TaxTMI 
TaxTMI 
2015 (11) TMI 1792
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.... together and are being decided by this consolidated order, for the sake of convenience. 2. First we will deal with the appeal filed by the revenue being ITA No.2519/Mum/2004, in respect of AY 1999-2000. 3. The assessee herein is engaged in the business of Banking and financing activities. It filed return of income declaring total income of Rs. 1,53,45,60,780/- on 31/12/1999. The AO made assessment u/s 143(3) of the Income Tax Act, 1961 and after making certain additions and disallowances computed total income of the assessee at Rs. 1,90,83,89,060/- vide order dated 04/02/2002, against which an appeal was filed which was disposed of vide order dated 15/01/2004, against which the present appeal before us. 4. The first issue urged by the revenue is in respect of broken period interest of Rs. 35,06,51,480/-. 5. The facts of the issue are that the assessee claimed disallowance of broken period interest on securities for Rs. 35,06,51,480/-. Consequently claimed as deduction of Rs. 13,25,23,374/- as broken period interest on securities sold during the year. The assessee claimed that the interest paid at the time purchase of securities be treated as revenue expenditure. The AO....
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.... Hongkong and Shanghai Banking Corporation Ltd V/s DCIT in ITA Nos.4082/Mum/97(AYs-1991-92) order dated 29.11.2006 para 5 to 10 of the order; c) The Hongkong and Shanghai Banking Corporation Ltd V/s JCIT in ITA Nos.709,2604,2605,4709/Mum/99 (AYs-1992-93 to 1994-95 & 1996-97 and 1997-98 order dated 15.2.2007 para 24 to 37 of the order; d) M/s Mercantile Bank Limited V/s Inspecting ACIT in Income Tax Reference No.153 of 1996 and RA No.865 and 866 of Bombay / 1992 order (AYs 1980-81 and 1991-92) dated 9.10.2002; e) Supreme Court in the case of British Bank of Middle East (through their successors HSBC) for the assessment year 1990-91; f) Bombay High Court in the case of British Bank of Middle East (through their successors HSBC) for the assessment year 1990-91; g) American Express International Banking Corporation V/s CIT(258 ITR 601 (Bom); h) CIT V/s City Bank N A -Civil Appeal No.1549 of 2006 order dated 12.08.2008 and i) CIT V/s Deutche Bank A G in Special Leave Petition No. 345 of 2004 order dated 27.1.2004 10. We heard both the sides and perused the record placed before us. We find that the issue raised by the Reve....
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....IT V/s The British Bank of Middle East in ITA No.4908/Mum/2000(AY- 1997- 98) order dated 28.6.2005, para 117 and 119 and he also placed reliance on the following decisions: a) Emirtes Commercial bank Ltd (now known as Abu Dhabi Commercial Bank Ltd (262 ITR 55); b) M/s American Express Bank Limited in Income Tax Reference No.3 of 2002 R A No.568/Mum/1998 order dated 17.7.2003; c) Shinhan Bank V/s DCIT(IT) (2012) 54 SOT 140(Mum) = (2012) 23 taxmann.com 449(Mum); d) DCIT (IT) V/s Chohang Bank 126 ITD 448 (Mum); e) ABN Amro Bank N V V/s JCIT in ITA No.692/Cal/2000(AY-1996-97) dated 30.3.2001; f) Kedarnath Jute Mfg Co. Ltd.V/s CIT- 82 ITR 363 g) The British Bank of Middle East V/s JCIT in ITA No.751/Mum/1998 (AY-1993-94) order dated 28.6.2005 para 71 and 72. 17. We have heard the parties on this issue and perused the materials placed before us including the case law relied upon by the parties. We find that the issue raised by the revenue in this appeal stands covered in favour of the assessee by the above said decisions. Therefore, following the principal of consistency, we dismiss Ground No.2 of revenue's appeal. 18. ....
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....gued that the findings of the ld.CIT(A) in not in accordance with law. He submitted that the order of ld.CIT(A) be set aside and that of AO be restored. 27. On the contrary, the ld.AR submitted that an identical issue had come up before the Mumbai Bench of the Tribunal in Tribunal in JCIT V/s The British Bank of Middle East in ITA No.2501/Mum/1999(AY- 1992-93) order dated 28.6.2005, para 15 and 16 and in ITA No.751/Mum/98 (AY- 1994-95) para 68 and 69 of the order he also placed reliance on the following case laws: a) CIT V/s Bharat Petroleum Corporation Ltd (Bom HC) 252 ITR 43; b) CIT V/s Hind Lamps Limited (Allahabad High Court) 130 Taxman 586; d) Associated Cement Co.Ltd repoted in 49 TTJ 623 (Bom-ITAT); e) Chloride Industries Ltd (79 ITD 1)(Cal ITAT). He submitted that the issue raised by the revenue now stands covered in favor of the assessee. Therefore, the issue raised by the revenue be dismissed. 28. After considering the rival submissions and on perusal of the record, we are of the considered opinion that this issue has already been decided in favour of the assessee by various judicial forum as mentioned above. Therefore, respect....
