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2025 (7) TMI 368
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....of ITA Nos. 2037/Mum/2024 & 2119/Mum/2024. The orders of the authorities below carefully perused, and the relevant documentary evidences brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. ITA No. 2037/Mum/2024 (assessee's appeal for AY 2020-21) 4. Ground No. 1 relates to the disallowance u/s 14A r.w. rule 8D. 4.1 We find that an identical issue was decided by the coordinate bench in ITA No. 1440/Mum/2023 for AY 2016-17. The relevant findings of the coordinate bench read as under: "4. The Id. AR submitted that the Co-ordinate Bench in assessee's own case for AY 2014-15 (ITA No. 1807/Mum/2018 dated 27.11.2020) has considered a similar issue and held that "6. We have heard the submissions made by rival sides and have examined the orders of authorities below. The assessee in appeal has raised solitary ground against the disallowance under section 14A r.w.r. 8D of the Act. The Revenue in ground No.1 of the appeal has impugned the finding of CIT(A) in restoring the issue of disallowance under section 144 r.w.r. 8D of the Act to Assessing Officer. Undisputedly, the assessee has earned tax free income from Bonds and dividend....
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.... the benefit of judgment rendered in the case of Maxopp Investment P. Ltd. (supra). The Tribunal passed the order on 08/01/2016 and the judgment in the case of Maxopp was delivered in February 2018. Even the judgment in the case of Pr.CIT vs. State Bank of Patiala (supra) and Pr.CIT vs. Punjab and Sind Bank (supra) are subsequent to the order of Tribunal. 8. Thus, in the light of the decisions discussed above, we hold that no disallowance under section 14A r.w.r. 8D of the Act is warranted where the assessee has earned exempt income on shares/stocks held as 'stock-in-trade'. Consequently, the sole ground raised in appeal by the assessee is allowed and corresponding ground No.1 raised in the appeal by the Revenue is dismissed. 9. In the result, appeal of the assessee is allowed." 5. We heard the parties and perused the material on record. The facts for the year under consideration is identical i.e. the exempt income earned by the assessee is out of the shares/stock held as stock-in-trade, therefore respectfully following the above decision of the Co-ordinate Bench in assessee's own case, we direct the AO to delete the disallowance made u/s 14A ....
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..... 14. Accordingly, for the purpose of determining taxable income, the provision made of 2.1000 is added back and offered to tax, the deduction of Rs..500 is claimed u/s 36(1)(viia) in the tax computation. Therefore, the actual bad debts written off is charged to the provision account, which the assessee ultimately reverses in the tax computation and allowed only the statutory deduction u/s 36(1)(viia) of the Act, in the books it never crossed the amount allowed under section 36(1)(viia) of the Act. 15. If there is a reversal of provision which is credited to P&L account, the same will be offered to tax and no deduction is allowed under section 36(1)(viia) of the Act. Therefore, the provision made/reversed and deduction allowed under section 36(1)(viia) / amount offered to tax form a separate stream of deduction under the Income-tax Act. When a bad debt is written off, the same is written off by debit to provision account for the reason that the assessee's claim of actual bad debts written off never crossed the claim of deduction claimed under section 36(1)(viia) of the Act by the assessee. Whereas, the deduction under section 36(1) (vii) is allowed to the exte....
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.... Therefore, the proposed addition of recovery of bad debts by the Assessing Officer is not proper and observation of Ld.CIT(A) is also not correct, the revenue has to appreciate the actual claim of deductions made by the assessee under various provisions exclusively enacted for the purpose of banking companies has to be read along with the tax computation submitted by the assessee and not express their opinion without properly verifying the impact in the tax computation. It may look double deduction while reading the provisions in isolation. Accordingly, the grounds raised by the assessee is allowed. 20. In the result, appeal filed by the assessee is allowed." 12. From the observations of the AO as extracted in earlier part of this order, it is clear that the AO has held the recovery to be taxable for the reason that the adjustment made to the provision is indirectly charged to P&L A/c. This scenario is considered in the above decision and therefore respectfully following the same, we hold that the recovery of bad-debts which has not been claimed as a deduction u/s 36(1)(vii) in earlier years is not taxable. Accordingly, the AO is directed to delete the addition m....
