TaxTMI 
TaxTMI 
2025 (5) TMI 1077
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....6,32,834 [Para 3, pages 2 to 47 of the CIT(A) order) On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the adjustment of 1,56,32,834 made to the arm's length price in respect of back office support services and business support services by the Transfer Pricing Officer vide his order dated October 28, 2011 passed under section 92CA(3) of the Act. 2. Re: Disallowance of Mark to market (MTM) losses on forex derivativesRs. 1302,00,00,000 [Para 4, pages 47 to 59 of the CIT(A) order] 2.1 On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of the amount of Rs.1302,00,00,000 being MTM losses on interest rate, forex and credit derivative transactions on the ground that the same were notional losses and hence cannot be considered as deductible expenditure under the Act. 2.2 Without prejudice, the Assessing Officer ought not to tax the MTM gains amounting to Rs.2504,00,00,000. 3. Re: Expenses apportioned against income exempted under section 10(15), 10(34) and 10(35)-Disallowance u/s. 14A: Rs.629,05,90,585 [Para 5, Pages 59 to 67 of the CIT(A) order] ....
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.... case and law, the CIT(A) erred in disallowing the business loss write off on account of loss on re- possessed assets, discrepant notes not accepted by the Reserve Bank of India, losses due to fraud etc. on retail loans amounting to 290,47,92,249 claimed by the Appellant on the ground that the Appellant's claim had not been accepted in the preceding assessment year 2006-07 and the Appellant had failed to prove the genuineness of the claim in the aforesaid assessment year. 5.2 The CIT(A) erred in not following the order of CIT(A) 7, Mumbai for A.Y. 2006-07 which after considering the facts of the case and submissions of the Appellant has held that these are expenses incurred in the normal course of banking business and accordingly allowed the Appellant's claim for business loss. 6. Re: Disallowance of Provision for expenses - 748,93,81,195 [Para 12, Pages 92 to 94 of the CIT(A) order] On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of the amount of 48,93,81,195 in respect of provision for expenses created in March 2008 on which no tax was deducted at source on the ground that the same was conti....
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....e [Para 18, page 98 of the CIT(A) order] 11.1 On the facts and circumstances of the case and in law, the CIT(A) erred in dismissing the ground regarding the applicability of provisions of section 115JB of the Act in case of the Appellant on the ground that since the Assessing Officer had not dealt with the same in the assessment order it does not arise from the findings of the Assessing Officer and hence does not require to be adjudicated upon. 11.2 The CIT(A) failed to appreciate that the Assessing Officer had worked out the book profit and tax thereon under section 115JB in the assessment order and hence the said ground does arise from the findings of the Assessing Officer. GENERAL 12. The Appellant craves leave and reserves its right to vary, amend, alter and/ or add to the grounds of appeal and to produce such oral and documentary evidence and file such compilation of documents as may be necessary at the time of hearing of the appeal. ITA No. 4159/Mum/2014 "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the depreciation on leased assets without appreciating the fact that the said....
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....on area usage charges CUP 0.08 Back office support services TNMM 8.71 Custody charges CUP 0.02 Front end fees CUP 0.02 Processing fees on subordinated bonds CUP 7.92 Risk participation fees CUP 4.05 Guarantee fees CUP 0.002 Income on derivative transactions PSM 35.09 Interest income CUP 92.86 Recovery of expenses CUP 27.03 Mark-to-market gain CUP 507.84 Swap forward contract CUP 0.06 Total - receipts 683.69 Payments Remittance fees CUP 4.67 Charges paid for mortgage loan CUP 0.6 Representative and marketing services for private banking CUP 7.03 Representative and marketing services - web trade CUP 0,25 Representative and marketing services - others TNMM 2.79 Risk participation fees CUP 13.94 Interest expense CUP 5.50 Reimbursement of expenses CUP 0.62 Swap forward contract CUP 258.8 Reversal of distribution fees CUP 0.28 Total payments 367.02 Total receipts and payments i.e. total value of all International transactions ....