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....He also placed reliance on the following case law: a) Credit Lyonnais (2012) 28 taxmann.com 91 (Mumbai); (2013) 21 ITR (T) 359(Mumbai), (2012) 139 ITD 681 (Mumbai) and b) Finance Act, 1997 deleting the provision of section 37(2). He therefore prayed that the order passed the ld. CIT(A) be confirmed. 34. After considering the rival submissions and on perusal of the record, we are of the considered opinion that this issue has already been decided in favour of the assessee by various judicial forum as mentioned above. Therefore, respectfully following the previous case law, we dismiss the Ground No.5 taken by the revenue. 35. The last issue pertains to exemption of interest of Rs. 21,82,78,180/- earned on tax free bonds. 36. The facts regarding the issue are that the assessee earned interest to the tune of Rs. 21,82,78,180/- on the investment made in tax free bonds and claimed that it is exempt income. The AO called for the explanation from the assessee as to why the interest earned on tax free should not be disallowed. The Assessee detailed explanation before the AO, but the AO did not accept the explanation tendered by the assessee and after calculating....
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....xable income. 11.3 I find merits in the appellant's submission that no disallowance out of interest paid should be made when it has equivalent reserves and capital available. However, the appellant's contention that the increase in non-interest bearing deposits i.e. current account should also be considered as its own fund is not acceptable as in the business of banking the funds received as deposits from public at large are to be mainly utilised for the purpose of making advances and the bank cannot afford to have mismatch of short term borrowed funds being used for long term investment. Besides this, certain percentage of deposits whether it is interest free or interest bearing is also supposed to be kept in SLR as per the guidelines of RBI. The appellant is also supposed to pay interest on term deposits to its customers. Therefore, amounts lying in the current deposits and term deposits should not be categorized as own funds. In principle, I am also agreeable with the findings of the AO that the disallowance is called for u/s.14A of the I.T. Act. However, keeping in view the appellant's submission that it has interest free funds in the form of reserves relat....
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....st the revenue vide paragraphs 11 to 17 of this order. Therefore, we do not take different stand than the stand so taken by us in earlier year. Accordingly, we dismiss Ground No.2 of the revenue's appeal. 46. The next ground of appeal pertains to deletion of disallowance of Rs. 46,43,398/- incurred on guest house and holiday home in view of the section 37(4) of the Act .w.e.f.1.4.1998. 47. Since we have decided an identical ground against the revenue for the assessment year 1999-2000 vide para 18 and 19 of this order above, we taken the same view here also and dismiss Ground no.3 of revenue's appeal. 48. The ground No.4 taken by the revenue pertains to deletion of disallowance of Rs. 22,10,218/- incurred on library subsidy, contributions to staff cultural committee and recreation club. 49. We have already discussed similar ground of revenue's appeal and vide paragraphs 21 to 28 of this order for the assessment year 1999- 2000, we have dismissed ground taken by revenue thereon. Therefore, following the above view, here also we dismiss Ground No.4 taken by Revenue. 50. The next issue raised by the revenue in this appeal pertains to deletion of disallowance of Rs. 1,98,....
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....5.2.2007 (para 22 and 38 of the order) 58. After considering the rival contentions and records available before us as well as the decisions relied upon by the parties, we are of the considered opinion that this issue is now settled against the assessee. Therefore, we dismiss the Ground No.1 taken by the assessee. 59. The second ground raised by the assessee is regarding confirming the disallowance made by the AO on account of NRI deposit Mobilization of Rs. 3,38,53,896/-. 60. At the time of hearing, the ld.AR submitted that an identical issue had been came up before this Tribunal in assessee's own case in ITA Nos.9587/Mum/92 and 9588/Mum/92 (AYs-1989-90 and 1990-91) order dated 22.2.2006 and vide para 8 of the order, the Tribunal has decided this issue in favour of the assessee. In addition to this submissions, the ld.AR also relie don the following decisions : a) JCIT V/s The British Bank of Middle East in ITA No.4908/Mum/2000(AY- 1997-98) order dated 28.6.2005; b) Emirtes Commercial bank Ltd (now known as Abu Dhabi Commercial Bank Ltd (262 ITR 55); c) M/s American Express Bank Limited in Income Tax Reference No.3 of 2002 R A No.568/Mum/1998 ord....