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....all be recognised as income or as expense in that previous year. (ii) In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income or as expense in that previous year. Exceptions to Paragraphs 3, 4 and 5 6. Notwithstanding anything contained in paragraphs 3, 4 and 5; initial recognition, conversion and recognition of exchange difference shall be subject to provisions of section 43A of the Act or Rule 115 of Income-tax Rules, 1962, as the case may be. Financial Statements of Foreign Operations 7. The financial statements of a foreign operation shall be translated using the principles and procedures in paragraphs 3 to 6 as if the transactions of the foreign operation had been those of the person himself" 6.2 It is pertinent to mention here that in earlier years, since there was gain, the same has been accepted by the AO and taxed accordingly. Therefore, following the same principle, we do not find any reason to disallow the loss and the same is directed to be allowed. Ground No. 3 is allowed. 7. Ground No. 4 relates to the disallowance of i....
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....the assessee that ratio in the case of Pepsu Road transport Corporation Ltd (supra) cannot be applied or the instant case. 16.2 However as far as finding of the Coordinate bench of Tribunal in the case of Tata Power Co Ltd (supra) is concerned, the Tribunal has in principle held that perpetual bond are not in the nature of equity and therefore quashed the revision proceedings passed by the Ld. PCIT, The relevant finding of the Tribunal (supra) is reproduced as under: Heard both the sides and perused the material on record. Assessment in the case of the assessee was completed by the Assessing Officer u/s 143(3) r.w.s 144C(13) of the 1.T. Act, 1961 on 30.06.2017. The ld. Pr.CIT has held vide order u/s 263(3) of the Act, dated 28.03.2018 that assessment order passed u/s 143(3) r.w.s 144C(13) as erroneous insofar as it was prejudicial to the interest of revenue holding that the Assessing Officer was not correct in allowing the interest on perpetual debt instruments without examining and verifying the allowability of such expenditure. With the assistance of ld. representatives we have gone through the copies of documents and detailed submission made before the A.O duri....
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....lso explained that the lenders were not entitled to share any surplus or bear any loss like shareholders. Debentures trustee were appointed to safeguard interest of the lenders. The assessee company had also stated on the basis of aforesaid discussion that it had borrowed fund for the purpose of its business and the interest on debenture was deductible in computing the income from profit and gains from business and profession. In the light of the above facts and after considering the detailed material furnished by the assessee during the course of assessment proceedings before the assessing officer we observe that the assessee has categorically explained to the assessing officer with relevant supporting material that it has issued unsecured perpetual non-convertible debentures and such lenders were not entitled to share any surplus or bear any loss like shareholders. These debentures were entitled for fixed year. These facts and submissions were also brought to the notice of the Id. Pr.CIT during the course of proceedings u/s 263 of the Act, however, the Id. Pr.CIT without controverting these undisputed fact held that assessment order was erroneous so far it was prejudicial to the ....
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....at a specified date, interest does not accrue to the holder thereof on any date prior thereto. Interest would accrue or arise only on the date specified in the instrument. That a creditor has a vested right to receive interest on a stated date in future does not constitute an accrual of the interest to him on any prior date. interest only on a particular date, an action filed prior to such date would be dismissed as premature and not disclosing a cause of action. Subject to a contract to the contrary, a debtor is not bound to pay interest on a date earlier to that stipulated in the instrument. Where interest is not calculated on the date on which it falls due in accord-ance with the terms of the security but only for a broken period between two consecutive due dates for payment of interest, interest can be said to accrue or arise only to the holder of the instrument and only on the date stipulated in the security for the payment of interest. The holder of a security would not be liable to tax on the notional interest for the proportionate period as on the last date of the financial year in respect of securities held on that date or on notional interest to the extent of the....