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....ithmetic Mean 27.53% 2.5. The Ld.TPO thus computed proposed adjustment at Rs. 138,77,685/- being the difference. The Ld.TPO also denied the benefit of 5% even though assesse's case fell within the safe harbor rules. 2.6. The Ld.TPO further noted that, the assessee provided certain business support services to its AE, details of which are as under: Sl. No. Nature of expense Amount 1 SAP maintenance expenses 22,00,268 2 Other legal expenses 26,56,448 3 Internal audit expenses 93,78,316 4 IT expenses 4,77,028 Total 1,47,12,060 2.7. The Ld.TPO noted that, the assessee had not charged any mark up to the services provided to its AE under this segment. Accordingly, based on the transfer pricing order passed for the previous assessment year, the Ld.TPO benchmarked the transaction by taking the margin at 11.93% and thus computed the adjustment of Rs. 17,15,159/-. 3. On receipt of the order of Ld.TPO, the Ld.AO passed draft assessment order on 18/01/2012, wherein along with transfer pricing proposed adjustment, following the disallowances were also proposed by the Ld.AO: Sl. No. Particulars Amount 1 ....
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....s BPO Ltd. 20.01 7 Mold-Tek Technologies Ltd. 96.66 8 R systems International Ltd. 4.3 9 Spanco Ltd. 11.04 10 Wipro Ltd. 30.05 5.1. It is submitted that if these comparables are excluded, assessee is acceptable with the margins that would be computed based on the remaining comparables. Before we undertaken the comparability analyze its sine qua non to understand the functions performed by the assessee, assets owned and risks assumed under the ITES segment. A. The assessee has placed the transfer pricing study report at page 649 of paper book. The services rendered by the assessee ITES segment are as follows: Function ICICI Bank AE Treasury support: * Processing of treasury-related transactions * Validation of deals, confirmation and settlement of deals * Settlement-related activities * Reconciliation of treasury accounts, bonds, inventory, etc. * Development of operational policies * Preparation of reports * Cash and fund management support √ Back office account processing and related activities * Processing of applications for various products and services * Account opening....
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..... 2007-08 in ITA No. 4248/M/2014 vide order dated 19.11.2023. The Ld.AR submitted that, this Tribunal found these comparables to be functional not similar to the assessee in paragraph 47, by observing as under: "Accentia Technologies Ltd. The Ld. AR submitted that the company is functionally different and is providing medical transcription, coding and software development. In this regard, we noticed that in the statement of accounts of the company, the income from operations (schedule-O page 716 of the PB) mainly consists of medical transcription, coding software development. We also noticed that income from medical transcription is more than 50% of the revenue, therefore, we see merit in the submission of Id. AR that the company is not functionally comparable with the assessee which is engaged in providing back office support services to its AE, therefore, we hold that Accentia Technologies Ltd. be excluded from the list of comparables. Vishal Information Technologies Ltd. The exclusion of this company is sought for the reason that the company has out sourced its activities and the business model is different. We in this regard notice that the e....
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....hnologies Ltd. be excluded from the list of comparables. Eclerx Services Ltd. The contention of the Id. AR with regard to exclusion of the company is that it is functionally different and is providing data analysis, data process solutions. The Id. AR is also seeking exclusion on the basis that the company is having unusual margin during the year under consideration as compared to earlier years. In this regard, we noticed that as per the financial statements of the company (page 847 of PB), we noticed that for the year ended 31.03.2007 the income of the company has almost doubled. Further, we noticed that as per the annual report wherein the functional profile of the company is stated to be that of KPO. Accordingly, we are of the view that the company cannot be compared with assessee which is rendering captive back office services to its AE. It is also relevant to notice here that in various decisions of the Co-ordinate Bench of the Tribunal, the inclusion of the said company has been rejected on the ground that the company is providing KPO services and therefore there is merit in the argument that the company which is rendering KPO services cannot be compared with....
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.... ICRA Techno Analytic Ltd. From the perusal of the annual report of the company (page 886 of PB) we noticed that the company is deriving revenue from professional services which consists of revenue earned from service performed for software development, sub-licensing fees, web development and hosting, etc. Also it is noticed from the financial statements that the revenue generated mainly from software development and other allied services. It is also noticed that the decision of the Co-ordinate Bench in the case of DCIT Vs. Morgan Stanley Advantage Services Put. Ltd. (ITA No. 4406 and 4479/Mum/2012), the company is excluded for the reason that it is functionally different. In assessee's case, the assessee is engaged in the business of rendering back office services to its AE which is different from the nature of services rendered by the company. Accordingly, on the basis of functional comparability we hold that ICRA Techno Analytic Ltd. be excluded. Infosys BPO Ltd. The exclusion of the company is contended for the reason that the company is deriving very high turnover from its operations and therefore, the same cannot be compared with the as....
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....ordingly we hold that Mold-Tek Technologies Ltd. should be excluded from the list of comparables. R Systems International Ltd. The Id. AR argued that the company is engaged mainly in sale of software products and rendering software development services. The Id. AR further argued that the income from ITES in the case of the company is only 14.75% and accordingly fails to filter applied by the TPO stating ITES revenue is less than 75% of total revenue. In this regard, we perused the financials of the company wherein we noticed that out of the total revenue of Rs. 117.54 crores is derived from sale of software products and rendering software development services. Therefore, we see merit in the submission of ld. AR that functions of the company cannot be compared with that of the assessee which is engaged in providing back office support services to its AE. Therefore, in our considered view based on functionality the company is not comparable with the assessee and accordingly we hold that R Systems International Ltd. be excluded from the list of comparables. Spanco Ltd. The exclusion of the company is sought on the ground of functionality dissimilar ....
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.... the same. Respectfully following the view taken by the coordinate bench for AY 2007-18, we direct the Ld.AO/TPO to exclude Accentia Technologies Ltd., Coral Hubs Limited (formerly Vishal Information Technologies Ltd.), Eclerx Services Ltd., HCL Comnet Systems & Services Ltd., Infosys BPO Ltd., Mold Tek Technologies Ltd., R Systems International Ltd., Spanco Ltd. Wipro Ltd. from the final list. 6.4. Accropetal Technologies Ltd: The Ld.AR submitted that, this comparable is functionally not similar with that of assessee as it is engaged in the development of engineering designs. It is submitted that this company is engaged in development of software and has incurred huge on sight development expenses during the year under consideration. She submitted that the Ld.TPO considered the engineering design services segment to compare with the ITES segment of the assessee, which is a basic back up of support service rendered by assessee to its AE. It is submitted that, revenue generated under ITES by this comparable is more than 75% of the total operating revenue. She drew our attention to page 118 of the paper book where in segmental details of the comparables are provided. The Ld.AR ....
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....TNMM is adopted, cannot be the reason to consider a company which is not functionally similar with that of assesse. It is necessary for the comparable to be similar qualitatively in functions in order to determine the comparability. In the present facts of the case, admittedly the assessee is a low risk captive service provider only rendering services to its AEs whereas this company is a high and KPO and entrepreneur in itself. 6.10. We, therefore, direct the TPO to exclude Accropetal Technologies Ltd and Cross domain solution Pvt.Ltd form the final list. 7. The assessee has also alleged that the Ld.TPO bench marked the reimbursement of expenses with the mark up based on the transfer pricing order passed by the predecessor for preceding assessment year. It is submitted that, the assessee incurred certain expenses on behalf of its AE that was recovered on cost. The break up of the expenses incurred by the assessee are as under: Particulars Amount (Rs.) SAP Maintenance Expenses 23,08,41,072 Other Legal Expenses 26,56,448 Internal Audit Expenses 93,78,316 IT Expenses 4,77,028 7.1. The Ld.TPO imputed the transaction with 11.93% mark up. The Ld.AR ....
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....m the AE. The TPO, however, did not accept the submissions of the assessee and held that these are in the nature of business support services for which the assessee is required to charge a margin since benefit is derived by the AE. The TPO did a benchmarking by selecting the following comparables to arrive at the arithmetic mean margin :- Name of the company Operating profits on operating costs (%) Financial Year 2006-07) Capital Trust -6.71 Crisil Limited 21.41 Cyber Media events Limited 10.64 Educational Consultants (India) Limited 10.64 ICRA Management Consulting Services Ltd 15.23 IDC (India) Limited 15.33 NTPC Electric Supply Co.Ltd. 16.78 Arithmetic mean 11.59 51. Accordingly, the TPO made a TP adjustment as per below working :- Amount-Rs. A Operating cost 1,51,79,844 B Mark up @11.59% 17,59,344 C ALP (A+B) 1,69,39,188 D Price actually charged 1,51,79,844 E Adjustment (C-D) 17,59,344 52. The Id. AR reiterated the submissions made before the TPO. The Id AR submitted that these cost are incurred towards common services rendered by the third....
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....s 2,504 Interest rate derivatives 164 Forex derivatives 551 Credit derivatives 587 Net MTM Gain / Loss 1202 8.3. The Ld.AO called for various details that was provided by the assessee in support of its contention. After considering the submission of the assessee, the Ld.TPO was of the opinion that, merely because marked to market loss has to be provided for, in the books of account as per accounting standard, the same cannot constitute tangible expenditure for the purpose of Income Tax Act. 8.4. The assessee also alternatively submitted that, the marked to market loss may be treated as notional, in such case, corresponding marked to market gain may not be treated as taxable. 8.4. The Ld.AO held that the mark to market losses claimed by the assessee are in the nature of liability that is not crystallized and, therefore, cannot be claimed as a deduction as business loss. The Assessing Officer in this regard relied on the CBDT Instrn. Dated 23/03/2010. 8.5. On further appeal before the Ld.CIT(A), the disallowance was upheld the order of the Assessing Officer stating that the MTM loss is notional and that the assesee's claim that particular me....
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..... As the loss represent negative profits, there cannot be different treatment for the positive MTM and negative MTM as the nature of the income being the same and will not affect the taxability or deductibility of the same 9.2. The Ld. AR relied on the decision of Hon'ble Supreme Court in the case of Woodward Governor wherein it is held that notional loss suffered on foreign exchange difference is in the nature of business loss and allowable as a deduction as the loss would have crystallized if the contract was closed on the Balance Sheet date. The Ld.AR also relied on the decision of Hon'ble Special Bench of the of the Mumbai Tribunal in case of Bank of Bahrain and Kuwait, reported in 132 TTJ 505 relying on the Supreme Court decision, has recently decided in August 2010 that MTM losses on forward contracts are allowable, as a binding obligation is created against the assessee as soon as a forward contract is entered into and if an assessee follows the same consistent method for accounting for both profits and losses, the loss should be allowed. Based on the above facts and legal position we submit that the MTM loss on Forex derivative is allowable as revenue loss u/s.37....
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...."7. We heard the parties and perused the material on record. We notice that the Special Bench of the Tribunal in the case of DCIT us Bank of Bahrain & Kuwait (supra) has considered the issue of allowability of loss arising out of MTM re-investment of foreign exchange contracts and held that- "58. In view of the above discussion, we allow the assessee's appeal for the following reasons :- i) A binding obligation accrued against the assessee the minute it entered into forward foreign exchange contracts. ii) A consistent method of accounting followed by assessee cannot be disregarded only on the ground that a better method could be adopted. iii) The assessee has consistently followed the same method of accounting in regard to recognition of profit or loss both, in respect of forward foreign exchange contract as per the rate prevailing on March 31. iv) A liability is said to have crystalised when a pending obligation on the balance sheet date is determinable with reasonable certainty. The considerations for accounting the income are entirely on different footing. v) As per AS-11, when the transaction is not settled in the same a....
