AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 298
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act") read with Rule 8D of the Income-tax Rules, 1962 ("the Rules") towards expenditure incurred in relation to income claimed exempt u/s. 10 of the Act and the Hon'ble CIT(A) has erred in confirming the said disallowance up to Rs. 10,87,05,359/- u/s. 14A read with Rule 8D(iii). The Appellant Bank prays that the learned ACIT be directed not to make disallowance u/s. 14A read with Rule 8D of Rs. 10,87,05,359/- towards expenditure incurred in relation to income claimed exempt u/s. 10 of the Act and reduce the total income under normal provisions of the Act accordingly. (B) Without prejudice to Ground 1(A) above, assuming your Honours is of the view that the contention of the Appellant Bank is not acceptable, on the facts and in circumstances of the case and in law, the learned ACIT be directed to restrict the disallowance u/s. 14A in respect of expenses (other than interest) Treasury Division of the Bank to Rs. 24,88,588/- (being proportionate expenses suo-moto disallowed in the return of income) and reduce the total income accordingly. 2. (A) On the facts and in the circumstances of the case and in law, the learned ACIT has erred in not allowing exclusion of p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n when the Hon'ble ITAT has only remitted the matter back to the AO for de-novo adjudication for deciding the issue of non-applicability of MAT to the Bank. (C) Without prejudice to Ground 3(A) and 3(B), on the facts and in the circumstances of the case and in law the learned ACIT has erred in not allowing exclusion of profits of foreign branches of Rs. 397,69,91,788 while computing book profit u/s. 115JB and the Hon'ble CIT(A) has erred in confirming the same without appreciating that the provisions of Section 90 override the provisions of Section 115JB of the Act. The Appellant Bank prays that the learned ACIT be directed to exclude profits of foreign branches of the Appellant Bank of Rs. 397,69,91,788 while computing 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 learned ACIT has erred in computing the amount of deduction u/s. 36(1)(viia) by considering 7.5% of "total income" after setting off of brought forward losses of earlier years and the Hon'ble CIT(A) has erred in confirming the same. The learned ACIT be directed to consider the "total income" before setting ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w and on facts and deserves to be set aside. 3. We first take up appeal by the assessee in ITA No.1397/Mum/2025 and deal with the grounds seriatim. I. Ground No.1(A) and (B) - Disallowance u/s. 14A r.w.r. 8D(2)(iii) 4. During the year under consideration, assessee has claimed the following income as exempt in its return of income: (a) Interest exempt Rs. 1,13,91,370/- (b) Dividend from companies Rs. 31,62,12,487/- Total Rs. 32,76,03,857/- 4.1. In the original assessment made u/s 143(3) on 27.03.2015, ld. Assessing Officer applied Rule 8D to determine the expenses attributed to exempt income u/s 14A at Rs. 1,32,98,41,522/- (Rs. 1,21,86,47,635/- under Rule 8D(@)(i) + Rs. 11,11,93,887/- under Rule 8D(2)(iii). As the assessee had made Suo Moto disallowance of Rs. 24,88,528/-, the balance amount of Rs. 1,32,73,52,994/- was further disallowed u/s 14A r.w. Rule 8D and added to the total income of the assessee. 4.2. In the reassessment made u/s 143(3) r.w.s 254 of the Act dated on 31.12.2019, ld. Assessing Officer mentioned that assessee had disallowed Suo Moto expenses of Rs. 24,88,528/- u/s 14A, meaning thereby that assessee had incurred s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... intention applied by the Punjab and Haryana High Court, which we have already discarded. In that event, the question is as to an what basis those cases are to be decided where the shores of other companies are purchased by the assessees as Stock-in-trade and not as investment. We proceed to discuss this aspect hereinafter 39. in those cases, where shares are held as stock-in-trade, the main purpose is to trade in those shares and earn profits therefrom. However, we are not concerned with those profits which would naturally be treated as 'income' under the head profits and gains from business and profession. What happens is that, in the process, when the shares are held as 'stock-in-trade', certain dividend is also earned, though incidentally, which is also an income. However, by virtue of Section 10(34) of the Act, this dividend income is not to be included in the total income and is exempt from tax This triggers the applicability of Section 14A of the Act which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Wolfort Shore & Stock Brokers (P.) Ltd. case. Therefore, to that extent, depending upon