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.... upon the sale of the debt-claim itself is not interest. Interest arises from and on the terms of the debt-claim/security and would be on revenue account. The sale proceeds upon a transfer or assignment of the security arise not from but on account of and represent the debt claim/security itself. The words in paragraph (4) "whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits" appear after the opening words "The term 'interest', as used in this article, means income from debt-claims of every kind" and, therefore, clearly relate to income from debt-claints. Thus, if and only if the transaction is a debt-claim, it matters not whether it is secured by a mortgage and whether or not it carries a right to participate in the debtor's profits. The subsequent words in article 11(4) "in particular, income from Govern-ment securities and income from bonds or debentures" constitute merely an inclusive provision which by way of illustration refer to Government securities and income from bonds or debentures which, in turn, include the further and other accretions thereto as stated therein, viz., premiums a....
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....that the income from sale of these securities constituted capital gains within article 14(4) of the DTAA and were, therefore, exempt from tax in India. The Commissioner (Appeals) deleted both additions and the Tribunal upheld his order. On appeal: Held, dismissing the appeal, (i) that the securities in this case expressly provided for payment of interest in respect thereof only on the dates specified therein at six monthly intervals and such dates did not fall on the last date of the assessee's financial year, viz., March 31. Therefore, the interest could be said to have accrued only on the date on which it was due in accordance with the terms and conditions of the security. The right to receive interest on the Government securities vested in the assessee only on the due date mentioned in the securities. Consequently, interest accrued on the securities only on the due dates and could not be said to have accrued to the assessee on any date other than the date stipulated therein. In respect of the securities held by the assessee on March 31, 2001, the due date for payment of interest thereon had not arrived on March 31, 2001, and the assessee sold some of such securities....
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.... in the profit and loss account and corresponding credit was made in the 'bad debt reserve account'. On the revenue's appeal, the Tribunal affirmed the view taken by the Commissioner (Appeals) on the following three grounds: Firstly, according to the Tribunal, the assessee had rightly made a provision for bad and doubtful debt by debiting the amount of bad debt to the profit and loss account so as to reduce the profits of the year. Secondly, the provision account so created was debited and simultaneously, the amount of loans and advances or debtors stood reduced and, consequently, the provision account stood obliterated. Lastly, according to the Tribunal, loans and advances or the sundry debtors of the assessee as at the end of the year lying in the balance sheet were shown as net of 'provisions for doubtful debt' created by way of debit to the profit and loss account of the year. Consequently, the Tribunal came to the conclusion that deduction under section 36(1)(vii) was allowable. That view was not accepted by the High Court which held that in view of the insertion of the Explanation to section 36(1)(vii) vide the Finance Act, 2001, with effect from 1-41989, ....
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....not suffice and, in the interest of transparency, it would be desirable for the assessee-bank to close each and every individual account of loans and advances or debtors as a pre-condition for claiming deduction under section 36(1)(vii). That view had been taken by the Assessing Officer because he apprehended that the assessee-bank might be taking the benefit of deduction under section 36(1)(vii). In that context, it must be noted that there was no finding of the Assessing Officer that the assessee had unauthorisedly claimed the benefit of deduction under section 36(1)(vii), twice over. The order of the Assessing Officer was based on an apprehension that if the assessee failed to close each and every individual account of its debtor, it might result in the assessee claiming deduction twice over. In the instant case, the Court was concerned with the interpretation of section 36(1)(vii). The matter could not be decided on the basis of apprehensions/desirability. It was always open to the Assessing Officer to call for details of individual debtor's account if the Assessing Officer had reasonable grounds to believe that the assessee had claimed deduction twice over. In fact, that e....
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....as the income of the previous year in which it is recovered. In the circumstances, the Assessing Officer was sufficiently empowered to tax such subsequent repayments under section 41(4) and, consequently, there was no merit in the contention that if the assessee would succeed, then it would result in escapement of income from assessment. [Para 9]" 9.3 Respectfully following the decision of the Hon'ble Supreme Court (supra), we direct the AO to delete the impugned addition. Ground No. 6 is allowed. 10. Ground No. 7.1 relates to the disallowance of the exclusion of profit of Foreign Branches. 10.1 The AO found that the assessee has claimed deduction of Rs. 25,73,11,908/- relating to profit earned by the Sydney branch based on section 90 of the Act. As per the CBDT notification, the income of foreign branches is required to be considered for tax in the resident state of the resident assessee. Accordingly, the AO disallowed Rs. 25,73,11,908/-, which was confirmed by the CIT(A). 10.2 We find that the coordinate bench in the case of Bank of India 122 taxmann.com 246 has decided this quarrel in favour of the revenue and against the assessee. The relevant findings of the coordi....
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....foreign branches exclusively vests with the respective tax jurisdictions and these profits cannot be taxed in India. This plea was negated by the Assessing Officer on the ground that, under the scheme of the law as it prevails-particularly in the light of the provisions of section 90(3) read with notification no SO 2123(E) dated 28th August 2008, entire global income of an Indian resident assessee is to be taxed in India and that where a DTAA provides that "any income of a resident of India 'may be taxed' in the other country, such income shall be included in his total income chargeable to tax in India, in accordance with the provisions of the Income-tax Act, 1961, and relief shall be granted in accordance with the method of elimination or avoidance of double taxation provided in such agreement". Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in further appeal before us. 5. Learned counsel's contention, as articulated in the written note filed before us, is that the issue in appeal is covered, in favour of the assessee, by decisions of the coordinate benches in two immediately pre....
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....sue is now covered against the assessee, by a rather recent coordinate bench decision in the case of Technimont (P.) Ltd. v. Asstt. CIT [2020] 116 taxmann.com 996/184 ITD 474. Learned counsel frankly submits that the reasoning adopted by those coordinate benches, in the light of this recent decision, does not hold good, and he has nothing to say on the same on the same-except for one new reason which we will take up a little later. In the case of Technimont (P.) Ltd. (supra), the coordinate bench, speaking through one of us (i.e. the Vice President), has, inter alia, observed, and we are in considered agreement with these observations, as follows: "4. To adjudicate on the issue on merits, only a few undisputed material facts need to be taken note of. The assessee before us is an Indian company with branch offices in UAE and Qatar. The assessee has carned profits aggregating to Rs. 11,91,18,391 in these branches, which, for the purposes of the provisions of the respective tax treaties, constitute permanent establishments. The claim of the assessee, as noted by the DRP at page 10, is that "the foreign branches create permanent establishments (PEs) in the foreign countries, t....
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.... 26-7-2017] wherein it has been held that the income of the foreign branches, covered by tax treaties with respective jurisdictions, is to be excluded from total income of the assessee and is to be held as not taxable in India. It is submitted that this decision is a binding judicial precedent and it is not open to us to deviate from the stand so taken by the coordinate bench. When learned counsel's attention was invited to the provisions of Section 90(3) read with notification no. 91/2008 dated 28th August 2008, and impact of this legal position on the claim of the assessee, he submits that section 90 was re-enacted with effect from 1st October 2009, and the notifications issued prior to re-enacted section 90 will not hold good in law. In support of this proposition, our attention is invited to a coordinate bench decision in the case of Essar Oil Ltd. v. Addl. CIT [2014] 42 taxmann.com 21 wherein it is said to have been held, in paragraph no. 76, that notifications issued under earlier section 90 shall hold good till 1st October 2009. As a corollary to this observation, according to the learned counsel, the notifications issued under earlier section 90 will not hold good after....
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....AE branch and reduce the same from assessee's total income. The ground of objection is, accordingly, accepted." 10.3 Respectfully following the findings of the coordinate bench, ground No. 7.1 is dismissed. 11. Ground No. 7.2 relates to the taxability of the income of foreign branches as per the local laws of the respective country. 11.1 A similar issue has been decided against the assessee in the case of the Bank of Baroda in ITA Nos. 2480 & 3081/Mum/2015. The relevant findings read as under: "26. A reading of the above makes it clear the Tribunal had held that the income of the foreign branches of the assessee shall also be taxable in India that is it would be included in the return income filed by the assessee in India and whatever taxes have been paid by the branches in the other countries credit of such taxes shall be given. We find that the Tribunal as above has not held that it is only that income of the foreign branches which was taxed in that foreign country which is to be included in the return of income filed by the assessee. Hence, we are in agreement with the revenue plea that Ld. CIT-A has not properly followed the Tribunal decision as referred b....
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....t and loss account in accordance with Section 52 r.w.s. 29 of the Banking Regulation Act and not as per the Companies Act. Earlier in the case of the assessee it has been settled by the Hon'ble Jurisdictional High Court that provision of Section 115JB has no application to its case. Now after the amendment w.e.f. A.Y.2013-14, Sub-section (2) has been amended to bring into the ambit of Section 115JB, those companies to which second proviso to subsection (1) of Section 129 of the Companies Act is applicable, who are required to prepare its statement of profit and loss account in accordance with provisions of the Act governing such company. For the sake of ready reference the amended subsection (2) of Section 115JB is again reproduced hereunder:- (2) Every assessee,- (a) being a company, other than a company referred to in clause (b), shall, for the purposes of this section, prepare its statement of profit and loss for the relevant previous year in accordance with the provisions of Schedule III to the Companies Act, 2013 (18 of 2013); or (b) heing a company, to which the second proviso to subsection (1) of section 129 of the Companies Act, 2013 (18 of 20....
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....he BR Act, therefore, Schedule III of the Companies Act is not applicable. Thus, Clause (a) of Section 115JB (2), the computation provision, will not apply and this matter has attained finality in the case of the assessee by the Hon'ble Jurisdictional High Court in the case of the assessee (cited supra). 42. Now for Clause (b), following conditions need to be satisfied for applying section 115JB in the case of a company:- i. it applies to a company to which the second proviso to subsection (1) of section 129 of the Companies Act, 2013 is applicable; ii. once this condition is fulfilled, it requires such assessee for the purpose of this section to prepare its profit and loss account in accordance with the provisions of the Act governing such company. 43. Since 115JB is applicable to the company to which second proviso to Section 129(1) applies, therefore, it would be relevant to quote Section 129 of the Companies Act which reads as under:- "129. Financial statement-(1) The financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section 133 and....
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....he order) which defines "Indian company" means company formed and registered under the Companies Act. Thus, the company for the purpose of the Income Tax Act is a company which is formed and registered under the Companies Act. Section 2(9) of the Companies Act, 2013, a banking company has been defined to mean a banking company as defined in section 5(c) of the BR Act). Section 5(c) of the BR Act defines a "banking company" as under: "(c) "banking company" means any company which transacts the business of banking in India" Therefore, for an entity to qualify as a banking company it should first of all, be a company' and secondly the said company should transact the business of banking in India. 46. The expression "company" has been defined in section 5(d) of the BR Act as under: "(d) "company" means any company as defined in section 3 of the Companies Act, 1956 (1 of 1956); and includes a foreign company within the meaning of section 591 of that Act;" 47. Therefore, in so far as is relevant, the entity has to be a company as defined in section 3 of the Companies Act, 1956 (Now 2013) to be regarded as a banking company. Section 3(1)(i)....
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.... 115JB(2) is not fulfilled, and consequently second proviso helow Section 129(1) of the Companies Act is also not applicable. 51. The main crux of the department is that since assessee bank has come into existence by the Acquisition Act" and Section 11 thereof states that for the purpose of Income Tax Act, every corresponding new bank shall be deemed to be an Indian company" and the company in which the public are ..substantially interested' and since in Section 2(17) of the Income Tax Act, the company" has been defined as any Indian company therefore, the provisions of the Income Tax Act would apply because Section 2(26) of the Act defines Indian company" means the company formed and registered under the Companies Act and therefore, it is deemed to be a company under the Companies Act. 52. Section 11 of the Acquisition Act states that "For the purposes of Incometax Act, 1961 (43 of 1961), every corresponding new bank shall be deemed to be an Indian company and a company in which the public are substantially interested". Therefore, the said deeming fiction is created only for the purposes of the Income-tax Act. Further, for the purposes of the said Act, it tre....
