STANDARD CHARTERED BANK, V. DDIT (IT) 2(1),

MA 139/MUM/2012

AI Insights

The case involves Standard Chartered Bank appealing against the assessment orders concerning the taxability of interest received from Citibank NA and the disallowance of losses incurred in securities transactions with Bank of America (BOA) for the assessment year 1996-97. The Tribunal had to reconcile differing opinions between the Accountant Member and the Judicial Member regarding these issues. The Accountant Member supported the taxability of the interest and disallowance of the loss, while the Judicial Member had a contrary view on the interest taxability. The matter was referred to a Third Member, whose decision led to the current outcome.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831185 (ITAT-MUMBAI)
• Duration Of Justice: 13 year(s) 10 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: misc
• Appeal Filed On: 01-03-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HIMANSHU JOSHI
• Assessee Lawyers: MADHUR AGRAWAL
• Keywords: Set aside; Difference of opinion
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘I’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER MA No.21/Mum/2012 (Arising out of ITA No.5303/Mum/2004) (Assessment Year :1996-97) & MA No.139/Mum/2012 (Arising out of ITA No. 5229/Mum/2004) (Assessment Year:1996-97) Standard Chartered Bank 23/25, M.G.Road Mumbai-400023 Vs. Deputy Director of Income Tax (International Taxation)-2(1), Mumbai PAN/GIR No.AABCS4681D (Appellant) .. (Respondent) Assessee by Shri Madhur Agrawal, Advocate Revenue by Shri Himanshu Joshi, Sr.DR Date of Hearing 31/10/2025 Date of Pronouncement 22/01/2026 आदेश / O R D E R PER AMIT SHUKLA (J.M): The present proceedings arise for passing a confirmatory order pursuant to the order dated 21 August 2025 passed by the Hon’ble Third Member in MA No. 21/M/2012 and MA No. 139/M/2012. The genesis of the present proceedings lies in the assessment order dated 26 March 1999 passed by the Assessing Officer under section Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 2 143(3) of the Income-tax Act, 1961, for the assessment year 1996-97, wherein the Assessing Officer, inter alia, disallowed the claim of the assessee in respect of loss incurred on securities transactions with Bank of America aggregating to Rs. 60.52 crores and taxed the amount of Rs. 73.92 crores received from Citibank NA as income of the assessee pursuant to the Special Court Decree. Being aggrieved, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). The CIT(A), vide order dated 27 February 2004, inter alia, confirmed the taxability of interest of Rs. 73.92 crores received from Citibank NA pursuant to the Special Court Decree, holding it to be a trading receipt taxable in the assessment year 1996-97, and with respect to the loss incurred in securities transactions with BOA, after noting that out of Rs. 60.52 crores claimed as loss, Rs. 22.80 crores had been written off in the books of account in the financial year relevant to the assessment year 1993-94 and the balance Rs. 37.72 crores had been written off in the books of account during the financial year relevant to the assessment year 1996-97, held that the amount of loss written off during the relevant year was allowable as a deduction. Accordingly, the CIT(A) allowed Rs. 37.72 crores and disallowed Rs. 22.80 crores. Both the assessee and the Revenue preferred appeals before the Tribunal challenging the said order; the Revenue’s appeal was numbered as ITA No. 5229/Mum/2004 and the assessee’s appeal was numbered as ITA No. 5303/Mum/2004. In the Revenue’s appeal, the Department had, inter alia, taken a ground for allowability of loss in respect of transactions with BOA, but inadvertently Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 3 referred to the amount of Rs. 60.52 crores, whereas the amount actually involved in the Revenue’s appeal was Rs. 37.72 crores, being the amount of loss allowed by the CIT(A) and not the total claim of Rs. 60.52 crores. The assessee, in its appeal, inter alia, raised grounds on disallowance of securities losses of Rs. 22.80 crores in respect of transaction with BOA and taxability of interest of Rs. 73.92 crores in respect of transaction with Citibank NA. 2. Upon hearing the cross-appeals, separate orders came to be passed by the Hon’ble Accountant Member and the Hon’ble Judicial Member. The Hon’ble Accountant Member, in the order passed in April 2011, inter alia, held that in respect of loss on transaction with BOA (Ground No. 5 of the Revenue’s appeal), the order of the CIT(A) was set aside