the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the judgment rendered in the case of Maxopp Investment Ltd. vs. CIT(supra) has upheld the decision of Tribunal in deleting disallowance made u/s. 14A of the Act in respect of exempt income earned on shares held as stock-in-trade. Similar view has been expressed by Hon'ble Delhi High Court in the case of PCIT vs. Punjab National Bank, 140 taxman.com 131 following the judgment rendered in the case of Maxopp Investment Ltd. vs. CIT(supra). The relevant extract of the judgment reads as under: "19. The Supreme Court in this judgment upheld the decision of the High Court of Punjab and Haryana arising under section 14A of the Act with respect to an assessee bank. It further held that when the shares were held as stock-in- trade and not as investment particularly by banks, the main purpose was to trade in those shares and earn profits there from and therefore section 14A of the Act was not attracted and the expenditure could not be disallowed. The judgment of MМахорр Investment Ltd. (supra) has been duly noted by the Tribunal in its impugned order and in our opinion the Tribunal has correctly disallowed the disallowance under rule 8D(2)(i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s claimed as exempt income by applying the formula contained in rule 8D of the Rules and holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. 50. 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 shares are held by the assessee, though the assessee has to ultimately trade those shares by selling them to earn profits. The situation here is, therefore, different from the case like Maxopp Investment Ltd. where the assessee would continue to hold those shares as it wants to r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the decision of the Coordinate Bench in assessee's own case and there being no material change in the facts and the law, ground no. 1(A) raised by the assessee is allowed. Without prejudice ground raised in 1(B) has become infructuous in view of our finding on ground no. 1(A) and the same is accordingly dismissed. II. Ground No.2(A) - Exclusion of income of foreign branches 6. In the original assessment made u/s 143(3) on 27.03.2015, ld. Assessing Officer disallowed the claim of exclusion of profit of Rs. 972.39 Crores in respect of income of Foreign Branches. In the appeal before ld. CIT(A), in the order dated 23.02.2017 for the year under consideration, ld. CIT(A) confirmed this disallowance following its own order in Assessment Year 2012-13. 6.1. We note that similar issue was dealt by the Co-ordinate Bench of ITAT, Mumbai in assessee's own case in ITA No.929/Mum/2023 (supra). The relevant extracts from the same are reproduced below for ready reference: "10. In ground No.2 of appeal, the assessee has assailed the findings of the CIT(A) in disallowing exclusion of profits of overseas branches. During the period relevant to the assessment year under appeal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 28th August 2008 was not issued in the context of the business income, and, should accordingly not be applicable so far as business income earned abroad, as in this case, is concerned. We see no substance in this plea either. The notification deals with connotations of the expression "may be taxed", appearing in the tax treaties entered into by India, and there is absolutely no basis whatsoever to support the proposition that the effect of the notification has to be restricted in its application to non-business income only. No such differentiation in treatment of business and non-business income is envisaged in the said notification, nor to do we see any justification for inferring the same. Learned counsel does not have any material whatsoever in support of the proposition canvassed by him, nor does this proposition make any sense on the first principles- inasmuch as once the notification is issued without any such specific restriction for application to business income, we cannot infer a restriction in its application. We, therefore, reject the plea of the assessee, and thus decline to interfere in the matter. We uphold the action of the Assessing Officer in including the profit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....countries only to be taxed 8. In ground No.2(A), assessee had taken the ground of exclusion of income of foreign branches with whom India has DTAA. This issue has already been decided against the assessee in ground no. 2(A) taken by the assessee. Accordingly, this ground of appeal is dismissed. Similar issue was dealt by the Coordinate Bench of ITAT, Mumbai in the case of Bank of Baroda for AY 2014-15 in ITA No.1222/Mum/2018, dated 22.05.2019, the relevant extracts are furnished below for ready reference: "18. Another common issue raised relates to foreign income to be taxed in India. 