TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1436
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....sessment years 2013-14 to 2016-17. 2. Since all these appeals pertain to the same assessee raising similar issues arising out of a similar factual matrix, these appeals were heard together for the sake of convenience and are decided by way of this consolidated order. With the consent of the parties, the appeals for the assessment year 2013-14 are considered as a lead case, and the decision rendered therein shall apply mutatis mutandis to other appeals. ITA No. 3740/Mum./2018 Assessee's appeal - A.Y. 2013-14 3. In this appeal, the assessee has raised the following grounds: - "1A On the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income-Tax - 2(1)(2) ["ACIT) has erred in disallowing Rs. 7,77,69,000/- u/s. 14A of the Income-tax Act, 1961 ("the Act") read with Rule 8D(2)(ii) towards expenditure incurred in relation to income claimed exempt u/s. 10 without recording objective reasons for dissatisfaction with the claim of the Appellant Bank and the Hon'ble CIT(A) has erred in confirming the said disallowance. The learned ACIT be directed to delete the disallowance made u/s. 14A read with Rule 8D(2)(ii) of Rs. 7,77,69,000/- and re....
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....CIT(A) has erred in confirming the said disallowance. The Appellant Bank prays that the learned ACIT be directed to allow bad debts written off of Rs. 728,10,48,511 for computing true and correct Book Profit u/s. 115JB and reduce the Book Profit accordingly. 4. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in disallowing corresponding valuation loss arisen on shifting of securities in earlier Previous Years (which was not claimed in the year of shifting) in the year of sale or transfer in any manner of such securities. The learned ACIT be directed to decrease / increase the profits/(loss), respectively, on sale or transfer in any manner of securities which were shifted in earlier Previous Years by the amount of the corresponding loss on valuation of securities on shifting disallowed in the year of shifting and reduce the total income accordingly. 5. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in enhancing the value of securities shifted from AFS to HTM category and outstanding as on 31-Mar-2013 by Rs. 85,03,64,972 and consequently, reversing valuation loss on such HTM securities ....
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....ii) Ground no. 3B (ii) of original appeal renumbered to Ground no. 3B (iii) WITHOUT PREJUDICE TO GROUND NO. 3B ii) above: The learned ACIT has erred in disallowing the bad debts written off of Rs. 728,10,48,511 while computing book profit u/s. 115JB of the Act and the Hon'ble CIT(A) has erred in confirming the said disallowance. The Appellant Bank prays that the learned ACIT be directed to allow bad debts written off of Rs. 728,10,48,511 for computing true and correct book profit u/s. 115JB and reduce the book profit accordingly." 5. Ground No. 1A raised in assessee's appeal pertains to the disallowance made under section 14A read with Rule 8D of the Income-tax Rules, 1962 ("the Rules"). 6. The brief facts of the case pertaining to this issue are that during the year under consideration, the assessee filed its return of income on 28/11/2013, declaring a total income of INR 1147,98,89,311. Subsequently, the assessee filed a revised return of income on 12/03/2015, declaring a total income of INR 1254,53,15,313. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the as....
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....ed CIT(A), vide impugned order, deleted the addition made under Rule 8D(2)(ii) of the Rules by placing reliance upon the decision of the Hon'ble jurisdictional High Court in CIT v/s HDFC Bank Ltd., reported in [2016] 67 taxmann.com 42 (Bombay HC). However, the disallowance made under Rule 8D(2)(iii) of the Rules was upheld by the learned CIT(A). Being aggrieved, the assessee is in appeal before us. 9. Having considered the submissions of both sides and perused the material available on record, we find that the coordinate bench of the Tribunal while deciding a similar issue in assessee's own case in Central Bank of India v/s AO, in ITA No. 235/Mum/2023, for the assessment it 2019-20, vide order dated 25/08/2023, observed as follows: - "8. We have considered the submissions of both sides and perused the material available on record. The dispute raised by the assessee is limited to disallowance of expenditure under section 14A read with Rule 8D in respect of income exempted under section 10 of the Act. As per the assessee, the securities are held by it in the ordinary course of its business and the profits and gains on sale/transfer of such securities are offered to tax while compu....
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....4A of the Act read with Rule 8D of the Rules in respect of shares held in stock has been discussed and adjudicated in favour of the Assessee therein. 18. Learned counsel for Appellant has submitted that the facts of the assessee in the case of Nice Bombay Transport (P.) Ltd. (supra) are distinct from the case at hand, however, no submissions have been made with respect to the said 'distinguishing facts'. On the contrary, it is noted that the Supreme Court has held in the case of Maxopp Investment Ltd. v. CIT [2018] 91 taxmann.com 154/254 Taxman 325/402 ITR 640 that in cases where the main purpose for investing in shares was to hold the same as stock-in-trade, the expenditure incurred by the Respondent shall be permissible to be deducted from its gross income. The relevant paragraph of the judgment of the Supreme Court reads as under : "...40 It is to be kept in mind that in those cases where shares are held as "stock-in-trade", it becomes a business activity of the assessee to deal in those shares as a business proposition. Whether dividend is earned or not becomes immaterial. In fact, it would be a quirk of fate that when the investee-company declared dividend, those s....
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....Revenue could not show us any reason to deviate from the aforesaid decision. We also find that similar findings were rendered by the coordinate bench of the Tribunal in assessee's own case in Central Bank of India v/s DCIT, ITA No. 3739/Mum./2018, vide order dated 29/01/2020. Therefore, respectfully following the decision of the Hon'ble Delhi High Court cited supra, we direct the AO to delete the disallowance made under section 14A read with Rule 8D. Since the relief is granted to the assessee on the aforesaid limited aspect, the other aspects raised by the assessee in ground no.1, are rendered academic and therefore are left open. Ground no. 1 raised in assessee's appeal is decided accordingly." 10. Thus, respectfully following the aforesaid decision, the disallowance made under section 14A read with Rule 8D of the Rules is deleted. As a result, Ground no. 1A raised in assessee's appeal is allowed. 11. In view of our findings rendered in respect of Ground no.1A, Ground no.1B raised in assessee's appeal is rendered academic, and therefore, is kept open. 12. Grounds no.2A and 2B, raised in assessee's appeal, pertain to the disallowance of provision for wage revision. 13. The bri....
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....ing 2013. As per the assessee, after prolonged discussion, the wage revision was settled by signing the agreement on 25/05/2015, a copy of which forms part of the paper book- IV from pages 45-103. During the hearing, the learned AR also placed reliance upon the decisions of the coordinate bench of the Tribunal in the case of other nationalised banks, wherein a similar provision for wage revision was allowed as a deduction by the coordinate benches of the Tribunal. 16. We find that the Memorandum of Settlement dated 25/05/2015 for wage revision entered into between the Indian Banks Association, on behalf of the member Banks, and the Union of Workmen/officers also agreed for wage revision at the rate of 15% of the salary slip component. Undisputedly, in the present case, the aforesaid Memorandum of Settlement was not examined by any of the lower authorities, and the same is fresh evidence. Accordingly, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo consideration, as per law, after examining the Memorandum of Settlement entered into between the Indian Banks Association, on behalf of the member Banks, and the Union of Workmen/officers. As....
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....corresponding loss on valuation of securities disallowed in the year of shifting and reduce the total income accordingly. As per the assessee, during the earlier previous years, i.e., from 2004-05 to 2009-10, the provision for loss on valuation of securities while shifting from AFS to HTM category aggregating to INR 1144,54,88,301 was disallowed. As per the assessee, such shifted HTM securities stand in the books of accounts net of the corresponding provision for loss on valuation of securities arising on shifting from AFS to ATM category as per the RBI instructions. Accordingly, if such loss on valuation of securities while shifting from AFS to HTM category is not allowed in the year of shifting itself then for income tax purposes, this would lead to inadvertently higher profits or lower losses being offered/claimed to the extent of such loss on valuation on sale or maturity or redemption or transfer in any manner of such shifted HTM securities. Therefore, the assessee claimed that in order to compute the true and real income of the assessee, the corresponding loss on valuation of such securities provided by the Bank while shifting the same from AFS to HTM, which was disallowed in....
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.... Id. CIT(A), the assessee is in appeal before us vide ground No.3. We find that as per the RBI Circular dated 01/07/2011, shifting loss incurred at the time of shifting of securities from AFS to HTM category should be debited to profit and loss account as a regular expenditure. We find that the Id. CIT(A) while allowing the additional ground of the assessee had categorically agreed that the assessee had incurred valuation loss / shifting loss to have been incurred pursuant to due compliance of RBI Circular dated 01/07/2011. While that be so, how the assessee could have violated the very same RBI Circular when it comes to enhancement of Rs. 3,43,236/- by way of reversal of shifting loss. Hence, it could be safely concluded that the Id. CIT(A) had taken a contradictory stand in his order with regard to compliance with RBI Circular. 6.3. We find that in the instant case, the depreciation of investments at the time of shifting from AFS to HTM category had been debited by the assessee as an expenditure in consonance with RBI Circular dated 01/07/2011 referred to supra. The said shifting loss is squarely allowable as deduction. But the assessee had provided the revised workings of the ....
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....s as on 31/03/2012 in the prescribed format given by the ld. CIT(A) and the said details were furnished on without prejudice basis. While this is so, it would be wrong on the part of the Id. CIT(A) to conclude that assessee had filed revised valuation of losses on account of securities and observed that a sum of Rs. 3,43,236/- requires to be reversed thereon. So based on this working, the Id. CIT(A) had resorted to enhancement of Rs. 3,43,236/- on the valuation difference of securities by holding that the said valuation was not done in accordance with RBI guidelines. 5.1 Against this enhancement, the assessee was in appeal before us vide ground No.3. We find that this Tribunal in paragraph 6.2 and 6.3 of its order had categorically held that assessee had fully complied with RBI Circular dated 01/07/2011 with regard to valuation of securities at the time of shifting of securities from AFS to HTM category and this Tribunal had also held that the shifting loss incurred would be squarely allowable as deduction to the tune of Rs. 159,74,79,854/-. Having done so, the enhancement made by the Id. CIT(A) to the tune of Rs. 3,43,236/- should have been deleted by this Tribunal which was not....
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.... that shifting loss is an allowable deduction, we restore the issue of quantification of such loss to the file of the jurisdictional AO for necessary examination. Needless to mention, no order shall be passed without affording the reasonable and adequate opportunity of hearing to the assessee. As a result, Ground no. 4 is allowed for statistical purposes, while Ground no. 5 raised in assessee's appeal is allowed. 27. Ground no.6 raised in assessee's appeal pertains to the levy of penalty under section 271(1)(c) of the Act, which is premature in nature. Therefore, this ground is dismissed. 28. In the result, the appeal by the assessee for the assessment year 2013- 14 is partly allowed for statistical purposes. ITA No. 3674/Mum./2018 Revenue's appeal - A.Y. 2013-14 29. In this appeal, the Revenue has raised the following grounds: - "On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in accepting the plea of the assessee that two separate provisions for rural and non r....
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....onrural advances amounting to INR 676,66,66,143. The bad debts pertaining to rural advances were not claimed as deduction by the assessee as the same did not exceed the opening credit balance in the provision for bad and doubtful debts account maintained under section 36(1)(viia) of the Act. However, the assessee claimed the entire bad debts written off pertaining to non-rural advances amounting to INR 676,66,66,143 as a deduction under section 36(1)(vii) of the Act in its return of income. In this regard, the assessee placed reliance upon the decision of the Hon'ble Supreme Court in Catholic Syrian Bank Ltd v/s CIT, reported in [2012] 343 ITR 270 (SC). The AO, vide order passed under section 143(3) of the Act, disagreed with the submissions of the assessee and held that there are no bifurcations of provision for rural and non-rural doubtful debts conceived by the legislature separately and distinct from each other. The AO further held that the assessee has not made any provisions on the lines of rural and non-rural branches goes on to show that the provisions as per the books have to be compared with the provisions as per section 36(1)(viia) of the Act as a single unit and not by ....
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....ognising the interest accrued but not due is adopted by the assessee consistently. It was further submitted that interest on securities does not accrue from day to day but only on fixed days (coupon dates) and the interest though accrued and becomes due on such fixed days can only be taxed under the provisions of the Act. 37. The AO, vide order passed under section 143(3) of the Act, disagreed with the submissions of the assessee and held that the assessee follow the mercantile system of accounting under which all interest which has accrued should be included as income. The AO noted that the assessee itself in its books of accounts treated all accrued interest as income. The AO held that the income accrues as and when the assessee acquires the right to receive such income. Thus, in the case of government securities, although interest becomes due for payment only at 6-monthly intervals, such interest certainly accrues from day to day. Similarly, when the assessee purchased certain securities, it paid not only the cost of securities, but also the interest which has accrued on a day-to-day basis from the last date of payment of interest to the date of purchase. Accordingly, the AO ad....
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....sult, Grounds no.4 and 5, raised in Revenue's appeal, are dismissed. 42. Ground no.6, raised in Revenue's appeal, pertains to the deletion of the addition made to the book profits on account of the disallowance made under section 14A read with Rule 8D of the Rules. In view of our findings rendered in Ground no.3A raised in assessee's appeal, the issue raised in this ground is rendered infructuous. Therefore, Ground no.6 is dismissed. 43. Ground no.7, raised in Revenue's appeal, pertains to the allowability of the deduction of the shifting loss. 44. Having considered the submissions of both sides and perused the material available on record, we find that the Hon'ble jurisdictional High Court in Commissioner of Income-tax-2, Mumbai vs. HDFC Bank Ltd., reported in [2014] 368 ITR 377 (Bombay), held that loss incurred on account of transfer of securities held under category AFS to HTM was to be allowed as business loss. As the learned CIT(A), while deciding this issue in favour of the assessee, followed the aforesaid decision of the Hon'ble High Court, therefore, we do not find any infirmity in the findings of the learned CIT(A), and therefore, the same are upheld. Accordingly, Groun....
