TaxTMI 
TaxTMI 
2025 (1) TMI 1752
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....ACIT, LTU-2, Chennai. 2013-14 09.01.2023 by NFAC, Delhi. 05.02.2020 by ACIT, LTU-2, Chennai. (Order Giving Effect) 2013-14 22.03.2023 by NFAC, Delhi. 03.12.2019 by ACIT, LTU-2, Chennai. 2015-16 12.12.2023 by NFAC, Delhi. 30.03.202 by NFeAC, Delhi. 2015-16 27.02.2023 by NFAC, Delhi. 30.04.2021 by NFeAC, Delhi. 2018-19 27.02.2023 by NFAC, Delhi. 30.09.2021 by NFeAC, Delhi. 2019-20 2. The assessee M/s Indian Overseas Bank is a Scheduled Bank and assessable as a company for the purpose of Income tax. The assessee filed its return of income for AY 2013-14 on 29.11.2013 declaring income of Rs. 966,16,62,596/-. The original assessment u/s 143(3) was completed on 31.12.2016 against which the appellant preferred appeals before the CIT(A) and Tribunal. Subsequently, AO issued notice u/s 148 dated 28.03.2019 reopening the assessment u/s 147. This appeal is arising out of the reopening of original assessment. The reopening issues are in AYs 2013-14 and 2015-16. 3. At the outset, the ld. counsel for the assessee filed charts and fairly stated that in captioned appeals issues raised in the respective grounds of appeal are covered either in fa....
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....ticed from Schedule 18 Note on Account item 5- Rupee Interest rate swap.... It is submitted that here again the AO reopens the assessment based on the information already on record i.e., annual report and hence there is no failure on part of appellant to fumish any information that has led to reopening of the assessment. On the third reason given for reopening the assessment, as can be seen from the reasons given in page 3 of the assessment order" As noticed from Note 13.3, it may again be seen that the reopening is again only based on annual report and hence there is no failure on part of appellant to furnish any information that has led to reopening of the assessment. it is submitted that even AO does not allege that there has been any failure on the part of appellant to fully and truly furnish any information that had led to the reopening of assessment. Since in appellants case the reopening is done after a period of 4 years from the end of the assessment year and there is no failure on the part of appellant to fully and truly disclose all material facts necessary for assessment, as per first proviso to section 147, the entire reassessment proceedings are bad in law and needs to....
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....t a new Section substituted Section 147 of the Income-tax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new Section 147 is as follows : "147. If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this Section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under Sub-section (3) of Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the fai....
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....ind that the Tribunal has correctly appreciated the facts in holding that the reopening of the assessment orders are barred by limitation. We find that the Commissioner of Income-tax (Appeals) as well as the Tribunal has concurrently held from the facts that the proviso to section 147 would not apply to the facts of this case and since it is a finding of fact that too which is essentially based on the principles which are gathered from the judgments referred to above, we find that the Assessing Officer has departed from the said principles in arriving at a conclusion that the proviso to section 147 would apply in the instant case. We see no reason to deviate from the finding of fact and, hence, the appeal of the Revenue fails on this ground. Therefore, the first part of the substantial question of law No. 1 in T. C. (A.) Nos. 310 to 312 of 2007 with regard to the invocation of extended period of time under the proviso to section 147 is answered in the affirmative and in favour of the assessee." 9. In view of the above facts and circumstance of case law of Hon'ble Supreme Court in the case of M/s. Foramer France and Jurisdictional High Court in the case of M/s. RPG Transmis....
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....16, the appellant filed its original return of income on 30.11.2015 declaring total income of Rs. 14,17,79,678/- The assessment was completed u/s 143(3) on 29.12.2017 against which the appellant preferred an appeal to CIT(A) and then to ITAT. Subsequently, AO by issue of notice u/s 148 dated 28.03.2019 reopened the assessment u/s 147 against which the present appeal is filed. The following are the issues involved in the appeal. 5.3 The ACIT reopened u/s 147 the assessment already completed u/s 143(3) by issue of notice u/s 148. The reopening was done based on significant accounting policy and notes forming part of annual report which was already examined at the time of original assessment. The reopening was done to tax unamortized receipts in case of financial assets sold to ARC, amortization of premium on HTM Securities and deferred income on termination of rupee interest rate swaps. The reopening was made based on the return of income or the details furnished at the time of assessment and hence there was no new tangible material based on which the reopening was done. The assessment originally completed u/s 143(3) was reopened by issue of notice u/s 148 dated 28/03/2019. The....