and the losses on transaction with BOA were disallowed on merits; in respect of loss of Rs. 22.80 crores on transaction with BOA (Ground No. 3 of the assessee’s appeal), basing on the discussion in Ground No. 5 of the Revenue’s appeal, the losses were disallowed; and in respect of Rs. 73.92 crores received from Citibank NA (Ground No. 2 of the assessee’s appeal), the order of the CIT(A) was confirmed, holding the interest to be taxable in the assessment year 1996-97. The Hon’ble Judicial Member, however, did not agree with the view of the Hon’ble Accountant Member in respect of the taxability of interest received from Citibank NA and passed a separate order dated 13 June 2011, inter alia, holding that the interest of Rs. 73.92 crores received from Citibank NA was not taxable in the assessment year 1996-97, while with respect to losses on Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 4 transaction with BOA, the Hon’ble Judicial Member agreed with the findings of the Hon’ble Accountant Member. In view of this cleavage of opinion on the issue of taxability of interest received from Citibank NA, the Hon’ble Members framed the question under section 255(4) of the Act for reference to a Hon’ble Third Member. 3. When the above separate orders and the questions framed were forwarded to the parties, three Miscellaneous Applications were filed before the Tribunal, one by the Revenue and two by the assessee. The Revenue filed MA No. 22/M/2012 against ITA No. 5303/Mum/2004 stating that the Hon’ble Supreme Court had reversed the order of the Special Court and that the assessee had refunded the interest received from Citibank NA and had claimed deduction of the interest refunded in the assessment years 2004-05 and 2005- 06, which had been allowed, and accordingly submitted that if the interest income was not taxed in the assessment year 1996-97, as held by the Hon’ble Judicial Member, it would lead to double deduction in the hands of the assessee. The assessee filed MA No. 21/M/2012 against ITA No. 5303/Mum/2004, inter alia, pointing out mistakes apparent from the record in the order of the Hon’ble Accountant Member on the taxability of interest received from Citibank NA for not applying the judgments of the Hon’ble Supreme Court and the jurisdictional High Court, and also pointing out that there was an apparent mistake in adjudicating Ground No. 3 with respect to securities losses of Rs. 22.80 crores in respect of transaction with BOA as the said ground had not Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 5 been pressed by the assessee. The assessee also filed MA No. 139/M/2012 against ITA No. 5229/Mum/2004, inter alia, submitting that the Tribunal had not followed or applied its own orders for the assessment years 1992-93 and 1993-94 wherein the claim for loss had been allowed. 4. Separate orders were thereafter passed by the Hon’ble Members on the Miscellaneous Applications. The Hon’ble Accountant Member, vide order dated 9 October 2012, inter alia, held that the order of the Tribunal for assessment year 1993-94 was based on wrong facts and could not be considered as binding and therefore dismissed MA No. 139/M/2012; that since the assessee had raised Ground No. 3 before the Tribunal, the Tribunal was empowered to pass an order even if the ground was not pressed, and that the earlier Tribunal order could not be followed as it was based on wrong facts, thereby dismissing MA No. 21/M/2012; and that since both parties stated that the return of interest to Citibank NA had been allowed in assessment years 2004-05 and 2005-06 and had become final and the assessee did not want to pursue the issue further, the difference of opinion on interest no longer survived, and therefore the MA of the assessee became infructuous, whereupon the MA of the Revenue was allowed. 5. The Hon’ble Judicial Member, vide a separate order dated 16 November 2012, inter alia, held that with respect to the taxability of interest received from Citibank NA, the Hon’ble Judicial Member agreed with the view of the Hon’ble Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 6 Accountant Member and held that the MA of the Revenue was allowed. With respect to Ground No. 3 of the assessee’s appeal and Ground No. 5 of the Revenue’s appeal on losses arising on transaction with BOA in MA No. 139/M/2012 and MA No. 21/M/2012, the Hon’ble Judicial Member noted that the Tribunal had allowed the entire losses in the assessment year 1993-94 itself which had reached finality at least at the level of Tribunal, and when the assessee had not pressed the ground in the assessment year 1996-97, it was not necessary to again re-examine the same issue in the assessment year 1996-97. Accordingly, the Hon’ble Judicial Member substituted paragraph 2.5.5 of the Hon’ble Accountant Member’s order in April 2011 with the following paragraph: “2.5.5. We have perused the record and rival contentions carefully. We find that the issue of the loss in respect of the securities transactions entered into by the assessee bank with the Bank of America (BOA) has reached finality atleast at the Tribunal level as the said claim is allowed by the Tribunal in the A.Y. 1993-94. As explained by the Ld. Sr. Counsel, the total quantum of loss of the disallowance to the extent of Rs. 337.19 crores consist of the loss in securities transactions more particularly 11% Bihar Bonds 2002, 13% HUDCO Bonds and 9% MTNL Bonds with the Bank of America. As submitted by Ld. Counsel, the said issue has become otiose and no adjudication is required. We accordingly dismiss Ground No. 3 in assessee’s appeal as well as Ground No. 5 in the Revenue’s appeal.” Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 7 6. As there yet subsisted a difference of opinion between the Hon’ble Accountant Member and the Hon’ble Judicial Member with respect to the losses on transaction with BOA, the Hon’ble Judicial Member framed a question to be referred to the Hon’ble Third Member. The Hon’ble Accountant Member did not agree with the question framed by the Hon’ble Judicial Member and therefore framed three separate questions. The Hon’ble Third Member, vide order dated 21 August 2025, answered the questions framed by both the Hon’ble Members. The question framed by the learned Judicial Member was: “Whether on the facts and circumstances of the case when issue of loss in the securities transactions with Bank of America originally claimed by the assessee in the A.Y. 1993- 94 has been decided by the Tribunal in the said year in assessee’s favour and can Tribunal again re-examine the same issue on merit in the A.Y. 1996-97 and dismiss the Ground taken by the assessee when the assessee himself has not pressed the said Ground in the A.Y. 1996-97.” The answer to the question framed by the learned Judicial Member was: “In the given facts and circumstances of the case and discussion carried above, the answer to this question is in the negative.” Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 8 7. The questions framed by the learned Accountant Member were: (i) Whether when the bench of the Tribunal of which the ld. JM was a Member had set aside the order of the CIT(A) and confirmed the disallowance made by the AO of loss of Rs. 37.72 crores on account of security transactions with BOA in relation to Bihar bonds and HUDCO bonds by way of a reasoned and speaking order after considering the decision of the Tribunal in assessee’s own case in assessment year 1993- 94 and ld. AM proposed to reject the Miscellaneous Application of the assessee dealing with all the points by way of a reasoned and speaking order in paras 2.5 to 2.12 of the proposed order holding that the sub-silentio order of ITAT in assessment year 1993-94, which was based on wrong facts and which gave no finding on the real issue could not be considered as binding precedent citing several judgments, the ld. JM without pointing out any mistake in the proposed order is justified to hold based on the same order of the Tribunal in assessment year 1993-94 that the order be recalled and order of CIT(A) be upheld that too in the order on miscellaneous application in which only patent obvious mistakes could be rectified. The answer to Question (i) framed by the learned Accountant Member was: “In the given facts and circumstances of the case and discussion carried above, there being a mistake apparent Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 9 from record in not following the Coordinate Bench’s decision in assessee’s own case, the answer to this question is in the positive.” (ii) Whether when the loss of Rs. 37.72 crores on account of security transactions with BOA in relation to Bihar bonds and HUDCO bonds which had been disallowed in the assessment year 1993-94 even after considering the decision of the Tribunal in assessment year 1993-94 and the assessee had made a claim in assessment year 1996-97 which had again been disallowed by the AO and the revenue had appealed against the order of CIT(A) allowing the claim which had been allowed by the Tribunal by way of a reasoned and speaking order after hearing both the parties, will the ld. JM be justified in holding that the order be recalled and appeal of the revenue be dismissed as academic. The answer to Question (ii) framed by the learned Accountant Member was: “In view to the answer to the Question No. (i) above, this question has become academic and hence needs no answer.” (iii) Whether when the assessee had raised the ground before the Tribunal against the order of CIT(A) confirming the disallowance of loss of Rs. 22.80 crores in relation to MTNL Bonds, and the Tribunal of which the ld. JM was a member while observing that the ground was not pressed, also held that the claim was not allowable even on merit for which Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 10 proper reasonings were given, the ld. JM will be justified in holding that there were apparent mistakes in the order which should be recalled and the ground be dismissed as academic without pointing out any apparent error in the finding of the Tribunal on merit of the claim. The answer to Question (iii) framed by the learned Accountant Member was: “In the given facts and circumstances of the case and discussion carried above, there being a mistake apparent from record in not following the Coordinate Bench’s decision in assessee’s own case, the answer to this question is in the positive.” 8. The Hon’ble Third Member, after answering all the aforesaid questions, concurred with the decision of the Hon’ble Judicial Member allowing MA No. 139/Mum/2012 and partly allowing MA No. 21/Mum/2012. 9. In view of the above and in faithful consonance with the findings of the Hon’ble Judicial Member as affirmed by the Hon’ble Third Member, and noticing that there was a typographical error in the order of the Hon’ble Judicial Member, the same is rectified. Accordingly, paragraph 2.5.5 of the order of the Hon’ble Accountant Member dated April 2011 is substituted with the following: Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 11 “2.5.5. We have perused the record and rival contentions carefully. We find that the issue of the loss in respect of the securities transactions entered into by the assessee bank with the Bank of America (BOA) has reached finality atleast at the Tribunal level as the said claim is allowed by the Tribunal in the A.Y. 1993-94. As explained by the Ld. Sr. Counsel, the total quantum of loss of the disallowance to the extent of Rs. 337.19 crores consist of the loss in securities transactions more particularly 11% Bihar Bonds 2002, 13% HUDCO Bonds and 9% MTNL Bonds with the Bank of America. As submitted by Ld. Counsel, the said issue has become otiose and no adjudication is required. We accordingly dismiss Ground No. 3 in assessee’s appeal and allow Ground No. 5 in the Revenue’s appeal.” 10. Consequent thereto, paragraph 3.3.1 of the order of the Hon’ble Accountant Member dated April 2011 is replaced with the following: “3.3.1 Before us the Learned AR for the Assessee at the very outset mentioned that the issue had become academic as the claim of Rs. 22.80 crores had already been allowed by the Tribunal in assessment year 1993-94. The Learned DR placed reliance on the orders of authorities below. We have perused the records and considered the matter carefully. We have discussed this issue in detail while dealing with the Ground No. 5 of the Revenue appeal. In view of the finding in para 2.5.5 above, this ground of the Assessee is dismissed.” Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 12 11. Accordingly, MA No. 139/M/2012 is allowed and MA No. 21/M/2012 is partly allowed. 12. We further notice that the point of difference in the original orders pertained to the taxability of interest received from Citibank NA. However, in view of the orders of the Hon’ble Accountant Member dated 9 October 2012 and the Hon’ble Judicial Member dated 16 November 2012 passed on the Miscellaneous Applications, the said issue stands concluded by holding that the interest received from Citibank NA is taxable in the assessment year 1996-97. Accordingly, the order of the Hon’ble Accountant Member is treated as the final order for disposal of the assessee’s appeal in ITA No. 5303/Mum/2004 and the Department’s appeal in ITA No. 5229/Mum/2004, subject to the substitution of paragraphs 2.5.5 and 3.3.1 as directed hereinabove. 13. In the result, MA No. 139/M/2012 is allowed and MA No. 21/M/2012 is partly allowed. Order pronounced on 22nd January, 2026. Sd/- (GIRISH AGRAWAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 22/01/2026 KARUNA, sr.ps Printed from counselvise.com MA No.21 & 139/Mum/2012 Standard Chartered Bank 13 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Printed from counselvise.com "