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....sment year 2013-14, we have already deleted the enhancement made by the learned CIT(A) in the value of assessee's investments in HTM securities following the directions of the coordinate bench of the Tribunal rendered in assessee's own case for the assessment year 2012-13, therefore, we do not find any basis in upholding the penalty levied under section 271(1)(c) of the Act on this issue. Accordingly, the same is quashed. As a result, grounds raised by the assessee in its appeal are allowed. 50. In the result, the appeal by the assessee, being ITA No. 5346/Mum/2018, is allowed. ITA No. 5664/Mum./2017 Assessee's appeal - A.Y. 2014-15 51. The first issue that arises for consideration, in the present appeal, pertains to the disallowance made under section 14A read with Rule 8D of the Rules. Since a similar issue has already been decided in the assessee's appeal for the assessment year 2013-14, accordingly, our findings/conclusions as rendered therein shall apply mutatis mutandis. As a result, the disallowance made under section 14A read with Rule 8D of the Rules is deleted, and Ground no.1A, raised in the assessee's appeal, is allowed. In view of our findings rendered in respect....
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....B of the Act to the assessee's case, the issue raised in this ground is rendered infructuous. Therefore, Ground no.5 is dismissed. 58. In the result, the appeal by the Revenue for the assessment year 2014- 15 is partly allowed for statistical purposes. ITA No. 1761/Mum./2022 Assessee's appeal - A.Y. 2014-15 59. In this appeal, the assessee has raised the following grounds: - "1. On the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income Tax (Hereinafter referred to as "ACIT") has erred in passing rectification order u/s. 154 of the Income-tax Act, 1961 ("the Act") for legal and debatable issues for which two views are possible. The Hon'ble CIT(A) has erred in confirming the same. The Appellant Bank prays that the rectification order u/s. 154 dated 12-3-2020 is bad in law and the same be quashed. 2. Without prejudice to Ground No. 1 mentioned above, assuming without accepting that Your Honors is of the view that the rectification order passed u/s. 154 dated 12-3-2020 is valid, then on the facts and in the circumstances of the case and in law, the learned ACIT has erred in invoking the provisions of Section 115JB of the Ac....
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....the Act by disallowing provision for investment depreciation and provision for depreciation on transfer of securities. Disagreeing with the submissions of the assessee, the AO vide order dated 12/03/2020 passed under section 154 of the Act recomputed the book profit under section 115-JB of the Act. As following the decision of the Special Bench of the Tribunal in Union Bank of India (supra), we have come to the conclusion that the provisions of section 115-JB of the Act are not applicable to the case of the assessee, therefore, the order passed under section 154 of the Act recomputing the book profit under section 115-JB of the Act is quashed. As a result, the grounds raised by the assessee are allowed. 61. In the result, the assessee's appeal, being ITA No. 1761/Mum/2022, for the assessment year 2014-15 is allowed. ITA No. 1078/Mum./2018 Assessee's appeal - A.Y. 2015-16 62. The first issue that arises for consideration, in the present appeal, pertains to the disallowance made under section 14A read with Rule 8D of the Rules. Since a similar issue has already been decided in the assessee's appeal for the assessment year 2013-14, accordingly, our findings/conclusions as render....
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.... that arises for consideration pertains to the deletion of disallowance made under section 14A read with Rule 8D while computing the book profit. In view of our findings rendered in respect of the applicability of the provisions of section 115-JB of the Act to the assessee's case, the issue raised in this ground is rendered infructuous. Therefore, Ground no.5 is dismissed. 69. The last issue that arises for consideration pertains to the deletion of the disallowance of interest accrued but not due. Since a similar issue has already been decided in the Revenue's appeal for the assessment year 2013- 14, accordingly, our findings/conclusions as rendered therein shall apply mutatis mutandis. Accordingly, Ground no. 6, raised in Revenue's appeal, is dismissed. 70. In the result, the appeal by the Revenue for the assessment year 2015- 16 is partly allowed for statistical purposes. ITA No. 1054/Mum./2020 Assessee's appeal - A.Y. 2016-17 71. The first issue that arises for consideration, in the present appeal, pertains to the disallowance made under section 14A read with Rule 8D of the Rules. Since a similar issue has already been decided in the assessee's appeal for the assessment y....