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.... (Delhi) and SLP filed against the said order was dismissed by Supreme Court reported in [2019) 108 taxmann.com 352 (SC). The assessee's objection to assumption of jurisdiction by AO is disposed of vide separate order dated 26.08.2019. The ld.CIT(A) in the view of the judgment of the Hon'ble High Court of Bombay in the case of Yuvraj Vs UOI [2009] 315 ITR 84 has dismissed the ground raised by the assessee challenging the validity of the issuance of notice u/s 148 of the Act. Hence, assessee is in appeal before us. 5.7 At the outset the ld. Counsel for the assessee submitted that in the similar circumstances, the reopening issue decided in favour of the assessee by the Co- ordinate bench of the Tribunal in assessee's own case in ITA Nos. 782 & 1991/Chny/2001 for AYs 1992-93 and 1993-94 dated 15.06.2022 which held as under: "7. The reasons recorded by Ld. AO to reopen the assessment read as under: - The assessee bank has been maintaining its books of accounts under mercantile basis. However, while admitting the interest on securities for Income Tax purposes, the assessee bank reduced the interest accrued due to profit & loss account and offers the same on receipt....
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....new tangible material before Ld. AO to reopen the case of the assessee and the reopening was based on existing material already available on record. In such a case, the reopening would become mere review of the order which is impermissible as per the decision of Hon'ble Supreme Court in CIT V/s Kelvinator of India Ltd. (320 ITR 561). We are of the opinion that the formation of belief has to be on the basis of some fresh tangible material or new information which is not the case here. This being so, reassessment proceedings are liable to be quashed on legal grounds. 9. The aforesaid conclusion also find support from the decision of Hon'ble High Court of Madras in Tanmac India V/s DCIT (78 Taxmann.com 155) wherein reassessment was held to be not justified since the same was sought to be initiated on the basis of return of income and enclosures thereto which was already part of record. Similar is the ratio of decision in Pr. CIT V/s M.R.Narayanan (131 Taxmann.com 280) as well as in CIT V/s RPG Transmissions Ltd. (48 Taxmann.com 57). 10. Considering the ratio of aforesaid binding judicial pronouncements, the reassessment proceedings are liable to be quashed. We order ....
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....2015 declaring total income of Rs 14,17,79,678/- The details of assessment /revision/rectification/reassessment orders passed are as under: Assessment order under section Date of order Assessed income under normal computation 143(3) 29-12-2017 6845,40,31,723 Giving effect to CIT(A) 25-02-2019 3547,72,36,987 143 r.w.s. 147 03-12-2019 4317,07,57,990 The case was reopened by issue of notice u/s 148 of the Act on 29-03-2021 under a reasonable belief that the income has escaped assessment within the meaning of provisions of section 147 of the Act after recording the reason and obtaining approval of competent authority under section 151 of the Act. The reason recorded for reopening of the case under section 147 of the Act, 1961 is as under:- "The assessee company M/s Indian Overseas Bank is a Scheduled Bank and assessed in the status of company for the purposes of Income Tax Act. It filed its return of income for the AY 2015-16 on 30/11/2015 declaring income of Rs. 14,17,79,678/- under normal provisions (after set off of brought forward loss of Rs. 31,66,36,42,782) and book profits of Rs. 41,13,18,277/- u/s 115....
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..... It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed copy of the annual report and audited P&L Account and balance sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L account and balance sheet or other evidence as mentioned above, the requisite materials facts are noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of Section 147 of the Act". 6.2 The assessee's objection to assumption of jurisdiction by AO is disposed of vide separate order dated 28.01.2022. Before the ld.CIT(A), the assessee inter-alia subm....
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....Y 1990-91 and 1991-92 in ITA Nos. 780, 781/Chny/2001 dated 24.01.2022. 6.4 From above referred order of the Co-ordinate Bench of Tribunal in assessee's own case, we also find that the AO had formed an opinion that income has escaped assessment only based on the facts and documents already on record i.e; from the Annual report which was filed with the return of income. During the original assessment proceedings u/s 143(3) these materials were duly available and considered by the AO as the case was selected for scrutiny under CASS. We also find that this is the third time, the case of the assessee is reopened. We also find that there is no fresh material came in the possession of the AO to justify re- opening of original assessment made u/s 143(3) of the Act. This is a clear case of 'change of opinion' which is not permissible to reopen the final original assessment. Hence, respectfully following the order of Co-ordinate bench of the Tribunal in assessee's own case in AY 1990-91 and 1991-92 in ITA Nos. 780, 781/Chny/2001 dated 24.01.2022, we endorse the order of the ld. CIT(A) quashing the reassessment proceedings and dismiss the appeal of the Revenue. In result, appeal of the rev....
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....ar facts and circumstances of this case, assessee has already been given proper opportunity of hearing to prosecute its case. Both orders are speaking orders and no prejudice has been caused. Hence, in the light of above peculiar facts of this case, we dismiss this ground of the assessee. We further observe that at the beginning itself, the assessee would have challenged this issue before the Hon'ble High Court in writ petition as done in the case of Devendran Coal International Private Limited Vs ITO & Ors (supra). Hence, we dismiss this ground of the assessee's appeal. 7 (ii) Deduction u/s 36(1)(vii): The appellant had claimed a sum of Rs. 8751.17 crores towards bad debts written off. However, based on the explanation 2 to section 36(1)(vii) the AO allowed the deduction at Rs. 3903.90 crores after reducing the opening credit balance and disallowed Rs. 4847.27 crores. On this issue, the ld. CIT(A) based on his order in ITA No.197/2017-18 dated 31.01.2019 for AY 2015-16, similarly, has directed the AO to verify the genuineness of the claim of the assessee that there is no opening balance in provisions for bad and doubtful debts u/s 36(1)(viia) and recompute the bad debts a....
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....f welfare fund overlooking the mandatory requirement of payment as an employer. 68. At the time of hearing, counsel for the assessee submits that this issue has been decided against the assessee by the co-ordinate Bench for the assessment year 2008-09 in ITA No.1815/Mds/2011 dated 2.4.2013 in para 14 of the order. Respectfully following the said order of this Tribunal, we dismiss the ground of assessee on this issue." 14.1 Respectfully following the above decision of Tribunal in assessee's own case for assessment year 2010-11, we reject this ground raised by the assessee." In view of the above, respectfully following the above order of this Tribunal, we reject the corresponding grounds of appeal of the assessee." 10. We heard the rival submissions. In view of the above findings of the Tribunal in assessee's own case in the earlier assessment years, respectfully following it, we reject the corresponding grounds of the assessee. Respectfully following the co-ordinate bench order referred supra we also decide this ground against the assessee. Accordingly, this ground of assessee is dismissed. 7 (iv) Restricting relief u/s 90 to the extent of f....
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....s. 42,94,845/- and Rs. 39,80,57,968/- respectively. Its thrust was upon various Double Taxation Avoidance Agreements DTAAs between India and the said countries except Hong Kong. The Assessing Officer had restricted this relief @ 16.5% Le the prevailing tax rate in Hongkong. Thereafter, he distinguished case law PVAL .Kulandaganchettiarvs CIT, 267 ITR 654 by observing that contrary to the facts of this case, Shri Chéttiar was fiscally domiciled in Malaysia and did not have any permanent establishment in India. On DTM with south Korea, the Assessing Officer was of the view that the terms contained therein did not give exclusive rate of tax to the concerned country and it had only provided for credit method of relief in double taxation. Accordingly, he declined to accept the assessee's claim. 23. Coming to the DTMs between India and Singapore, Thailand and Sri lanka, the Assessing Officer observed that they also recognized 'credit' method. He alleged the assessee not to have provided any difference in rates of tax in the above stated tax jurisdictions. Simultaneously, the Assessing Officer held that on furnishing details on assessee's part; the claim would be allowed i....
