HDFC BANK LTD, V. DCIT 2(3),

MA 18/MUM/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2876 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMAND J

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM) , AND B.R.BASKARAN (AM) , . . , MISC.APPLICATI ON NO S . 18 TO 20 /MUM/20 1 5 ARISING OUT OF I.T.A. NO S . 375 / MUM/2 0 12 , ITA NO.3465/MUM/2012 AND ITA NO.1795/MUM/2014 ( / ASSESSMENT YEAR S : 2008 - 2009 TO 20010 - 2011 ) HDFC BANK LTD., SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI - 400013 / VS. DY .CO MMISSIONER OF INCOME TAX 2(3), A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ( / APP LICANT ) .. ( / RESPONDENT ) ./ ./ PAN/GIRNO.: AAACH2702H / APP LICANT BY : SHRI YOGESH THAR / RESPONDENT BY : SHRI P REMAND J / DATE OF HEARING : 27. 3 . 2015 / DATE OF PRONOUNCEMENT : 31. 3. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THESE M ISCELLANEOUS APPLICATIONS HAVE BEEN FILED BY THE ASSESSEE SEEKING RECTIFICATION OF COMMON ORDER DATED 12.11.2014 PASSED IN THE INC OME TAX APPEALS REFERRED SUPRA FOR ASSESSMENT YEARS 2008 - 09 TO 2010 - 11. 2. THE LD . COUNSEL APPEARING FOR THE ASSESSEE SUBMIT TED THAT THE TRIBUNAL HAS OBSERVED IN PARAGRAPH 2 OF THE IMPUGNED ORDER THAT THE LD A.R SUBMITTED THAT THE SAID DISALLOWANCE IS NOT WARRANTED SINCE THE OWN FUNDS AVAILABLE WITH THE ASSESSEE EXCEEDS THE BORROWED FUNDS. THE LD MA NO. 18 TO 20 / MUM/20 15 2 A.R SUBMITTED THAT THE SAME EXPRESSION FINDS PLACE IN THE LATER PART OF PARAGRAPH 2 OF THE ORDER. HE SUBMITTED THAT THE ASSESSEE HAD SUBMITTED THAT OWN FUNDS AND OTHER NON - INTEREST BEARING FUNDS WERE MORE THAN THE INVESTMENT MADE IN THE TAX FREE SECURITIES. ACCORDINGLY HE SUBMITTE D THAT THE EXPRESSION USED BY THE TRIBUNAL IS NOT APPROPRIATE. ACCORDINGLY HE REQUESTED FOR MODIFICATION OF THE ABOVE SAID EXPRESSION IN ACCORDANCE WITH THE SUBMISSION MADE BY THE ASSESSEE. 3. T HE LD A.R FURTHER SUBMITTED THAT THE TRIBUNAL HAS EXPRESSED A VIEW IN PARAGRAPH 4 OF THE ORDER THAT THE AVAILABILITY OF OWN FUNDS NEEDS TO BE VERIFIED AS ON THE DATE OF MAKING INVESTMENTS. SUBSEQUENTLY THE TRIBUNAL HAS OBSERVED THAT THE BENCH HAD SUGGESTED FOR RESTORING THIS ISSUE TO THE FILE OF THE ASSESSING OFF ICER AND BOTH THE PARTIES ALSO AGREED TO THE SAME. THE LD A.R SUBMITTED THAT THE ASSESSEE IS HAVING THE VIEW THAT THE AVAILABILITY OF OWN FUNDS AND OTHER NON - INTEREST BEARING FUNDS VIS - A - VIS THE INVESTMENT SHOULD BE EXAMINED AS ON THE DATE OF BALANCE SHEE T AND NOT AS ON THE DATE OF MAKING INVESTMENT. FURTHER THE ASSESSEE HAD AGREED FOR SETTING ASIDE THE MATTER FOR FRESH EXAMINATION AND DID NOT AGREE WITH THE VIEW EXPRESSED BY THE TRIBUNAL WITH REGARD TO THE DATE OF COMPARISON. HOWEVER, THE ORDER PASSED B Y THE TRIBUNAL GIVES AN IMPRESSION THAT THE ASSESSEE HAD AGREED TO THE PROPOSITION THAT THE AVAILABILITY OF OWN FUNDS AND OTHER NON - INTEREST BEARING FUNDS SHOULD BE EXAMINED AS ON THE DATE OF MAKING INVESTMENTS. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE DID NOT AGREE TO THE SAID PROPOSITION AND IT WAS ONLY THE VIEW TAKEN BY THE TRIBUNAL. ACCORDINGLY HE SUBMITTED THAT THE PARAGRAPH 4 SHOULD BE MODIFIED SUITABLY. 4. WE HEARD THE LD D.R AND ALSO PERUSED THE RECORD. WE FIND MERIT IN THE MISCELLANEOUS PETITIONS OF THE ASSESSEE AND ACCORDINGLY, WE ARE OF THE VIEW THAT THE ERRORS POINTED OUT BY THE ASSESSEE REQUIRE RECTIFICATION. ACCORDINGLY, WE CARRY OUT FOLLOWING MODIFICATIONS: - MA NO. 18 TO 20 / MUM/20 15 3 (A) IN PARAGRAPH 2 OF THE ORDER DATED 12.11.2014, WHEREVER THE EXPRESSIO N SINCE THE OWN FUNDS AVAILABLE WITH THE ASSESSEE EXCEEDS THE BORROWED FUNDS OCCURS, THE FOLLOWING EXPRESSION SHALL BE SUBSTITUTED IN THAT PLACE. SINCE THE OWN FUNDS AND OTHER NON - INTEREST BEARING FUNDS WERE MORE THAN THE INVESTMENT MADE IN TAX FREE SE CURITIES. (B) THE EXISTING PARAGRAPH 4 SHALL BE SUBSTITUTED BY THE FOLLOWING PARAGRAPHS. 4. WE NOTICE THAT THE ASSESSEE IS PUTTING FORTH ITS CONTENTIONS AGAINST THE IMPUGNED DISALLOWANCE FROM DIFFERENT ANGLES. ALL THESE CONTENTIONS CAN BE APPRECIATE D ONLY IF THE RELEVANT FACTS ARE AVAILABLE BEFORE US. THE LD A.R FURTHER SUBMITTED THAT THE PRESUMPTION OF USE OF OWN FUNDS AND INTEREST FREE FUNDS IS AVAILABLE, WHEN BOTH THE OWN FUNDS & INTEREST FREE FUNDS AND LOAN FUNDS ARE MIXED UP. FOR THIS PROPO SITION, HE PLACED RELIANCE ON SOME OF THE DECISIONS RENDERED BY THE JURISDICTIONAL HIGH COURT IN ITS OWN CASE AND ALSO IN SOME OTHER CASES. EVEN THOUGH THE ASSESSEE HAS CONTENDED THAT IT HAS USED ITS OWN FUNDS AND INTEREST FREE FUNDS FOR MAKING THE INVEST MENTS, IN OUR VIEW, THE SAID CONTENTIONS REQUIRE VERIFICATION. ADMITTEDLY, THE FACTS RELATING THERETO ARE NOT AVAILABLE ON RECORD. SINCE FULL FACTS WHICH ARE REQUIRED TO BE CONSIDERED IN ORDER TO PROPERLY APPRECIATE VARIOUS CONTENTIONS OF THE ASSESSEE AR E NOT AVAILABLE BEFORE US, THE BENCH SUGGESTED THAT THIS ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER IN ORDER TO ENABLE HIM TO EXAMINE THIS ISSUE AFRESH. BOTH THE PARTIES AGREED TO THE SAME. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO MA NO. 18 TO 20 / MUM/20 15 4 EXAMINE THIS ISSUE AFRESH IN ALL THE THREE YEARS BY DULY CONSIDERING THE VARIOUS CASE LAW RELIED UPON BY THE ASSESSEE AND ALSO BY D ULY ADDRESSING VARIOUS TYPES OF CONTENTIONS OF THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 4.1 BEFORE PARTING WITH THIS ISSUE, WE MAY STATE THAT WE ARE OF THE VIEW THAT THE AVAILABILITY OF OWN FUNDS & INTEREST FREE FUNDS FOR MAKING INVESTMENTS SHOULD BE EXAMINED AS ON THE DATE OF MAKING INVESTMENTS, EVEN THOUGH THE LD A.R CONTENDED THAT THE SAID EXAMINATION SHOULD BE CARRIED OUT AS ON THE DATE OF BALANCE SHEET. WE MAY EXPLAIN OUR VIEW WITH AN EXAMPLE. LET US ASSUME THAT THE CAPITAL OF THE ASSESSEE IS RS.1.00 LAKH AND THE SAME WAS USED TO GIVE RENT ADVANCE AND IN PURCHASING OFFICE FURNITURES. LET US FURTHER ASSUME THAT THE ASSESSEE BORROWS INTEREST BEARING LOAN OF RS.10.00 LAKHS AND USES THE SAME FOR MAKING INVESTMENTS. HENC E, HIS BALANCE SHEET AS ON THE DATE OF MAKING INVESTMENT WOULD REFLECT AS UNDER: - LIABILITIES AMOUNT ASSETS AMOUNT CAPITAL 1,00,000 FURNITURE 50,000 LOAN FUNDS 10,00,000 OFFICE ADVANCE 50,000 INVESTMENTS 10,00,000 TOTAL 11,00,000 TOTAL 11,00,000 IF ONE EXAMINES THE ABOVE BALANCE SHEET, HE CAN EASILY CONCLUDE THAT THE INVESTMENTS HAVE BEEN MADE OUT OF LOAN FUNDS. LET US FURTHER ELABORATE THIS MATTER. LET US ASSUME THAT THE ASSESSEE HAS MADE A PROFIT OF RS.20.00 LAKHS DURING MA NO. 18 TO 20 / MUM/20 15 5 THE YEAR UNDER CONS IDERATION. THEN THE BALANCE SHEET AT THE YEAREND WOULD REFLECT AS UNDER: - LIABILITIES AMOUNT ASSETS AMOUNT CAPITAL 21,00,000 FURNITURE 50,000 LOAN FUNDS 10,00,000 INVESTMENTS 10,00,000 CURRENT ASSETS 20,00,000 OFFICE ADVANCE 50,000 TOTAL 31, 00,000 TOTAL 31,00,000 IF THE CONTENTION OF THE ASSESSEE IS ACCEPTED, THEN IT WOULD APPEAR THAT THE INVESTMENTS HAVE BEEN MADE OUT OF CAPITAL (OWN FUNDS) ONLY, SINCE THE OWN FUNDS EXCEEDS THE AMOUNT OF INVESTMENT. A COMPARISON OF BOTH THE TABLES WOULD S HOW THAT THE COMPARISON OF OWN FUNDS & INTEREST FREE FUNDS VIS - A - VIS THE INVESTMENT SHOULD BE MADE AS ON THE DATE OF INVESTMENT ONLY AND NOT AS ON THE DATE OF BALANCE SHEET, SINCE THE COMPARISON MADE AS ON THE DATE OF BALANCE SHEET WOULD GIVE MISLEADING RE SULTS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE CONTENTIONS OF THE ASSESSEE IN THE LIGHT OF DISCUSSIONS MADE ABOVE. 5. IN THE RESULT, ALL THE MISCELLANEOUS APPLICATIONS ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPE N COURT ON 31ST MAR , 2015 . 31ST MAR , 2015 SD SD ( / JOGINDER SINGH ) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 31ST MAR ,201 5 . MA NO. 18 TO 20 / MUM/20 15 6 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY OR DER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI