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Income Tax Appellate Tribunal - Mumbai

Assistant Commissioner Of Income Tax ... vs Dcb Bank Limited (Formerly Development ... on 7 May, 2019

                IN THE INCOME TAX APPELLATE TRIBUNAL
                     MUMBAI BENCHES "D", MUMBAI

     BEFORE SHRI RAJESH KUMAR (AM) AND SHRI RAM LAL NEGI (JM)

                           ITA No. 62/MUM/2018
                          Assessment Year: 2013-14

The ACIT 2(3)(1),                             M/s DCB Bank Ltd. (Formerly
R. No. 552, 5th floor,                        Development Credit Bank Ltd.),
Aaykar Bhavan, M.K. Road,                     6th Floor, Tower A, Peninsula
Mumbai - 400020                        Vs.    Business Park, Senapati Bapat
                                              Marg, Lower Parel,
                                              Mumbai - 400013
                                              PAN: AAACD1461F
           (Appellant)                                  (Respondent)

                          Revenue by : Shri D.G. Pansari (DR)
                          Assessee by : Shri Satish Mody (AR)

                 Date of Hearing:            13/02/2019
          Date of Pronouncement:             07/05/2019

                                ORDER

PER RAM LAL NEGI, JM

This appeal has been filed by the revenue against the order dated 20.10.2017 passed by the Commissioner of Income Tax (Appeals)-6 (for short 'the CIT(A), Mumbai, for the assessment year 2013-14, whereby the Ld. CIT(A) has allowed the appeal filed by the assessee against the assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short the 'Act').

2. Brief facts of the case are that the assessee bank filed its return of income for the assessment year under consideration declaring the total income of Rs. 49,33,50,936/-. The AO completed the assessment u/s 143(3) of the Act determining the total income at Nil after allowing set off of loss of earlier years. The AO disallowed the deduction of Rs. 9,48,81,164/- claimed by the assessee, treating the broken period interest as part of the cost price of the securities acquired by the assessee Bank, disallowed the amortization of securities premium of HTM Securities claimed by the assessee amounting to Rs. 4,73,09,872/- treating the same as part of the cost price. The AO further made 2 ITA No. 62/ MUM/2018 Assessment Year: 2013-14 disallowance of Rs. 1,40,786/- under section 14A read with rule 8D and Rs. 16,64,214/- on account of depreciation on lease assets. Aggrieved by the assessment order passed by the AO, the assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee allowed the appeal of the assessee. The revenue has filed the present appeal against the said order of the Ld. CIT(A).

3. The revenue has challenged the assessment order on the following effective grounds:-

1. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO on account of broken period interest relying on the decision of the Hon'ble Supreme Court in the case of CIT v/s City Bank in Civil Appeal 1549 of 2006, and order of the Hon'ble Bombay High Court in the case of American Express International Banking Corporation v/s CIT 258 ITR 601 and the decision of the Tribunal in the case of Dena Bank in ITA No. 3476/M./2000 dated 10.04.2014.

2. On the facts and in the circumstances of the case and in Law, the Ld. CIT (A) has erred in deleting the addition made by the AO on account of expenses u/s 14A r.w.r. 8d, without considering the fact that the Revenue has filed appeal before Hon'ble Supreme Court on this similar issue which is pending for final verdict.

3. On the facts and in the circumstances of the case and in Law, the Ld. CIT (A) has erred in deleting the addition made by the AO on account of depreciation on leased assets, without appreciating the fact that Revenue has filed appeal before Hon'ble ITAT in the assessee's case for the A.Y. 2010-11 to 2012-13 on a similar issue, which are pending for adjudication."

4. Vide Ground No. 1 the revenue has challenged the action of Ld. CIT (A) in deleting the addition made by the AO on account of broken period interest. The Ld. Departmental Representative (DR) relying on the assessment order submitted that as has been held by the AO, the broken period interest paid by the assessee is nothing but part of price paid for acquiring the securities, 3 ITA No. 62/ MUM/2018 Assessment Year: 2013-14 therefore no part of it can be set off as expenditure against interest accruing on these securities. Since, the AO has rightly disallowed the claim of the assessee. The Ld. CIT (A) has wrongly deleted the same.

5. On the other hand, the Ld. counsel for the assessee submitted that this issue is covered in favour of the assessee in assessee's own case for the assessment year 2010-11. Similarly, the Ld. CIT (A) has decided the identical issue in favour of the assessee in the assessment year 2012-13. The Ld. counsel further submitted that the findings of the Ld. CIT (A) are based on the decision of the Hon'ble Supreme Court in the case of Citibank in Civil Appeal No. 1549 of 2006, decision of the Hon'ble Bombay High Court in the case of American Express International Banking Corporation vs. CIT 258 ITR 601 and the decisions of the ITAT, Mumbai. The Ld. counsel further submitted that the ITAT has confirmed the order of the Ld. CIT (A) passed in assessee's own case for the AY 2009-10 and 2012-13. Since, the findings of the Ld. CIT (A) are based on the decision referred above and covered by the decision of the ITAT rendered in assessee's appeals pertaining to the earlier years, there is no infirmity in the order of the Ld. CIT (A) to interfere with.