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....'t submitted that no expenses other than administrative expense at 1% of the gross dividend/interest income have been incurred for earning the said exempt income. 10.2. The assessee submitted that, only direct expenditure in relation to earning exempt income can be disallowed under section 14A and all other expenditure cannot be considered as it is allowable under section 37, being wholly and exclusively incurred for the purposes of business of the assessee. Assessee had relied on the decision of Hon'ble Supreme Court in case of Rajasthan State warehousing Corporation vs. CIT reported it to 242 ITR 450, wherein it was held at an assessee carrying on one indivisible business in various ventures that has yielded both taxable and exempt income, the entire expenditure is permissible to deduction without any apportionment. 10.3. The Ld.AO after considering the submissions of the assessee computed 14A disallowance by observing as under: "The assessee had itself disallowed a sum of 11,94,09,415 @ 1% of the total dividend on account of administrative expenses attributable to the dividend income as per the notes to the original return .. The assessee had allocated the....
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....7.87 Closing investment Shares (equity and preference) 979.49 Subsidiaries and/ or joint ventures 1846.33 Venture funds 263.07 Total - b 3088.88 Average Investment (a+b)/ 2 2678.37 Section 14A disallowances c) Administrative expenses (0.5%) 13.39 Total 13.39 The Ld.AO is directed to verify the same and to consider the disallowance in accordance with law. Accordingly, Ground no.3 raised by the assessee stands partly allowed for statistical purposes. 12. Ground no.4 raised by the assessee is in respect of disallowance bad debt written off. 12.1. The Ld.AO observed that, assessee claimed bad debts of Rs. 6,76,70,81,747/-. It was noted that after adjusting credit balance of Rs. 296,65,17,179/- in the provision of bad and doubtful debts, the deduction claimed by the assessee under section 36(1)(vii) of the Act was Rs. 380,05,11,568/-. The Ld.AO called for various details in respect of the claim. After considering the submission of the assessee, the Ld.AO observed and held as under: "The circumstances and the facts of the case is similar to ....
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....8420&8435/Mum/2010 vide order dated 21/07/2023, wherein identical issue was considered on similar findings of the authorities below. She also placed reliance on the decision of Hon'ble Supreme Court in the case of TRF Ltd. vs CIT reported in 230 CTR 14 and Vijaya Bank vs CIT & Anrs. reported in 323 ITR 166. 13.2. The Ld.AR submitted that for A.Y. 2004-05 and 2005-06, this Tribunal remanded the issue back to the Ld.AO to consider the claim of assessee in the light of the decision of Hon'ble Supreme Court in the case of Vijaya Bank (supra). In support she relied on the decision of Co-ordinate Bench of this Tribunal for AY. 2007-08(supra), wherein identical direction was issued to the Ld.AO while remanding. 13.3. The Ld.DR on the contrary relied on orders passed by authorities below. We have perused the submission advanced by both the sides in the light of records placed before us. 13.4. It was submitted by the Ld.AR that, during the year under consideration the assets of the defaulting company were assigned Asset Reconstruction Company India Limited (ARCIL) who failed to sell the assets. Referring to the amendment to section 36(1)(vii) w.e.f. 01.04.1989, the Ld.AR....
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....he Income Tax Act 1961. (hereafter referred to as the Act) to rationalize the provisions regarding allowability of bad debt with effect from the r ^ (at) April, 1989. 3. The legislative intention behind the amendment was to eliminate litigation on the issue of the allowability of the bad debt by doing away with the requirement for the assessee to establish that the debt, has in fact, become irrecoverable. However, despite the amendment, disputes on the issue of allowability continue, mostly for the reason that the debt has not been established to be irrecoverable. The Hon'ble Supreme Court in the case of TRF Ltd. In CA Nos. 5292 to 5294 of 2003 vide judgment dated 9.2.2010, has stated that the position of law is well settled. "After 1.4.1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1) (vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee" 4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) ....
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....f the ratios by Hon'ble Supreme Court in the above referred decisions in accordance with law. Accordingly, this ground raised by the assessee stands partly allowed for statistical purposes. 14. Ground No.5 raised by the assessee is in respect of disallowance of business loss and other expenses. 14.1. During the assessment proceedings are Ld.AO noted that assessee claimed loss of Rs. 290,47,92,249/- which included loss on repossessed assets, the details of which are as under: Sr. No. Particulars Amount (Rs.) 1. Loss on sale of re-possessed assets - automobiles 47,09,64,599 2. Loss on sale of re-possessed assets-consumer durables 26,70,630 3. Loss on sale of re-possessed assets two wheeler 29,13,54,083 4. Loss on sale of re-possessed assets-construction equipment 90,65,790 5. Loss on sale of re-possessed assets-commercial vehicles 74,86,29,880 6. Loss on sale of re-possessed assets-car overdraft 10,43,00,355 7. Loss on sale of re-possessed assets-farm equipments 51,10,05,485 Total 213,80,20,823 14.2. The assessee submitted that it gives loan for purchase of vehicles, 2 wheeler as w....
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....elied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of the records placed before us 15.2. The breakup of the repossessed assets placed in the pre- paper book at page 905 is as under: Statistical breakup of loss on repossessed assets Range Count Amount (Rs.) Percentage of amount Above 20 lakhs 3 1,02,61,288 0.48 Above 10 lakh below 20 Lakhs 1 16,19,479 0.08 Above 5 lakh below 10 lakhs 205 12,67,20,013 5.93 Above 1 lakh below 5 lakhs 6,571 1,22,57,47,130 57.33 Less than 1 Lakh 30,900 66,93,89,883 31.33 Others 10,42,83,030 4.88 TOTAL 2,13,80,20,822 100.00 15.3 It is noted that coordinate bench of this Tribunal in the preceding assessment year 2007-08 (supra) remanded identical issue on similar facts back to the Ld.AO to examine afresh by observing as under: "24. We notice that in the details furnished by the assessee before the Assessing Officer, the assessee has furnished the loan account number, party name, and the amount. However in our considered view it is important to examine the am....
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....l the Ld.AR submitted that the breakup of year and provision for expenses are pleased at page 906. She submitted that the provision is claimed as per mercantile system of accounting. It was submitted that in any event TDS is not applicable on the year and provision. She placed reliance on the decision of Hon'ble Karnataka High Court in case of Subex Ltd. US DCIT in ITA No. 787 of 2017 vide order dated 22/12/2022. 16.4. On the contrary the Ld.AR relied on orders passed by authorities below. We have perused submissions advanced by both sides in the light of records placed before us. 17. It is an admitted fact that in the kind of business carried out by the assessee most of the times the bills are not received by 31^st March of the financial year relevant to the assessment year under consideration. In such cases the year and provision are made on an estimate basis and subsequently are reversed in the books of account on the 1st day of the next year upon receipt of their invoices. It is also not disputed that in the subsequent financial year the payments made by the assessee has been subjected to TDS. Further various courts and Hon'ble Supreme Court in case of Eli Lill....
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.... case on hand the payees were not identified. Therefore, the said authority does not lend any support in the contentions urged on behalf of the Revenue. 14 In view of the law laid down in Karnataka Power Transmission Corporation Ltd. & Volvo India Pvt. Ltd. (supra), we are of the considered opinion that the ITAT's order reversing DRP's Order and issuing further direction to AO is perverse. Hence, the following: ORDER (a) Appeal is allowed. (b) The first question of law is answered in favour of assessee and against the Revenue. (c) In view of first question being answered in favour of the assessee, the second question does not arise for consideration." Respectfully following the above view we are of the opinion that year end provision was made on estimate basis by the assessee cannot be denied in such facts as observed herein above. Accordingly ground 6 raised by the assessee stands allowed. 18. Ground No.7 is in respect of the disallowance of contribution to pension and that it is paid on account of Sanghli Bank Ltd. 18.1. The Ld.AR observed that, assessee made a claim for deduction on certain accounts including disch....
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....y relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961." 19.1. Based on the above observations, we remand this issue back to the Ld.AO to verify the claim of the assessee in the light of the evidence is furnished in accordance law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly ground number 7 raised by the assessee stands allowed for statistical purposes. 20. Ground No.8 raised by the assessee is in respect of the disallowance of discount expenses claimed by the assessee on bonds. 20.1. It is submitted that there is no finding on this issue by the Ld.AO. The Ld. CIT(A) on an appeal dismissed the claim of the assessee by stating that the issue does not arise out of the assessment order. 20.2. Before this Tribunal the Ld.AR submitted that, assessee had claimed identical e....
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....ture, the liability should be spread over the period of wonderlebent bond Though, the Assessing Officer has referred to the aforesaid decision Hon'ble Supreme Court and accepts the legal position, however den of the tond bleven the expenditure relating to the impugned assessment year oroheallowed that the assessee has not furnished the books of account for verifying the correctness of the claim. It needs to be mentioned, the learned Commissioner (Appeals) while accepting assessee's alternative claim has leaned Commissioner (Appeals able to the impugned assessment year has to be allowed and the auditor expenditure has to be spread, over the period of bond/ debenture. We find the aforesaid reasoning of the learned Commissioner (Appeals) to be in tune with the ratio laid down by the Hon'ble Supreme Court in Madras Industrial Investment Corp. (supra). As discussed earlier, in the aforesaid decision, the Hon'bie Supreme Court, though held that the expenditure incurred on bonds/ debenture is revenue in nature, the expenditure has to be spread ever the period of bond/ In fact, the learned Authorised Representative has before us that in the subsequent assessment years, the ....
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....'ble Karnataka High Court in case of CIT us ING Vysys Bank Ltd., reported in (2020) 114 taxmann.com 506. 23.4. The Ld.DR on the country relied on orders passed by authorities below. We have perused submissions advanced by both sides in the light of the records placed before this. This issue is no longer res integra as it has been held by Hon'ble Bombay High Court and Hon'ble Supreme Court that provisions of 115 JB of the act is not applicable to banking institutions. Respectfully following the view, we do not find any merit in the applicability of section 115 JB of the act to the facts of the present assessee. Accordingly ground number 11 raised by the assessee is stands allowed. Departmental appeal: 24. Ground number 1 raised by the revenue is against the claim of depreciation on leased assets allowed by the Ld. CIT(A). 24.1. During the year under consideration assessee has claimed depreciation of Rs. 30,63,55,733/- on leased assets. The Ld.AO disallowed the claim of the assessee by holding that ownership of the assets is not established by the assessee and therefore these transactions are of financial transaction. 24.2. The Ld.CIT(A) followed i....
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....o-ordinate Bench has been consistently hold the issue in favour of the assessee, where for the year under consideration see no reason to interfere with the decision of the Ld. CIT(A). This ground of the Revenue is dismissed." 24.4. Respectfully following the above view and also taking into consideration the fact that no new lease transaction has been entered into by the assesse, we do not find any infirmity in the view taken by the Ld. CIT(A). Accordingly ground number 1 raised by the revenue stands dismissed. 25. Ground number 2 raised by the revenue is against the club membership fees being allowed as expenditure under section 37 of the act by the Ld. CIT(A). 25.1. During assessment proceedings are Ld.AO noted that assessee claimed Rs.49,81,062/- towards club membership. Assessee was called upon to explain as to why the said expenditure should not be treated as capital expenditure. In response assessee submitted that membership fees peter the club is allowable as business expenditure since it is incurred to promote the business interest of the assessee. Assessee also relied on the decision of Hon'ble Bombay High Court in case of Otis elevators company India Ltd re....