2018 (1) TMI 1544 - AT - Income Tax

Tribunal upholds CIT (A)'s orders, denies revenue's appeals for assessment years 2010-11 and 2011-12

The Tribunal dismissed the revenue's appeals for assessment years 2010-11 and 2011-12, upholding the CIT (A)'s orders. Section 115JB of the Income Tax Act ... Provisions of Section 115JB applicability to assessee bank - HELD THAT:- As in assessee's own case [2013 (4) TMI 752 - ITAT MUMBAI] issue decided in favour of the assessee holding that provisions of section 115JB are not applicable to the assessee. Disallowance of broken period interest claimed - HELD THAT:- In our considered opinion, the findings of the Ld. CIT (A) is in accordance with the principals of law laid down by the Hon’ble Supreme Court in the case of CIT vs. Citibank [2008 (8) TMI 766 - SUPREME COURT] , decision in the case of American Express International Banking Corp. [2002 (9) TMI 96 - BOMBAY HIGH COURT] and in assessee's own case [2013 (4) TMI 752 - ITAT MUMBAI] broken period interest paid by the appellant is allowable as deduction in computing the total income of the assessee. Issues Involved:1. Applicability of Section 115JB of the Income Tax Act, 1961 to the assessee bank.2. Allowability of broken period interest as a deduction.Detailed Analysis:1. Applicability of Section 115JB of the Income Tax Act, 1961 to the Assessee Bank:The primary issue was whether the provisions of Section 115JB, which pertains to Minimum Alternate Tax (MAT), were applicable to the assessee bank. The Assessing Officer (AO) had determined the income under Section 115JB, but the Commissioner of Income Tax (Appeals) [CIT (A)] held that these provisions were not applicable to the bank.The CIT (A) referenced previous judgments, including the Hon’ble Supreme Court's decision in CIT vs. Citi Bank and the Bombay High Court's decision in American Express Int. Banking Corporation vs. CIT. The Tribunal noted that this issue had been previously adjudicated in favor of the assessee in its own cases for the assessment years 2006-07 and 2008-09. The Tribunal upheld the CIT (A)’s decision, stating that the provisions of Section 115JB were not applicable to the assessee bank, consistent with the Tribunal's earlier decisions.2. Allowability of Broken Period Interest:The second issue was whether the broken period interest paid by the assessee was allowable as a deduction. The AO had disallowed this interest, citing the Supreme Court decision in CIT vs. Vijaya Bank and the Rajasthan High Court decision in Bank of Rajasthan. However, the CIT (A) allowed the deduction, relying on the Supreme Court's decision in CIT vs. Citi Bank and the Bombay High Court's decision in American Express Int. Banking Corporation vs. CIT.The Tribunal noted that the issue of broken period interest had been settled in favor of the assessee by the Hon’ble Supreme Court and the Bombay High Court. The Tribunal also referenced its own previous decisions in similar cases, including ACIT vs. IndusInd Bank Ltd., where the broken period interest was allowed as a revenue expenditure. The Tribunal upheld the CIT (A)’s decision, allowing the broken period interest as a deduction.Conclusion:The Tribunal dismissed the revenue's appeals for both assessment years 2010-11 and 2011-12, upholding the CIT (A)’s orders. The provisions of Section 115JB were held not applicable to the assessee bank, and the broken period interest was allowed as a deductible expense. The Tribunal's decision was consistent with previous judgments and the principle of law established in earlier cases.