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....nor under any other previous company law. Already the Hon'ble Supreme Court in the case of Rustom Cavasjee Cooper v. Union of India (supra) as noted above, the Hon'ble Supreme Court had held that only undertaking was acquired for the banking companies acquisition and transfer of invoking ordinance which was promulgated on 19/06/1969, which culminated into the Act of Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. Thus, assessee cannot be treated as a company under the Companies Act, because it was never registered under the Companies Act. Ergo, the deeming fiction by way of Section 11 of the Acquisition Act has to be read purely in the context for the purpose of Income Tax Act where the corresponding new bank have been deemed to be an Indian Company and a company in which public are substantially interested. This deeming section cannot be extended to a company registered under the Companies Act to which alone Section 115JB is applicable. 56. Thus, we hold that Section 11 of the Acquisition Act which deals a corresponding new bank treated as Indian company for the purpose of Income Tax, however, Clause (b) in Sub-Section 2 to Section 115JB doe....
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....y such entity then TDS is not to be deducted. It is very relevant to note that at the time of Acquisition Act was enacted, Central Government had issued a Notification No. SO 710 dated 16/02/1970 [1970] [Reported in 75 ITR (Stat) 106] which reads as under:- Income-tax Act, 1961: Notification under sec. 194A(3) (iii) (f) Notification No. S. O. 710, dated February 16, 1970. (1) In pursuance of sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notify with effect from the 19th July, 1969, the following banks for the purposes of the said sub-clause:- 1. Indian Overseas Bank, 151, Mount Road, Madras- 2. Indian Bank, Indian Chamber Building, Madras-1. 3. Allahabad Bank, 14, India Exchange Place, Calcutta-1. 4. Dena Bank, Devkaran Nanjee Building. 17. Horniman Circle, Fort, Bombay-1. 5. Canara Bank, 112, Jayachamarajendra Road, Bangalore-1. 6. Union Bank of India, 66/80, Apollo Street, Fort, Bombay-1. 7. United Commercial Bank, 10, Brabourne Road, Calcutta-1. 8. Bank of Baroda, 3. Walchand Hirachand Marg, ....
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....see's own case in ITA No. 1818/Mum/2023. The relevant findings read as under: 36. Ground No.5 of the Revenue is with regard to the disallowance on payment made to RBI for not following the internal regulations laid down by the AO which the CIT(A) deleted during appellate proceedings. The AO noticed from the P&L A/c of the assessee that an amount of Rs. 8,43,401/- on account of penalty is debited. The AO disallowed the said amount for the reason that the assessee has not furnished any details pertaining to the same. The assessee submitted before the CIT(A) that the impugned amount is not an expenditure incurred for any purchase which is an offence or which is prohibited by law. The assessee further submitted that it was paid to RBI for deficiencies found in the working of currency chest on various parameters i.e. soiled and mutilated notes, cut notes, fake notes. The assessee also submitted that the charges for non-compliance of internal guidelines and not for violation of any law or offence. Accordingly, the assessee submitted before the CIT(A) that Explanation-1 to section 37(1) of the Act is not applicable for the impugned expenditure and hence should be allowed. The CIT....
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....)(b) of the Banking Regulation law does not stipulate any such criminal liability. We follow the aforestated case law in these facts and direct the assessing authority to allow the assessee's claim of Rs.5 lacs as revenue expenditure." In Mangal Keshav Securities Ltd. (supra), the assessee was engaged in the business of share/stock broking. It paid a sum of fine/penalty to stock exchange for non-maintenance of KYC forms etc. Said penalty was disallowed by the AO by invoking Explanation 1 to section 37. The Tribunal held that: "The assessee-company is engaged into stock broking activities and also in financial services which involves substantial compliance requirements with various regulatory authorities, e.g., BSE, NSE, CDSL, NSDL and SEBI, etc. In the regular course of the business of the assessee-company, certain procedural non-compliance are not unusual, for which the assessee is required to pay some fines or penalties. These routine fines or penalties are 'compensatory' in nature; they are not punitive. These fines are generally levied to ensure procedural compliances by the concerned persons. Only those payments, which have been made by the assess....
