 820/M/2014 12 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,- &&./ , ./' , ' ( / DR, ITAT, MUMBAI 6. -01 2 / GUARD FILE. % / BY ORDER, + & //TRUE COPY// & / %' ( (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI