2019 (3) TMI 1261

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....Coch/2017 dated 13/12/2017 wherein it was held as under: 4. We have heard the rival submissions and perused the material on record. We find, that this issue is covered against the assessee and in favour of the Revenue by the decision of the Hon'ble jurisdictional High Court, in assessee's own case in ITA 730 of 2009. The relevant para of the Hon'ble jurisdictional High Court reads as follow: - "5. What we have slated above is only a reasonable suggestion for the Assessing Officer to adopt which arises only if assessee is not able to establish more accurately the interest spent on earning tax free income. We, therefore, leave this matter to be decided by the Assessing Officer with reference to the accounts of the assessee- Banks for each year. Since we find that the rationale adopted by the Assessing Officer to estimate the expenditure for the purpose of disallowance under Section 14A is not tenable, we feel the matter should be restored to the Assessing Officer for making disallowance under section 14A by reasonably estimating as nearly as possible the expenditure incurred for earning the tax free income. This should be done after giving opportunity to &#3....

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.... amount of Rs. 10,79,80,515/- being the deduction claimed u/s. 36(1)(viii) of the Act holding that the assessee had not advanced any loan as long term finance for development of housing in India, industrial or agricultural development or development of infrastructure facility in India. 7. On appeal, the CIT(A) allowed deduction u/s. 36(1)(viii) of the Act for the income generated from advancing loans to industrial or agricultural development and development of infrastructure facility in India by following the decision of this Tribunal in the case of Ernakulam District Co-op. Bank Ltd. vs. Jt. Director of Income-tax (TS-7866-ITAT-2017), However, with regard to long term finance for development of housing in India, he observed that construction/purchase of individual houses does not tantamount to housing development. Hence, he upheld the action of the Assessing Officer in so far as the disallowance of the claim of the assessee for advances given for development of housing is concerned u/s. 36(1)(viii) of the Act. 8. Against this, both the Revenue as well as the assessee are in appeal before us. The Ld. AR had made elaborate submissions which has been extracted in the CIT(A)'....

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....ses of section 36(1)(viii) providing long-term finance for the construction or purchase of houses in India for residential purposes and providing long-term finance for only Development of Housing in India are different. 9.3 The words Development of Housing or Housing has not been defined in he Act. Hence, we will have to take the dictionary meaning. Housing means as per dictionary meaning : - Merriam Webster - Is a group of individual dwellings or apartment houses typically of similar design that are usually built and sold or leased by one management. Cambridge : An area containing large number of houses or apartments built close together at the same time. Collins: A large number of houses or flats built together at the same time. 9.4 However, the assessee referred to legislative history of Section 36(1)(viii). Prior to its amendment by the Finance Act, 2009 all Banking Companies were entitled to deduction u/s 36(1)(viii) for the profits generated from the business of providing long-term finance for the construction or purchase of houses in India for residential purposes. Now let us quote from the Explanatory Circular for Finance (No.2) Act, 2009. "17. Special ....

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....not tantamount to Housing Development. Hence, we uphold the action of the lower authorities in so far as the disallowance of the claim of the assessee for advances/loans given for Development of Housing is concerned. No deduction shall be allowed to assessee u/s 36(1)(viii) for the amount claimed by assessee in respect of advances/loans given for individual houses. 10. The Revenue has also raised the following ground as Ground No. 4 in ITA No. 219/Coch/2018: The learned Commissioner of Income Tax(Appeals) ought to have considered the CBDT circular No.665 dated 05/10/1993 and Instruction 17/2008 dated 26/11/2008 read with guidelines issued by Reserve Bank of India relied on by the Assessing Officer. 10.1 The Ld. DR submitted that as per sec.36(1)(viii), deduction is allowable to a banking company for eligible business of providing long term finance for: (a) Industrial or agricultural development. (b) Development of infrastructure facility in India or (c) Development of housing in India. According to the Ld. DR, with regard to eligibility for deduction u/s. 36(1)(viii), the assessee should advance loan for eligible business, however, the a....

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....and development of housing in India and hence is eligible for deduction u/s.36(1)(viii). Accordingly, deduction of Rs. 1, 56,78,943 is allowed to the assessee. 9.2 Aggrieved by the order of the CIT(A), the revenue is in appeal before us. The Id. DR strongly supported the order of the Assessing Officer and contended that the new order of the CIT(A) is a non-speaking order and the same needs to be quashed. The Ld. Counsel for the assessee, on the other hand, reiterated the submission made before the Income Tax Authorities. Joint Director of Income tax {TS-7866-IT AT-2017 (Cochin)-O} 9.3 We have heard the rival submissions and perused the material on record. As per provisions of section 36(1)(viii) of the IT Act, the eligible business means business of providing long term finance for industrial or agricultural development, development of infrastructure facility in India and development of housing in India. In our view, industrial purposes includes all types of industries both manufacturing as well as service industry. Admittedly, these are loans advanced by the assesse for long term finance and the details of the purpose for which the loans are adva....

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....dition of interest charged u/s 234B of the Income-tax Act, 1961. On this issue also, the CIT(A) has upheld the view of the AO in charging interest u/s 234B, by following the decision of the Hon'ble jurisdictional High Court in assessee's own case in ITA No. 189 of 2011, for assessment year 2005-2006. 11.1 We have heard both the parties and perused the record. We find that a similar issue had come up for consideration in assessee's own case in ITA No.29/Coch/2017 dated 13/12/2017 wherein it was held as under: 10. After hearing both the parties and perusing the relevant material on record, we find that the learned CIT(A) has rightly confirmed the charging of interest u/s 234B by following the decision of the Hon'ble jurisdictional High Court in assessee's own case in the preceding assessment year, i.e. A.Y. 2005- 2006. The relevant part of the High Court order is reproduced as under. - "It was contended by the assessee that the charging of interest under Section 234B is erroneous as the assessee cannot anticipate the conditions likely to be made by the assessing officer in regular assessment on a future date. Section 234B provides that short falls has to ....