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....On the issue of Depreciation on Goodwill, the AR relied on the order of this tribunal in the assessee's own case in ITA No. 776/Chny/2018 dated 28.02.2019 for the assessment year 2013-14, the relevant portion is extracted as under: 7. The next issue raised by the assessee is with regard to denial of depreciation on goodwill and the Ld. AR submitted that the Bank had during the year ended 31.01.2010 taken over assets &liabilities of Shree Suvama Sahakari Bank Ltd. The excess of Liabilities over Assets amounting to Rs. 246,52,02,148/- has been treated as Goodwill, Depreciation on the said amount of Goodwill based on the WDV as on 01.04.2012 of Rs. 26,00,01,789/- has been claimed as deduction based on the decision of Supreme Court in the case of CIT vs Smift Securities Ltd (Civil Appeal No.5961 of 2012 (Arising out of SLP (c) No.35600 of 2009) dated 22.08.2012. The AO rejected this claim on the following reasons: "As held by the assessee, assessee has taken over the specific asset and liabilities of M/s. Shree Swatna Sahakari Bank Ltd as existing as on 19.05.2009 as per the approval of RBI. Accordingly it resulted in excess of liabilities over assets absorbed on acco....
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....d on the judgement of the Hon'ble Supreme Court in the case of Smifs Securities Ltd.(348 ITR 302) dated 22.08.2012. 7.2 Per contra, the Ld. DR invited our attention to para 12 of the Memorandum of Understanding, which is extracted as under: "12. Regarding Goodwill:-Since the business of Transferor Bank is under moratorium from 14/09/2006, the Transferor Bank does not enjoy any goodwill in commercial terms. Accordingly, no monetary consideration is provided for goodwill." and submitted that as per the agreement, it is clear the transferor bank does not enjoy any goodwill in commercial terms and hence, there is no goodwill. The Ld. DR further invited our attention to the following portion of the judgement of the Hon'ble Supreme Court in the case of Smifs Securities Ltd.(348 ITR 302) : "Assessing Officer, as a matter of fact, came to the conclusion that no amount was actually paid on account of goodwill. This is a factual finding. The Commissioner of Income Tax (Appeals) ["CIT(A)', for short] has come to the conclusion that the authorised representatives had filed copies of the Orders of the High Court ordering amalgamation of the above two Companie....
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....ing grounds of the assessee. In view of the above findings of the Tribunal in assessee's own case in the earlier assessment years, respectfully following the co-ordinate bench order referred supra we also reject and decide this ground against the assessee. Accordingly, this ground of assessee is dismissed. 7 (vi) Provision for leave salary: The AO disallowed the claim of assessee in respect of provision made for leave salary based on actuarial valuation amounting to Rs. 88.33 Crore. Assessee contended that the AO failed to appreciate that the provisions of section 43B are not applicable for the above provision since it is neither a statutory liability nor a contractual liability. The ld. Counsel fairly conceded that this issue of provision for leave salary has already been decided against the assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA Nos. 948 & 777 /Chny/2018 for AY 2014-15 dated 20.01.2020 which held as under: "23. On the issue of disallowance of provision for leave encashment, the ld DR presented the case on the lines of grounds of appeal. Per contra, the ld AR relied on the orders of this tribunal in the assessee's own case....
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....nches instead of the advances outstanding at the end of each month. Before us, the ld. Counsel for the assessee submitted that this issue has been allowed in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA Nos. 948 & 777/Chny/2018 for AY 2014-15 which held as under: "17. On the issue of deduction u/s. 36(1)(viia) based on advances outstanding and not on incremental advances, the ld DR presented the case on the lines of grounds of appeal. Per contra, the ld.AR relied on the orders of the Calcutta High Court in the case of Uttarbanga Kshetriya Gramin Bank in ITA No. 76/Kol/2016 and the assessee's own case in ITA No. 947/CHny/2018 dated 28.02.2019, the relevant portion is extracted as under: "13. With regard to the claim that the deduction u/s 36(1)(viia) needs to be calculated based on the incremental advances for each month and not on the outstanding advance as on the last day of the relevant month, the Ld. DR submitted on the lines of grounds of appeal. Per contra, the Ld.AR submitted that this issue was decided by this Tribunal in favour of the assessee in ITA No.77/Mds/2014 vide order dated 03.04.2017. The relevant porti....
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....by the decision in Principal Commissioner of Income Tax, Jalpaiguri v. Uttarbanga Kshetriya Gramin Bank [(2018) 94 taxmann. Com 90 (Calcutta), in favour of the assessee and the relevant passage of the same is usefully extracted below: "6. Mr. Nizamuddin, learned advocate appeared on behalf of the Revenue and submitted the amended direction made by the Tribunal on the ITO has resulted in the assessee getting double deduction which is not permissible on computation made under Rule 6ABA. He submitted a double deduction in the manner thus obtained by the assessee has not been expressly provided. He relied on a judgment of the Supreme Court in the case of Escorts Ltd. v. Union of India reported in (1993) 199 ITR 43, on the following portion in the said judgment appearing in page 64 of the report. "A double deduction cannot be a matter of inference, it must be provided for in clear and express language, regard being had to its unusual nature and its serious impact on the revenues of the State." 7. Mr. Khaitan, learned senior Advocate appeared on behalf of the assessee and submitted that the computation to be made as prescribed by Rule 6ABA is for the purpose of....
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....to which the deduction was claimed, so as to determine whether any advance of earlier year for which provision was made is still outstanding. 5.4. In other words, the assessee is not in a position to give details of the advances with reference to which the deduction of Rs. 14.99 crores was allowed as per Annexure 2 as deduction under section 36(1)(viia) towards unknown and anticipated trading loss by virtue of mere provision made on adhoc basis for bad and doubtful debts and to confirm that these advances were still outstanding as at the end of the previous year relevant to this accounting year." "6.3.1. Therefore due to assessee's inability to relate the provision to any particular advance of a branch, it cannot be said whether it is a provision for rural advance or for non-rural advance so as to examine the monetary limit prescribed under section 36(1)(viia) for allowing deduction thereunder. Then such provision is only reserve for bad debts and not provision for bad and doubtful debts. Though the provisions of section 36(1)(viia) may be understood as a beneficial provision to the assessee company to claim deduction even in respect of reserve created by it to me....
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....e never been allowed by the revenue hence no need to file evidences. As stated by the ld. Counsel for the assessee that this issue has been allowed in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA Nos. 948 & 777 /Chny/2018 for AY 2014-15 which held as under: "11. On the issue of Recovery in respect of bad debts written off relating to rural branches viz ground nos 5.1 & 5.2, the AR relied on the order of this tribunal in the assessee's own case in ITA No. 776/Chny/2018 dated 28.02.2019 for assessment year 2013-14, the relevant portion is extracted as under: "9. The next ground raised by the assessee is with regard to recovery of bad debts written off relating to rural branches. The Ld. AR submitted that this issue was decided in favour of the assessee by this Tribunal in ITA No35/Mds/2014vide order dated 03.4.2017. 9.1 Heard the rival submissions and perused the order of this Tribunal in ITA No.35/Mds/2017 dated 03.04.2017. The relevant portion of the order of this Tribunal, supra is extracted here under:- 27. The Fifth ground is with regard to addition towards bad debts recovered. 27.1 Afte....
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....nue. Further, we make it clear that if it is allowed as bad debt in earlier years and recovered the same in the assessment year under consideration to be treated as income of assessee." 9.2 Respectfully following the above order of this Tribunal, we allow these grounds of the assessee subject to the above lines." 12. We heard the rival submissions. In view of the above findings of the Tribunal in assessee's own case in the earlier assessment years, respectfully following it, we allow the corresponding grounds of the assessee." In view of the above findings of the Tribunal in assessee's own case in the earlier assessment years, respectfully following the co-ordinate bench order referred supra we also allow and decide this ground in favour of assessee and against the revenue. Accordingly, this ground of revenue is dismissed. 8(iii) Disallowance under section 14A read with Rule 8D: The assessee argued that the AO failed to appreciate that since exempt income were received from securities which were held as stock in trade therefore, Rule 8D read with section 14A(2)(3) could not have been invoked. The ld.CIT(A) relied upon the judgment of the Hon'ble Supreme C....
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....th Rule 8D for the purpose of disallowing expenditure attributable for earning dividend income. 65. We have perused the order of co-ordinate Bench of this Tribunal for the assessment year 2009-10, wherein the Tribunal held that authorities below have wrongly invoked section 14A in case of investments held as stock-in-trade. While holding so the Tribunal observed as under: "15. We have considered the rival contentions, perused the relevant findings and the judicial precedents undisputedly, the assessee had earned income of 21 crores from investments made in mutual funds and equities. Its stand adopted throughout has been to have held the investments as 'stock-in- trade'. There is no finding on this issue forthcoming either from the Assessing Officer or the CIT(A). We have also perused the 'guard' fife pertaining to I.T.A.No. 1815/Mds/2011 decided on 2.4.2013(supra). It is evident there from that the very disallowance stands upheld by a co-ordinate bench. Its plea challenging applicability of section 14A in case of investment held as 'stock-in trade' appears to have neither been raised nor adjudicated. So, we treat it as a fresh plea not covered by the earlier order....
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.... order regarding treatment of exempted income yielding assets as stock-in-trade. Hence, in our opinion, if it is treated as stock-in-trade by the assessee, then the claim of assessee is to be allowed in terms of Order of Tribunal in ITA No.2126/Mds./2013 (supra). Accordingly, this issue is remitted to the file of AO for fresh consideration. This ground is allowed for statistical purposes. In view of the above reasoning of this Tribunal, following it, we remit this issue back to the file of AO for fresh consideration. This ground is allowed for statistical purposes." 22. We heard the rival submissions. In view of the above findings of the Tribunal in assessee's own case in the earlier assessment year, respectfully following it, we remit this issue back to the file of the AO for fresh consideration. This ground is treated as allowed for statistical purposes. Respectfully following the co-ordinate bench order referred supra, we remit this issue back to the file of the ld. Assessing Officer for fresh consideration. Accordingly, this ground of revenue is allowed for statistical purpose. 8 (iv) Depreciation on UPS at 60%: The AO disallowed depreciation claimed ....
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.... of Tribunal in assessee's own case for assessment year 2010-11, we reject this ground raised by the assessee." In view of the above reasoning of this Tribunal, we reject this issue raised by the assessee." 14. We heard the rival submissions. In view of the above findings of the Tribunal in assessee's own case in the earlier assessment years, respectfully following it, we reject the corresponding grounds of the assessee. Respectfully following the co-ordinate bench order referred supra we also reject and decide this ground against the revenue. Accordingly, this ground of revenue is dismissed. 8.(v) Depreciation on ATM: The AO disallowed excess depreciation claimed on ATM on the contention that ATM is not a computer and is only a part of general plant and machinery. The ld. counsel pointed out that the issue of depreciation on ATM has been decided in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA Nos. 948 & 777/Chny/2018 for AY 2014-15 which held as under: "15. On the issue of depreciation on ATM, the AR relied on the order of this tribunal in the assessee's own case in ITA No. 776/Chny/2018 dated 28.02.2....