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....is and called on the assessee to furnish details and provide explanations. The assessee submitted before the AO that as per the provisions of section 43D of the Act in the case of Schedule Bank income by way of interest in relation to prescribed categories of bad or doubtful debts shall be chargeable to tax having regard the Guidelines issued by the RBI either in the year in which it is credited to the P&L A/c or in which actually received by the Bank whichever is earlier. The assessee relied on the decision of the Hon'ble Supreme Court in the case of Vasisthchay Vyapar Ltd. (253 taxaman 401) where it is held that even in case where the provisions of section 43B are not applicable interest on bad and doubtful debits have to be taxed only in accordance with RBI Guidelines. The AO did not accept the submissions of the assessee to hold that the when the assessee is maintaining books of account on accrual basis, not accounting for interest on NPA on the basis of RBI Guideline cannot be accepted. Accordingly, the AO brought to tax interest of Rs. 236,21,71,029/- to tax towards interest on NPA. The CIT(A) gave relief to the assessee by placing reliance on the decision of the Co-ordin....
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.... of such loans were credited to RFDI account and not to the profit and loss account. The assessee offered to tax the net amount credited to the RFDI account i.e. the interest accruals in the RFDI account net of recoveries. However, it was argued that such tax treatment leads to offering interest on nonaccrual loans to tax on accrual basis, even if the same is not credited to the profit and loss account. The Mumbai Tribunal held that where the AO has not contested that the policy adopted by the assessee is not in accordance with RBI guidelines, the incidence of taxation of interest on bad and doubtful debts will be either when the same is credited to the profit and loss account for the year or in the year in which it is actually received. Mere crediting of the interest to a reserve cannot be said to be an incidence by which the said interest could be charged to tax. The aforesaid decision has been affirmed by the Bombay High Court in the case of DIT vs. American Express Bank Ltd [2015] 235 Taxman 85 (Bombay). In the present case the assessee argued that there is no credit entry in the books of the account in respect of the interest on such NPAs and, accordingly, the addition made ca....
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....16. During the year under consideration, the assessee has paid Rs. 379,53,74,991/- as broken period interest on purchase of securities during the year and held as stock-intrade as on 31.03.2016. The assessee has treated the said amount as revenue and claimed deduction accordingly. The AO held that the broken period interest paid is nothing but part of the purchase price paid for the securities and therefore cannot be treated as revenue in nature. The AO therefore made an addition towards broken period interest. The CIT(A) deleted the disallowance by placing reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd. (2014) 49 taxmann.com 335 (Bom.). 17. The Id. DR submitted that the Hon'ble Rajasthan High Court in the case of CIT Vs. Bank of Rajasthan Ltd. (2009) 316 ITR 391 (Raj.) has held a contrary view which has been followed by the AO while making the disallowance. Accordingly, the ld. DR supported the order of the AO. 18. The Id. AR on the other hand submitted that the Hon'ble Bombay High Court in the case of HDFC Bank (supra) has distinguished the decision of the Hon'ble Rajasthan High Court and the decisi....
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.... in ITA No. 1819/Mum/2023. The relevant findings read as under: "21. The assessee has claimed amortized premium to the tune of Rs. 133,01,99,864/- on securities in Held To Maturity (HTM). The assessee submitted before the AO that as per the RBI Guidelines investments in HTM category should be carried at acquisition cost and in case the purchase price is higher than the face value, the premium should be amortized over the remaining period of maturity of the security. The assessee further submitted that the amortized premium thus claimed is to be allowed as a deduction. The AO however did not accept the submissions of the assessee stating that specific clauses in RBI Circular with regard to accounting treatment cannot be considered for Income tax purposes and accordingly disallowed the amortized premium claimed by the assessee as a deduction. 22. We heard the parties and perused the material on record. We notice that the Hon'ble Bomby High Court in the case of HDFC Bank Ltd. (supra) while considering the question of law as to "whether the ITAT is right in law in holding that the assessee is entitled for deduction with respect to the diminution in value of invest....