19. On this issue learned Counsel of the assessee fairly conceded that this issue has been decided against the assessee by the ITAT in assessee's own case for A.Y. 2011-12 in ITA no. 4355/Mum/2016 vide para 3 to 5 of the said order. 20. Upon careful consideration we find that ITAT in assessee's own case has decided the issue in favour of the Revenue as under :- 4. We have considered the submission of Id. representative of the parties and perused the order of authorities below. The Assessing Officer while relying upon the Notification No. S 2123(e) dated 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 by him. A reading of the notification canvassed by the Ld. Counsel by the assessee also does not help the case of assessee. The notification also does not support the direction of Ld. CIT-A. The doctrine of stare decisis mandates that we follow the coordinate bench decision as above and hold that the income of the branches of assessee situated abroad shall also be taxable in India and whatever tax have been paid by the branches in the foreign country, credit of such taxed shall be given. Accordingly, we allow the ground raised by the revenue. 5. Considering the decision of co-ordinate bench in assessee's own case, the ground of appeal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd of foreign tax paid which is not permitted. 10.1. Against this effect giving order, assessee went before the ld. CIT(A) who confirmed the order of ld. Assessing Officer. Ld. CIT(A) observed that there is no provision in the Act to carry forward the relief for credit of taxes paid in the foreign countries, if there is net loss in the year AY 2012-13, as relief of these taxes could not be claimed in that year, i.e. year of payment. The view taken by the authorities below is that in a situation, where the credit of taxes paid in foreign countries is more that the total tax liability in the year under consideration, there is no provision to refund the excess credit relief claimed and there is no carry forward of this excess credit in the Act. Once there is no provision of refund or carry forward of such excess tax credit paid in foreign countries, the same cannot be allowed to be adjusted in the subsequent year. 10.2. On further appeal by the assessee against the order of ld. CIT(A), Coordinate Bench of the Tribunal in its order in ITA No. 869/Mum/2018, dated 04.03.2021 held that the issue of claiming credit will arise only in the year in which the reduced loss for AY 2012- 13....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, could have been Rs 150 crores. That's the year in which the so-called double jeopardy will hit the assessee. In case the assessee is not to make any profits during the period eligible for set off, there cannot be any double jeopardy. Therefore, the so called double jeopardy, as in the present year, is nothing more than a mere possibility, in the realm of a contingent event. The taxation reliefs cannot be on the basis of possibilities. The second point is that one has to see the legal position in the year in which the double jeopardy actually hits the assessee. Rule 128 of the Income Tax Rules 1962, introduced with effect from 1st April 2017, specifically restricts the foreign tax credit "in the manner and to the extent as specified" therein [See rule 128(1)], and, therefore, so far as the assessment years 2017-18 onward are concerned, a taxpayer cannot even claim carry forward of the excess tax credits. It is well settled in law, and as provided in the relevant treaty article itself, foreign tax credits are admissible subject to the domestic law provisions inasmuch as these credits are "subject to the provisions of the law regarding the allowance as a credit against Indian ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d or not, may cease to be inadmissible for the short reason of this deduction having been allowed alone. It could be so for the reason that there may be no double disadvantage in that case. However, we need not deal with that aspect of the matter at this stage." [emphasis supplied by us by bold and underline] 10.3. From the above extraction of the decision of Coordinate Bench in assessee's own case for AY 2012-13, following emerges: i) Possibility in the realm of contingent event expressed has now turned into reality in the year under consideration before us, i.e. in AY 2013-14 ii) Arousal of double disadvantage in the year under consideration which is a period prior to 01.04.2017 i.e., prior to introduction of Rule 128 which provides for method of computing FTC iii) Mitigation of double jeopardy/disadvantage in the light of Article 23/24 of the relevant treaties (DTAAs) when the tax payer has been subjected to higher tax burden on account of reduced eligible set off of losses carried forward 