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....id expenses as revenue expenses and claimed deduction as revenue expenses. The AO did not allow the claim of assessee on the ground that the premises in question will be useful for long time business purpose of the assessee-bank. Therefore, rejected the claim of the assessee as expenditure is revenue in nature rather than capital in nature. The AO also rejected the claim of depreciation of Rs. 2 crores on the ground that cost of the vacated floor has already been included in the WDV on which depreciation has been claimed by the assessee every year. The ld. CIT(A) relying on the decision of the Hon'ble Kerala High Court in the case of CIT V/s Sea Lord Hotel Pvt Ltd reported in 245 ITR 601 confirmed the action of the AO holding that the expenses incurred for vacating the premises is permanent in nature and treating the same as capital expenditure, the AO is justified in rejecting the claim of the assessee. Aggrieved by the decision of ld.CIT(A), the assessee is in appeal before us. 67. The ld. AR submitted before us the facts as narrated before the lower authorities and also contended that the premises in question was very much in need of the assessee-bank and because of it assess....
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....we allow these grounds of appeal in favour of the assessee. 73. The fifth ground taken by the assessee is in respect of disallowing the loss of Rs. 3,50,00,000/- in respect of replacement of shares of Zee Telefilms to a foreign Institutional Investors (FII). 74. In the computation of income, the assessee claimed a loss of Rs. 3,50,00,000/- on account of replacement of shares to a Foreign Institutional Investor. The AO called for the explanation from the assessee as to why this amount should not be added to the total income of the assessee. In reply, the assessee contended the assessee act as mediatory to holds securities, collect dividends, obtains deliveries, ensures transfer in the name of the clients and delivers the securities when the same are sold by the clients. During the course of such business proceedings. One client namely Capital Emerging Markets Growth Fund (EMGF) has purchased certain shares of Zee Telefilms in October, 1994. These shares were duly registered in the name of EMGF in December, 1994. Subsequently, a company viz Jas-One Diamonds Pvt Ltd filed a suit in Bombay High Court claiming that these share were in the name of Jas-One Diamonds Pvt Ltd and sent ....
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....ment. In these transactions, Chase and EMGF suffered loss of 3.5. These client being reputed clients and to maintain dignity in the market, the assessee company paid this amount to them and claimed as business expenses. He contended that in such type of business whatever losses suffered by the bank is business loss and should be allowed as business loss. Therefore, the AO was not justified in disallowing this payment as business loss. In support of his contention, he placed reliance on the decision of Apex Court in the case of CIT V/s Nainital Bank Ltd (1966) 62 ITR 638(SC). 76. The ld.Counsel/ AR submitted that in the case of Nainital Bank Ltd, the large number of currency notes and jewellery were stolen and the payment of these assets were made by the bank to the constituent and the Hon'ble Supreme Court allowed the claim of the assessee being loss incurred by the assessee as business expenditure. He, therefore, submitted that the facts of the present case and the case cited supra are same and hence the payment made by the assessee to Zee Telefilms be allowed as business loss. 77. The ld. DR reiterated the facts of the case as made before the ld. CIT(A) and relied on the or....
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....as made before the ld.CIT(A) and relied on the order of AO. 86. The ld.Counsel for the assessee submitted that the ld.CIT(A) has passed well reasoned order by considering all aspects of the matter and prayed that the ground raised by the revenue be confirmed. In support of this contentions he placed reliance on the following decisions : a) ACIT V/s M/s Shoppers Stop Ltd -ITA No.1835/Mum/2010 (AY- 2003-04) dated 25.1.2012; b) Syndicate bank V/s DCIT (Bang ITAT) -(2013) 38 taxmann.com 25); c) Bharat Earth Movers V/s CIT -245 ITR 428 (SC); d) Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC); e) Rotork India Pvt. Ltd. Vs. CIT reported in 314 ITR 63 (SC); f) Taparia Tools Ltd v Joint CIT [2003] 260 ITR 102 (Bom),; g) Vinitee Corporation (P) Ltd. (2005) 146 Taxman 313 (Delhi); and h) CIT v. Beema Manufacturers P. Ltd. (2003) 130 Taxman 400 (Mad) 87. We find that the ld.CIT(A) has considered this issue with detailed discussions, we also find that an identical issue had come up before the various forums/ Judicial authorities, and therein the Courts have decided this issue in favour of the assessee. Hence, this issu....
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.... the total income of the assessee. Being aggrieved by the addition made by the AO, the assessee filed appeal before the ld. CIT(A) and the ld. CIT(A) by following the decision of Hon'ble Calcutta High Court in the case of CIT V/s Bank of Tokyo Ltd (71 Taxman 85) deleted the addition made by the AO. Aggrieved by the order of ld.CIT(A), the revenue is in appeal. 98. The ld. DR relied on the decision of the AO and also contented the facts of the issue as mentioned before the ld. CIT(A). 99. The ld. AR submitted the facts and contended that the ld. CIT(A) has considered the issue and decided in favour of the assessee. He submitted that the findings of the ld.CIT(A) are in consonance of the law and, he therefore prayed that the findings of the ld.CIT(A) be upheld. He also contended that an identical issue had come up before the various Courts and they have decided the issue in favour of assessee. Accordingly, he placed reliance on the following case law: a) BNP Paribas SA (Bombay HC) (2013) (32 Taxman.com 276); b) CIT V/s Bank of Tokyo Ltd (71 Taxman 85) ; c) Bank of Baharain and Kuwait (Mumbai ITAT SB) (2010) 41 SOT 290). 100. After hearing both the ....
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....the explanation from the assessee, the assessee contended that assessee has paid commission of Rs. 25,41,43,735/- to other re-arrangers which is in respect of services rendered by them outside Indian which is in the nature of their business income and is not liable to tax in India. The AO did not accept the contention of the assessee. The AO observed and held that the commission income paid to the outside parties is clearly in the nature of fee for technical services. The concerned parties have rendered services to collect deposits meant for Indian operations and thus there is a business connection and there income is clearly taxable as per the provisions of section 9 of the Act. The AO by placing reliance on the decision in the case of Raymonds Ltd V/s DCIT(80 TTJ 120) and by invoking the provisions of section 195 held that the assessee failed to deduct tax at source and hence he disallowed the expenditure u/s 40(a)(i) of the Act. Aggrieved by this finding of the assessing officer, the assessee filed appeal before the ld. CIT(A). 103. Before the ld.CIT(A), the assessee made detailed submissions and the ld.CIT(A) incorporated the same in the order vide para 31.1. to 32 of CIT(A)....
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....on by the parties. We find that the an identical issue has come up before the Tribunal in number of cases and the Tribunal in the above cited cases decided the issue in favour of the assessee. Before us, the ld.DR could not bring any material contrary to the findings of the Tribunal. Therefore, we have no other alternative but to dismiss the Ground No.8 taken by the revenue. 107. Now we shall take up the appeal bearing I.T.A. No.4670/Mum/2005 filed by Bank/ assessee in respect of AY2001-02. 108. The first ground raised by the assessee is regarding confirming the disallowance made by the AO on account of NRI deposit Mobilization of Rs. 4,56,28,770/-. 109. This is an identical issue raised by the revenue in ITA No.2679/Mum/2005, which vide para 59 to 62 of this order has been dismissed. Accordingly, following the same, we confirm the order of ld.CIT(A) on this issue. Ground No.1 taken by the assessee is allowed. 110. The second issue raised by the revenue is in respect of directing the AO to delete salaries paid to expatriate employees amounting to Rs. 11,39,00,527/-under section 44C of the Act. 111. While dealing with the appeal of revenue in ITA No.2519/Mum/2004, we ....
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....he state of affairs of the concerns. The valuation is done as per guidelines of the RBI and this method of accounting has been regularly followed by the assessee, therefore, he prayed that no adjustment should be made on this account. He submitted time and again this Tribunal as well as the Apex Court held that the loss suffered by assessee on account of fluctuations of foreign exchange as on the date of Balance Sheet is an item of expenditure under section 37(1), allowed the mark to market loss in the case of equity index/stock future as an allowable loss. Therefore, the ld. AR prayed that the loss suffered by assessee be allowed as business loss. In support of this contention, the ld.AR placed reliance on the following decisions: a) CIT vs. Woodward Governor India P. Ltd. 312 ITR 254(SC); and b) Bank of Bahrain (132 TTJ 505) Mum (SB). 119. The ld. DR reiterated the same contentions and relied on the orders of authorities below. 120. We have considered the rival submissions and perused the record. We find that the issue raised by the assessee stands covered by the decision of Hon'ble Supreme Court in the case of Woodward Governor India P. Ltd (supra) wherei....