TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 1275
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned Sr. Counsel, Shri Girish Dave, appearing for the assessee submitted before us that each and every ground of appeal raised for the captioned assessment years under consideration are identical and covered by assessee's own casé for preceding assessment years, wherein the Co-ordinate Bench of this Tribunal has been consistently decided these issues. In support of this contention, he filed a chart showing each ground of appeal which is covered by the decision of the Tribunal in preceding assessment years. The learned Departmental Representative also fairly conceded the submissions of the learned Counsel for the assessee. Consequently, this Bench was of the considered opinion that since all the issues have already been decided multiple times, therefore, we deem it fit and appropriate not to repetitively discuss the facts of each issue. ITA No. 4409/Mum./2011 Assessee's Appeal-A.Y. 2001-02 4. Ground no.1, relates to disallowance of Rs. 274,04,19,099, in respect of broken period interest. 5. Considered the submissions of the parties and perused the material on record including the case laws relied upon by the parties. During the course of hearing, both the leaned Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... parties. Both the parties agreed before us that identical issue has been decided by the Tribunal and has allowed the claim of depreciation on securities in the assessment year 2000-01, 1996-97, 1997-98, 1998-99, 1999-00. Consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) by allowing the ground raised by the assessee. Ground no.3, is allowed. 10. Ground no.4, relates to disallowance of Rs. 3,36,420 in respect of payments for scientific research. 11. The learned Sr. Counsel for the assessee submitted before us that this issue is covered by the decision of the Tribunal in assessee's own case for the assessment year 2000-01, 1997-98, 1998-99, 1999-2000, wherein this issue has been decided by the Tribunal against the assessee and in favour of the Revenue. However, he pointed out that during the year under consideration the payment for scientific research was made out of separate funds created out of taxed profits in each of the earlier years. The amount set apart for the funds has not been claimed as a deduction in the earlier years. He submitted that the amount has been spent by the Bank in the ordinary course of business and hence, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, he submitted that disallowance under section 14A of the Act can be made only when the expenditure is actually incurred. In support of this proposition, he relied upon the following decisions:- (i) CIT v/s Central Bank of India, [2003] 264 ITR 522 (Bom.); (ii) CIT v/s General Insurance Corporation of India, [2000] 254 ITR 203 (Bom.); (ii) CIT v/s Eicher Ltd., 101 TTJ 369 (Del.); (iv) Dhanlakshmi Bank Ltd. v/s ACIT, [2007] 12 SOT 625 (Cochin); (v) State Bank of Indore, 275 ITR 23 (MP); (vi) Maruti Udyog Ltd., 92 ITD 119 (Del.); and others. 17. Further, the learned Counsel for the assessee submitted that the disallowance under section 14A of the Act in relation to administrative expenses may be calculated on the basis of certain percentage of the exempted income. He also brought to our notice the decision of the Tribunal in assessee's own case wherein the Co-ordinate Bench has restricted the disallowance to one percent of the dividend income for the assessment year 1982-83 to 1983-84 and 1984-85 to 1990-91. He also submitted that no disallowance can be made under section 14A of the Act in the absence of exempt income. However, he submitted that in assessment year 2000-01, in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in view and consistent with view taken by the Co-ordinate Bench of this Tribunal in assessee's own case, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised by the assessee. Ground no.6, is dismissed. 22. Ground no.7, relates to the dispute arising out of the order of the learned CIT(A) in treating the amount of Rs. 24,00,00,000, received from Cardif S.A. as revenue receipt. 23. The learned Counsel for the assessee brought to our notice Note-25 attached to the statement showing computation of total income. He submitted that the assessee has received amount of Rs. 24 crore from Cardif S.A. in consideration of entering into joint venture to form SBI Life Insurance Co. Ltd. The joint venture entered by the assessee with Cardif S.A. was in the nature of "bancassurance" where an insurance company ties up with the local bank and wherever the bank operates, it target customers for insurance. He submitted that the LEARNED CIT(A) erred in considering the amount paid by the Cardif S.A. for utilizing the assessee's brand and the learned CIT(A) has not appreciated the fact that Cardif S.A. is not using the assessee's brand at all an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... therefore, it is revenue in nature. For that Proposition, he heavily relied upon the findings of the learned CIT(A). 