2014 (4) TMI 635 - HC - Income Tax

High Court affirms Income Tax Tribunal's ruling on substantial legal questions

Commissioner of Income Tax-4, Mumbai Versus ICICI Web Trade Ltd.

The High Court of Bombay upheld the order of the Income Tax Appellate Tribunal in two income tax appeals. The court ruled in favor of the revenue, ... Excessive and unreasonable expenditure - Treatment of income from operations – Brokerage income – Held that:- Certain customers have been introduced to the assessee through the ICICI Bank Ltd. and that is how there is increase in brokerage income - The increase is because of number of customers which have been sourced by ICICI Bank Ltd. - Once there is no formula for such services or facilities and for which payment is made nor has the revenue brought on record any material to show that the expenditure in question was excess or unreasonable, no substantial question of law arises for consideration in that case – Decided against Revenue. Issues:1. Challenge to the order passed by the Income Tax Appellate Tribunal in two income tax appeals.2. Interpretation of questions raised in the memo of appeal by the revenue.3. Application of retrospective operation to Section 234D of the Income Tax Act, 1961.4. Consideration of Division Bench judgment in a similar case.5. Analysis of questions 4(A) and 4(B) regarding brokerage income sourced through ICICI Bank Ltd.Analysis:The judgment by the High Court of Bombay pertains to an appeal challenging the order passed by the Income Tax Appellate Tribunal in two income tax appeals. The senior counsel for the revenue argued that the appeal raises a substantial question of law, particularly in relation to questions formulated in the memo of appeal. The court considered the interlinked nature of the questions and the impact of the retrospective operation of Section 234D of the Income Tax Act, 1961. Referring to a Division Bench judgment, the court held that question 4(C) should be answered in favor of the revenue, based on the retrospective operation given to the statute and the precedent set by the Division Bench.Regarding questions 4(A) and 4(B) concerning brokerage income sourced through ICICI Bank Ltd., the court found that the Tribunal had maintained consistency in its view for prior assessment years. The Tribunal determined that certain customers were introduced to the assessee through the bank, resulting in an increase in brokerage income. As there was no established formula for such services or evidence of excess or unreasonable expenditure, the court concluded that the findings of fact did not raise a substantial question of law. Consequently, the appeal was dismissed concerning questions 4(A) and 4(B), with no costs imposed on either party.