10.4. Thus, what was left open by the Coordinate Bench in the aforesaid order, now needs to be dealt with since present AY 2013-14 before us is the ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1,41,12,295 39,51,442 9 China 6,13,97,260 1,53,49,315 [A] Total FTC eligible u/s 90 9,72,39,02,562 2,65,05,91,971 5 Japan (state taxes) --- 2,03,55,387 10 Cambodia 73,74,064 14,74,813 11 Hong Kong 1,55,85,47,887 25,71,60,401 12 Jersey 49,91,86,358 4,99,18,636 [B] Total FTC eligible u/s 91 2,06,51,08,309 32,89,09,237 Grand Total FTC 11,78,90,10,871 2,97,95,01,208 Table 2: Sr. No. Tax jurisdiction concerned Income as per tax laws of the respective jurisdiction Taxes paid in the Respective tax jurisdiction 1 United Kingdom 164,83,03,346 42,85,58,870 2 Singapore 148,75,29,708 24,27,31,477 3 USA 134,29,98,097 43,57,35,733 4 Japan 115,31,72,581 34,59,51,694 5 Belgium 29,27,12,456 9,49,70,556 6 Kenya 27,25,92,653 8,84,42,686 7 China 11,38,14,129 1,00,64,665 9 France 4,07,81,841 1,32,31,668 10 Dividend Income-Zambia and Tanzania 8,46,61,252 87,54,656 11 Hongkong 142,33,31,811 9,53,86,270 12 Jersey 57,96,82,547 6,23,49,551 13 P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....disallow carry-forward, the FTC framework is silent in this regard. Accordingly, treaty-based interpretation and recognition under the available jurisprudence is looked into to resolve the present issue wherein more pertinent question involved is in respect of timing mismatch for the FTC paid and its claim as a credit by the assessee. 11.4. In this regard, Hon'ble Supreme Court in the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC) expressly observed that equitable considerations are irrelevant in interpreting tax laws but those laws like all other laws have to be interpreted reasonably and in consonance with justice. Also, Hon'ble Supreme Court in Vodafone International Holdings B.V. v. Union of India [2012] 341 ITR 1 (SC) emphasized that taxing statutes must be interpreted strictly and that legislative silence cannot be construed as a prohibition unless expressly stated. 11.5. Further, Hon'ble jurisdictional High Court of Bombay in the case of CIT v. Petroleum India International [2013] 29 taxmann.com 250 (Bom) had before it, one of the substantial questions of law (SQL) relating to timing mismatch which reads as under: "Whether on true and proper....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... credit against Indian tax of tax paid in a territory outside India (which shall not affect the general principle hereof), the amount of the United Kingdom tax paid, under the laws of the United Kingdom and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of income from sources within the United Kingdom which has been subjected to tax both in India and the United Kingdom shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. For the purposes of the credit referred to in the above paragraph (2), where the resident of India is a company, by which surtax is payable, the credit to be allowed against Indian tax shall be allowed in the first instance against the income-tax payable by the company in India and, as to the balance, if any, against the surtax payable by it in India." [emphasis supplied by us by bold and underline] 12.1. The following principles can be discerned from the above stated Article 24(2) for allowing foreign tax c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his scenario, the same item of income is taxed twice and that the timing distortion should not impede the application of the credit method. Consequently, a tax credit carry-forward should be granted, even if national law does not explicitly provide for such a carry-forward." 12.4. Even though India is not a party to the Vienna Convention of the Law of Treaties (VCLT), 1969, we take useful guidance from it as it contains many principles of customary international law. Principle of interpretation in Article 31 of the Vienna Convention provides a broad guideline as to what could be an appropriate manner of interpreting a treaty in the Indian context also. 'Principle of Good Faith' as enunciated in Article 26 of VCLT, 'Pacta sunt servanda' states that every treaty in force is binding upon the parties to it and must be performed by them in good faith. Further, Article 31, "General Rule of Interpretation", of the VCLT provides that a "treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose." 13. In this regard, it is imperative to refer to UN Model Convention....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te of source. The State of residence must therefore provide relief of double taxation through the credit or exemption method with respect to such item of income or capital even though State of source taxes it in an earlier or later year" 13.1.2. Article 23B of OECD Model Convention reads as follows: "1. Where a resident of a Contracting State derives income or owns capital which may be taxed in the other Contracting State in accordance with the provisions of this Convention (except to the extent that these provisions allow taxation by that other State solely because the income is also income derived by a resident of that State or because the capital is also capital owned by a resident of that State), the first-mentioned State shall allow: a) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other State; b) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in that other State. Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the VCLT even though India is not a party to the same, as under: "60. Article 31, "General Rule of Interpretation", of the Vienna Convention of the Law of Treaties, 1969 provides that a "treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose." While India is not a party to the Vienna Convention, it contains many principles of customary international law, and the principle of interpretation, of Article 31 of the Vienna Convention, provides a broad guideline as to what could be an appropriate manner of interpreting a treaty in the Indian context also." 14.2. We thus, note that Hon'ble Supreme Court has, in the cases of Azadi Bachao Andolan (supra) and Ram Jethmalani (supra) referred to the principles set out in Vienna Conventions on Law of Treaties (VCLT) which, inter alia, refer to the interpretation of the tax treaties "in good faith in accordance with the ordinary meaning given to the terms of the treaty in their context and in the light of its object and purpose". Similar reference has been made to OECD Commentary in support of the reasoni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll loss arose in AY 2012-13. Foreign income is taxed only in the source State i.e. UK and, therefore, only taxed once. Though foreign income is attributable to this taxable period, but, due to the overall loss, it was not possible to avail credit for foreign tax in AY 2012-13. As the credit method does not have any effect on the tax base in the residence state i.e. India, foreign profits reduced the overall domestic loss carry-forward, although no credit was given in respect of foreign tax paid. There are overall profits in the residence state i.e. India in the second year i.e. AY 2013-14, which are subject to tax in India. Consequently, the reduced overall loss carry-forward resulted in a temporary deferral of the tax base into the future. The foreign positive income of AY 2012-13 gave rise to an increase in the tax in India in AY 2013-14. But for the profit of foreign branches during AY 2012-13, the losses to be set off in AY 2013-14 would have been higher by Rs. 1035.94 crores. 16.2. In other words, double taxation did not arise in AY 2012-13 i.e. in the tax period in which foreign income is received, but, rather, in AY 2013-14 i.e. the tax period in which the (reduced) loss ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has already been subjected to tax in AY 2012-13. However, due to set off of global loss (i.e. overall domestic loss as reduced by foreign source income) during AY 2013-14, the said income is considered to be doubly taxed in current assessment year, on similar lines as that of income from treaty-partner jurisdictions, dealt by us in above paragraphs. 18. In conclusion, assessee is eligible to claim FTC in respect of both, treaty and non-treaty partner jurisdictions towards taxes paid in AY 2012-13 for which corresponding foreign sourced income got subjected to tax in India in the present AY 203-14 when set off of reduced brought forward loss was made which had resulted in higher tax burden in the hands of the assessee. Since FTC cannot exceed the domestic tax liability as deliberated above in detail, ld. Assessing Officer is directed to verify and ascertain the correct quantum of domestic tax incidence on the foreign sourced income against which FTC is claimed and accordingly, give credit for the same. This issue is therefore, remitted back to the file of ld. Jurisdictional Assessing Officer (JAO) for limited purpose of verification and ascertainment as directed herein above. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 3(C) - Exclusion of income of foreign branches in computing book profits 22. Assessee has raised grounds that the profit of foreign branches amounting to Rs. 397,69,91,788/- should be excluded while computing profits u/s 115JB. The issue decided in ground no. 2(A) for computation of net profits under normal provisions of the Act, wherein it had been held that the profits of foreign branches are not to be excluded and they are part of the total profits of the assessee. Also, in ground no. 3(A), it is held that provisions of section 115JB are not applicable to the case of assessee. Accordingly, ground no. 3(B) and 3(C) of appeal are rendered academic in nature and therefore, not adjudicated upon. VII. Ground No. 4 - Deduction u/s. 36(1)(viia) before set off of brought forward losses 23. Ld. Assessing Officer adjusted the brought forward business losses from the net profit of the year under consideration and allowed deduction u/s 36(1)(viia) after set-off of these b/f losses. Aggrieved, assessee went in appeal before the ld. CIT(A). Ld. CIT(A) referred to section 36(1)(viia) as extracted below: "..... (viia) in respect of any provision for bad and doubtf....