27. Considered the rival submissions and perused the material on record. We notice that the assessee entered into Joint Venture with Cardif S.A. to form an entity SBI Life Insurance Co. Ltd., with the ratio of 74:26 between them. The Assessing Officer notice that the assessee received an amount of Rs. 24 crore for accepting Cardif S.A. as Joint Venture partner. It was paid as premium for the above purpose. The assessee submitted consistently that this payment is towards noncompete fee and not received in the ordinary course of business. Since it is onetime payment, it is only towards commencing insurance business. Therefore, it can only be capital in nature and, hence not taxable. It was argued that the non-compete fee is not taxable in this assessment year. We also noticed that the Revenue authorities treated the above payments towards utilization of brand of the assessee for the insurance business. The authorities applied the purpose test and the value exchange test to bring this receipt in revenue in nature. 28. We also notice that the assessee agreed to enter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e business in India. Therefore, it cannot be said that it is for non-compete but it is for the advantage offered for the Joint Venture business. Therefore, we are inclined to sustain the addition made by the Assessing Officer. Thus, ground no.7, raised by the assessee is dismissed. 28. Ground no. 8, relates to disallowance of Rs. 57,74,039 on account of road show, Rs. 5197,880 on account of legal expenses and Rs. 2,05,092, on account of advertisement expenses incurred in connection with the issue of India Millennium Deposits under section 40(1) of the Act on account of non-deduction of tax at source under section 195 of the Act. 29. Considered the submissions and perused the material on record along with the case laws relied upon by the parties. We find that identical issue has been decided in favour of the assessee and against the Revenue by the decision of the Tribunal rendered in assessee's own case in the assessment year 1999-2000. It was also brought to our notice that the learned CIT(A) has also while decided the issue for the year under consideration has relied upon the order of the first appellate authority for the assessment year 1999-2000 holding that the facts of the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appearing for the parties that this issue has been decided by the Co-ordinate Bench of the Tribunal in assessee's own case in ITA no.6482 & 6822/Mum./2010, order dated 6th March 2020, wherein the Co-ordinate Bench Para-26 of its order has restored the issue to the file of the Assessing Officer directing him to decide the issue afresh after following the directions given in the order dated 31st January 2018 passed in assessee's own case for the assessment year 1999- 2000. Consistent with the view taken therein, we set aside the order of the first appellate authority and restore the issue to the file of the Assessing Officer for deciding the issue afresh following the directions given in the order dated 31st January 2018 passed in assessee's own case for the assessment year 1999-2000 and verify the assessee's claim in accordance with law. Thus, ground no.11, is allowed for statistical purposes. 36. Ground no.12, relates to levy of interest under section 234D of the Act. 37. Considered the rival submissions and perused the material on record. The learned Counsel for the assessee fairly conceded before us that this issue covered against the assessee and in favour of the Revenue by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment year 1996-97, 1997-98, 1998-99, 1999-2000, 2000- 01 and 2008-09, wherein the Tribunal following the order 3rd January 2014, passed in assessee's own case for the assessment year 1996-97 in M.A. No.371/Mum./2014, restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following similar guidelines as given by the Tribunal in the aforesaid misc. application. Consistent with the view as aforesaid, we set aside the order passed by the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer with similar direction. We order accordingly. Additional ground no.2, raised by the assessee is allowed for statistical purpose. 43. Additional ground no.3, raised by the assessee relates to treatment of income earned from foreign branches i.e., whether or not the income earned is liable to be taxed in India. 44. Considered the rival submissions and perused the material on record in the light of the decisions relied upon by the learned Counsel for the assessee. Before us, both the parties agree that identical issue has been c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of hearing, on a perusal of the record available before us, we find that identical issue has been consistently decided in favour of the assessee and against the Revenue by the Tribunal in assessee's own case for the assessment year 1991-92 1995-96 1996-97, 1999-2000, 2000-01 and 2008-09. The Tribunal in assessee's own case in State Bank of India v/s DCIT, ITA no.3644 & 4563/Mum./2016, order dated 3rd February 2020, for the A.Y. 2008- 09, has decided this issue in favour of the assessee and against the Revenue. Consistent with the view taken by the Tribunal in assessee's own case as cited supra, we uphold the order of the learned CIT(A) on this issue by dismissing the ground raised by the Revenue. The learned Counsel for the assessee also submitted before us that that the appeal filed by the Revenue in assessee's own case before the Hon'ble Jurisdictional High Court for the assessment year 1996-97, the said appeal was also dismissed vide its order dated 1st August 2016. Ground no.2, raised by the Revenue is dismissed. 50. In the result, Revenue's appeal is dismissed. ITA No.44/Mum./2011 Assessee Appeal-A.Y. 2002-03 51. Ground no.1, raised by the assessee relates to deferr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of change in accounting Policy of investments in the HFT category of income. 58. During the course of assessment proceedings, it was found that in terms of RB I guidelines there has been a change in the accounting policy on valuation of investments in the "Held for Trading" (HFT) category from market value to book value or market value whichever is lower. Consequent to this change, the profit for the year was lower by Rs. 106.46 crore. The Assessing Officer, therefore, asked the assessee to explain why appreciation of Rs. 106.46 crore should not be added to the income. In response, the assessee submitted that the method of accounting regularly followed by the bank is mercantile and governed by the guidelines of the RBI and there was a bona fide change in the method of valuation of stock during the financial year 2001-02 brought about to comply with the RBI guidelines. In support of these submissions, the assessee relied upon the following decisions:- (i) Chainrup Sampatram v/s CIT, 24 ITR 481 (SC); (ii) Melmould Corp. v/s CIT, 202 ITR 789 (Bom.); (iii) CIT v/s Corpn. Bank Ltd., 174 ITR 616 (Kar.). 59. The Assessing Officer, however, did not accept the explanation of the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ket become uni-directional. (viii) From a plain reading of the Circular; it would appear that the emphasis of this Circular is that the investment fluctuation reserve is to be created out of taxable profits and not out of unrealized gains. The master circular dt. 6.9.2001 states as follows. "The individual scrips in the head trading for category will be revalued at monthly or at more frequent intervals and the net depreciation /depreciation under each Classification referred to in item 2(1) above will be recognized in the income a/c. The book value of the individual scrip will change with the revaluation." 60. The Assessing Officer held that the circular referred to by assessee is for the purpose of creation and maintenance of investment fluctuation reserve a/c and is to ensure that the assessee does create IFR out of unrealized gains and that the effect of the change with reference to the closing stock alone is not acceptable as following the method adopted by the assessee in earlier years. Accordingly, amount of Rs. 106,46,00,000 was added back to the total income of assessee. The assessee being aggrieved, filed appeal before the appellate authority. 61. The learned CIT(A) u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer that, the PSI Circular is more on the desired model of creation and maintenance of investment fluctuation reserve account and to ensure that the Appellant does not create IFP out of unrealized gains. Change in the method of valuing the closing stock is not the only option earmarked for this purpose. 8.3.2 In line with the above very fundamental principles and position, the arguments put forth by the Appellant are found to be misplaced. As I see, the Circulars and Instructions quoted by the Appellant are not exactly on the issue at hand as the PSI guidelines in question here is not only on valuation of stock but on overall expected model of investments Further, the argument that the gain in question is notional is also misplaced in the closing stock is intrinsic to the accounts and any variation or income on account of closing stock would also be intrinsic to income. Accordingly, seen in this perspective the decisions relied upon by the Appellant are also distinguishable. The change being bona fide or otherwise is also immaterial when the change violates some basic accounting principles. 8.3.3 In line with the foregoing, I find the action of the Assessing Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 616 (Kar.). The bank's financial results are completely different from the regular business results since they are bound by the guidelines of the RBI and the new method of valuation adopted by the banks, henceforth applied on a permanent basis in the later years. Therefore, the contention of the tax authorities are not proper and not as per judicial precedence. Accordingly, the ground raised by the assessee is allowed. 63. Ground no.5, relates to disallowance of Rs. 199,64,30,232, for earning exempt income under section 10(15)(iv)(c), 10(15)(iv)(f), 10(15)(iv)(h), 10(23G) and 10(33) by applying provisions of section 14A of the Act r/w rule 8D. 64. Having considered the rival submissions and having perused the material on record, we find that identical issue, except variation in figures, has been decided by us in assessee's own case being ITA no.4409/Mum./2011. Since the issue is mutatis mutandis similar to the issue decided by us vide Para-19 of this order as aforesaid, facts and circumstances being similar, therefore, on this issue also, we are inclined to direct the Assessing Officer to estimate the expenditure under section 14A of the Act at the rate of one percent of the exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isions: - (i) The Catholic Syrian Bank Ltd. v/s CIT, [2012] 343 ITR 270 (SC); (i) CIT v/s City Union Bank Ltd., [2007] 291 ITR 144 (Mad.); (ii) DCIT v/s Karnataka Bank Ltd., [2012] 349 ITR 705 (SC); and (iv) Punjab & Sind Bank v/s ACIT, [2008] 23 SOT 103 (Del.). 71. Consistent with the view taken in assessee's own case for the assessment year 2001-02 cited supra, we set aside the impugned order passed by the learned CIT(A) on this issue and allow the ground no.8, raised by the assessee. 72. Ground no.9, relates to disallowance of payment of Rs. 36,60,00,000, made to Federal Reserve Bank of New York and State of New York Banking Department due to the payment being penal in nature. 73. The Assessing Officer, during the course of assessment proceedings, found that in terms of order of assessment of civil money penalty and monetary payment issued by the Board of Governors of the Federal Reserve System, USA, the New York Office of the Appellant bank has paid Federal Reserve Bank, New York and the State New York Banking Dept., an amount of Rs. 36,60,00,000. These amounts were payments for violation of certain requirements. In this context, the Assessing Officer held that a penalty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e decision of CIT v/s Syndicate Bank 261 ITR 528 (Kar.) (Penal interest paid by bank under Banking Regulation Act). In line with the foregoing, I find the disallowance justified. It is confirmed and the ground of appeal is dismissed." 75. Considered the rival submissions and perused the material on record. We notice that the Assessing Officer found that the assessee incurred expenditure towards penalty in the nature of failure to maintain accounting _ procedures, compliance and reporting requirements. The board of Governors of the Federal Reserve System, USA, proposed the above civil penalty on the non-compliance of accounting and reporting requirements. The Assessing Officer held that penalty imposed for breach of law during the course of trade be treated as commercial loss. This view was supported by the decision of various Courts that infraction of law is not a normal incident of business, therefore, no expenses which are claimed by way of penalty for breach of law can be an amount wholly and exclusively for the Purpose of business. The above view of the Assessing Officer was upheld by the learned CIT(A). After considering the submissions of both the parties, in our consider....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vy of interest under section 234D of the Act. 79. Considered the rival submissions and perused the material on record. The learned Counsel for the assessee fairly conceded before us that this issue covered against the assessee and in favour of the Revenue by the decision of the Hon'ble Jurisdictional High Court in CIT v/s Indian Oil Corporation Ltd., [2012] 25 taxmann.com 284 (Bom.), wherein the Hon'ble Court has decided identical issue in favour of the Revenue and against the assessee. Since the issue is squarely covered against the assessee, consistent with the view taken by the Hon'ble Jurisdictional High Court as aforesaid, we do not have any hesitation to uphold the order of the learned CIT(A) on this issue by dismissing the ground raised by the assessee. Thus, ground no.11, raised by the assessee is dismissed. 80. The assessee has also raised additional grounds for our adjudication and these additional grounds are being disposed off accordingly. 81. Additional ground no.1, raised by the assessee relates to deduction for write-off of the bad debts under section 36(1)(vii) of the Act as per the judgment of the Hon'ble Supreme Court in Vijaya Bank Ltd. v/s CIT, [2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... whether or not the income earned is liable to be taxed in India. 86. Considered the rival submissions and perused the material on record in the light of the decisions relied upon by the learned Counsel for the assessee. Before us, both the parties agree that identical issue has been consistently decided by the Tribunal in assessee's own case for the assessment year 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01 and 2008-09, wherein the Tribunal following the order 3rd January 2014, passed in assessee's own case for the assessment year 1996-97 in M.A. no.371/Mum./2014, restored the issue to the file of the Assessing Officer and directed him to decide the controversy afresh by giving an opportunity of being heard to the assessee in accordance with law by following similar guidelines as given by the Tribunal in the aforesaid misc. application. Consistent with the view as aforesaid, we set aside the order passed by the learned Commissioner (Appeals) and restore the issue to the file of the Assessing Officer with similar direction. We order accordingly. Additional ground no.3, raised by the assessee is allowed for statistical Purpose. 87. In the result, assessee's appeal is partly all....