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....nue is dismissed. 8 (vi) Applicability of Provisions of section 115JB: This ground has been allowed in favour of assessee by the co-ordinate bench of the Tribunal in assessee's own case in ITA Nos. 948 & 777 /Chny/2018 for AY 2014-15 which held as under: "29. On the issue of applicability of provisions of section 115JB, the Ld. AR relied on the order of the Calcutta ITAT in the case of UCI Bank (2015) 64 Taxmann.com 51 and Damodar Valley Corporation in ITA No. 438/Kol/2017, which is relied on by the Ld. CIT(A) in allowing the appeal in its favour. 30. We heard the rival submissions. Since, the Ld. CIT(A) has followed and applied the decision of Calcutta ITAT in the case of UCI Bank (2015) 64 Taxmann.com 51 and Damodar Valley Corporation in ITA No. 438/Kol/2017, we do not find any reason to interfere with the order of the Ld. CIT(A) and hence, the corresponding grounds of the Revenue on this ground as well as the other grounds raised by the Revenue with regard to the various additions made in computing book profits are dismissed". It is also pointed out that this issue has been decided by the Special Bench of Tribunal Mumbai in the case of Union Bank of In....
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....nly in the current year and hence these cannot be treated as prior period expenses. The assessee further, submitted that it has branches spread across the country, and settlement of claim and payment thereof is a continuous process and no expenditure can be treated as proper period expenses overlooking this fact. Therefore, AO cannot add the sum of Rs. 3.57 Crores in computing the total income. The assessee, before us relied upon the order of the Tribunal in the case of Bank of India (ITA No.2781/Mum/2011) which held as under: 12. The next ground is against the disallowance of Rs. 2,93,434, held to be prior period expenses, debited to the P&L Account. 13. The facts involved in this issue are that there are claims on expenses such as rent, electricity, payments to R&T Agents, repairs etc. pertaining to preceding year, where the payments made in the current year. The AO held that these are prior period expenses, the AO disallowed the same and added these to the income of the assessee. 14. Aggrieved the assessee approached the CIT(A), who sustained the disallowance, simply by observing that since the assessee has not been able to substantiate the claims made....
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....j). The AR, therefore, submitted that since the issue is settled, no disallowance should be made. 17. DR relied on the orders of the revenue authorities. 18. We have heard the arguments of both the sides and have also perused the written submissions made before us and the case laws cited. We find that coordinate Bench at Mumbai in the case of Union Bank of India Vs ACIT, Mumbai, ITA no. 4720 & 4724/Mum/2010 (appeals filed by the department), it was held, Ground No. 1 raised by the Revenue (in ITA Nos. 4702 to 4706/M/10 for A.Yrs. 2002-03 to 2006-07) is with respect to prior period expenses. The expenditure disallowed as in the nature of rent, municipal taxes etc. where usually the amounts are paid after detailed negotiations and receipt of demand of the arrears amount from the parties. The Ld. CIT(A) taking into consideration the nature of expenditure had come to a conclusion that since the bank is a nationalized bank subjected to audit, the claim that the liability to pay the expenses arose in the relevant assessment year would not be a matter of doubt particularly considering the nature of expenditure. He therefore allowed the amount on the gro....
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....to be equated to share capital whereas on facts the bonds represent borrowings made by appellant and any interest paid on such borrowings is allowable as deduction u/s 36 of the Act. He ld. CIT(A) relied upon the order of the Tribunal in the case of ICICI Bank ITA No.3864/Mum/2019 for AY 2010-11 allowed the appeal of the assessee. The Tribunal in the case of ICICI Bank ITA No. 3864/Mum/2019 held as under: "10. Heard both the sides and perused the material on record. The A.O has disallowed the claim of interest made u/s 36(1)(iii) by treating the perpetual bond as equity in nature. In support of his finding the A.O has placed reliance on the observation of the Pr. CIT made in the order u/s 263 in the case of the assessee for A.Y. 2013-14. These observations are as under: (i) Perpetual bond with no maturity date; (ii) right to redeem that assessee not with the Investors; (iii) showing in the balance sheet as debt or borrowings. However, it is observed that A.O has failed to controvert the undisputed fact that assessee has issued innovative perpetual debt instruments (IPDI) which carry a fixed rate of interest. The holder of these instrumen....