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., allowed the appeal in part and answered the substantial question of law No. 2 against the revenue and in favour of the appellant- assessee. 3. It is now well settled that the deduction towards bad and doubtful debts at 7.5% shall be made after setting off the brought forward loss, to arrive at the total income. Therefore, the finding recorded by this Court on substantial question of law No. 2 is an error apparent on the face of the record and therefore, deserves to be reviewed. Hence, the substantial question of law No. 2 in I.T.A. No. 783/2018 is answered as follows:- "The Tribunal was justified in holding that the deduction at the rate of 7.5% of the total income should be computed after setting off the brought forward loss." 4. Hence, the following ORDER The review petition is allowed. Consequently, the judgment dated 18-6-2021 passed by this Court in I.T.A.No.783/2018 is modified and the substantial question of law No. 2 framed therein and extracted above, is answered in favour of the Revenue and against the assessee. Consequently, I.T.A. No. 783/2018 is dismissed." [emphasis supplied by us by bold] 23.2. In view of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Moreover, as per Sec. 2(45) of the Income Tax Act, 1961 the income of the assessee is to be computed as per the manner prescribed in this Act. The purpose of total income u/s.36(1)(viia) of the Income Tax Act, 1961 is for computing the deduction for computation of business income as per the provisions of Sec 28 to 43D of the Income Tax Act, 1961. Therefore, the term total income referred in Clause (viia) of Sub-section 1 of Sec. 36 of the Income Tax Act, 1961 is used for the purpose of statutory deduction available for business income". and finally at para-10 on page-9 the Tribunal held as under: "We are of the view that while computing the statutory deduction under Clause (viiia)of Sub-section 1 of Section 36 of the Income Tax Act, 1961, the total income would be the business income of the assessee before deducting the deduction under this Clause and deductions under Chapter 6A of the Income Tax Act, 1961. Therefore the brought forward losses would not be deducted while computing the total income for the purpose of Sec. 36(1)(vita). Since, the deduction is available only for computing the business income under this Clause, therefore the total income also refers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(a) The law declared by the Supreme Court being binding on all courts in India, the decisions of the Supreme Court are binding on all courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence through out the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows : (i) A single judge of a High Court is bound by the decision of another single judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that decision. Judicial comity demands that a binding decision to which his attention had been drawn should neither be ignored nor overlooked. If he does not find himself in agreement with the same, the proper ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dictional one. 25.3. Aforesaid decision was dealt by the Coordinate Bench in assessee's own case in appeal for Assessment Year 2012-13 in ITA no. 869/Mum/2018 dated 04.03.2021. It noted that applicability of non- jurisdictional High Court is never absolute, without exceptions and as a matter of course. Reference was also made to the decision of Hon'ble Supreme Court in the case of CIT v. Saurashtra Kutch Stock Exchange Ltd [2008] 305 ITR 227 (SC) which held that "non-consideration of a decision of jurisdictional Court or of the Supreme Court can be said to be a mistake apparent from the record." It kept out the decisions of 'non- jurisdictional High Courts while holding so. Thus, a conscious call is required to be taken, on the facts of a particular situation. Relevant extracts from the decision of the Coordinate Bench in assessee's own case (supra) are as under for ready reference: "34.......While dealing with judicial precedents from non-jurisdictional High Courts, we may usefully take of observations of Hon'ble jurisdictional High Court in the case of CIT v. Thana Electricity Co. Ltd. [1994] 206 ITR 727 (Bom.), to the effect "The decision of one High Court is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITR 192, when two interpretations are possible, and one of the views is in favour of the assessee, the view in favour of the assessee, and a decision of Hon'ble non-jurisdictional High Court is required to be treated at least as a possible view of the matter. This principle has, however, two major exceptions. It has been held that the rule of resolving ambiguities in favour of tax-payer does not apply to deductions, exemptions, and exceptions which are allowable only when plainly authorised. This exception, laid down in Littman v. Barron 1952 (2) AIR 393 and followed by apex Court in Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commr. of C1992 taxmann.com 24 and Novopan India Ltd. v. CCE & C 1994 taxmann.com 231, has been summed up in the words of Lord Lohen, "in case of ambiguity, a taxing statute should be construed in favour of a taxpayer does not apply to a provision giving taxpayer relief in certain cases from a section clearly imposing liability". The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. v. Dadabho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tting off the loss brought forward. Hence the reasoning adopted in this regard by the assessing officer and the Commissioner of Income Tax (Appeals) is not in accordance with the provisions of the Act. Hence, the substantial question No.2 is answered against the revenue and in favour of the assessee." 25.5. Accordingly, under the guidance of binding nature from the Hon'ble jurisdictional High Court of Bombay in Thane Electricity Supply (supra), we with utmost respect are not persuaded enough by the decision in review petition of Syndicate Bank (supra) and therefore, keeping consistency with the decision of Coordinate Bench (supra), we also in our considered view hold for the purpose of section 36(1)(viia), total income would be the business income before deducting the claim under the said section and eligible deduction under Chapter VI-A. Therefore, brought forward losses would not be deducted while computing the total income for the purpose of section 36(1)(viia). Resultantly, ground no. 4 raised by the assessee is allowed. 26. In the result, appeal of the assessee is partly allowed. 27. We now take up appeal by the revenue in ITA No.1549/Mum/ 2023. We deal with the groun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0. Ground no. 5 is in respect of interest u/s. 244A, whereby assessee contended that refunds given to it earlier should be adjusted against the interest and then the principle in subsequent refunds arising out of appeal effect. Thus, the issue raised was in respect of short grant of refund including interest u/s. 244A due to wrong adjustment of earlier refunds. This issue had come up in assesses own case for AY 2001-02 in ITA No.5683/Mum/2019 order dated 26.07.2021. In this decision the Co-ordinate Bench by following the decision for AY 2003-04 in assesses own case in ITA No. 629/Mum/2018 dated 10.04.2019 as well as in the light of judgement of Hon'ble High court of Delhi in the case of India Trade Promotion Organization (2014) 361 ITR 646 (DEL). Restore the matter to the file of ld. AO with the direction to decide the issue qua computation of interest u/s. 244A afresh as well as in terms of Rule 119A of the Rules. Relevant para 10 of the said order is extracted below for ready reference: "We have heard the Id. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As observed by us hereinabove, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. The next issues contested by the assesses relates to the granting of interest u/s 244A of the Act The id AR submitted that the assessee has been receiving refunds upon passing of orders by the appellate authorities or upon passing of orders u/s 154 of the Act. The Id AR submitted that the AO has made adjustment of refund (consisting of tax and interest) already granted against the refund of tax dye in each of the successive orders The Id. A.R submitted that the entire amount of refund (both tax and interest) granted should be first adjusted against the interest portion that has become due and then the remaining amount, if any. should be adjusted against the tax portion of me refund that has become due in support of his contentions the Ld. A.R planed reliance on the decision rendered by the Tribunal in the assessee's own case in ITA NO 5444 to 5446/Mum/2013 dated 22.12.2014 and also the decision rendered by the Tribunal in the case of Union Bank of India (ITA No. 571 85741/Mum/2013 dated 23.6.2014). 6. We heard the parties on this issue. Since it is matter involving computation of eligible amount of interest u/s 244A of the Act. We are of the view that this ....