6. We have gone through the material on record in the light of the rival contention of the parties. The Ld. CIT (A) has decided this issue in favour of the assessee. The relevant paras of the order passed by the Ld. CIT (A) read as under:-

"6.4 I have carefully considered the facts of the case, discussion of the AO in the impugned order as well as oral contentions and written submissions of the appellant. I find that similar issue has come up for consideration in appellant's own case for the preceding A.Y.2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant by my learned predecessor vide Appeal No. CIT(A)-6/IT-178/2014-15 dated 05.10.2015. The relevant portion of the order is reproduced hereunder for ready reference:

Assessment Year: 2013-14 "6.2 1 have carefully considered the facts of the case and the submission of the appellant. I have also gone through the decisions relied upon by Ld.. AR and the AO. I find that similar issue has been decided in favour of the appellant by the Hon'ble Supreme Court in the case of CIT v. Citi Bank in Civil Appeal No.1549 of 2006. Further, Hon'ble Bombay High Court in the case of American Express Bank (supra) has also decided this issue in favour of the appellant. It was also argued that the Hon'ble ITAT in the case of Dena Bank has decided this issue in assessee's favour in ITA No.3676/M/2000 dated 10.02.2014. Respectfully following the above decisions of Hon'ble Supreme Court, Bombay High Court and Mumbai ITAT, it is held that the broken period interest paid by the appellant is allowable as deduction in computing the total income. The ground is accordingly allowed."

6.5 Similarly. in A.Y.2012-13, my learned predecessor has decided the issue in favour of the appellant vide Appeal No. CIT(A)-6/IT-2/2014-15 dated 27.05.2016. The relevant part of the order is reproduced hereunder for ready reference: "7.2 1 have carefully considered the facts of the case, discussion of the AO in the impugned order as well as oral contentions and written submissions of the appellant. I find that similar issue has come up for consideration in appellant's own case for the preceding A.Y.2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant by my learned predecessor vide Appeal No.CIT'(A)6/IT 178/2014-15 dated 05.10.2015. The relevant portion of the order is reproduced hereunder for ready reference:

"6.2. I have carefully considered the facts of the case and the submission of the appellant. I have also gone through the decisions relied upon by the AR and the AO. I find that similar issue has been decided in favour of the appellant by the Hon'ble Supreme Court in the case of CIT v. Citi Bank in Civil Appeal No.1549 of 2006. Further, Hon'ble Bombay High Court in the case of American Express Bank (supra) has also decided this issue in favour of the appellant. It was also argued that the Hon'ble ITAT in the case of Dena Bank has decided this issue in assessee's favour in ITA No.3676/M/2000 dated 10.02.2014. Respectfully following the above decisions of Hon'ble Supreme Court, Bombay High Court and Mumbai ITAT, it is held that the 5 ITA No. 62/ MUM/2018 Assessment Year: 2013-14 broken period interest paid by the appellant is allowable as deduction in computing the total income. The ground is accordingly allowed."

7.3 Since the facts are similar, following the reasons given in appellant's own case for A.Y.2011-12 (supra), no disallowance is called for in respect of broken period interest on HTM securities. Accordingly, the addition of Rs.4,71,69,218/- made by the AO is deleted. The ground is allowed."

6.6 Since the facts are similar for the year under consideration, respectfully following the reasons given by my learned predecessor for A.Y.2011-12 and 2012-13, no disallowance is called for in respect of broken period interest on HTM securities. The addition of Rs.9.48,81,164/- made by the AC in respect of broken period interest on HIM securities is deleted. Accordingly, the ground is allowed.

7. We notice that the Ld. CIT (A) has decided this issue in favour of the assessee by following the decision of his predecessor in the assessee's own case for the AY 2011-12 and 2012-13. Since, the decisions of the then Ld. Commissioners (Appeals) relied upon by the Ld. CIT(A) who has passed the impugned order, are based on the decision of the Hon'ble Supreme Court in the case of Citibank (supra), Hon'ble Bombay High Court in the case of American Express Bank (supra) and since there is no material change in the facts of the present case there is no merit in the contention of the department. Moreover, the Ld. CIT(A) has decided this ground of appeal by following the decision of the Mumbai Tribunal rendered in the assessee's own appeals for the AY 2009-10 , 2011-12 and 2012-13. Hence, we do not find any reason to interfere with the findings of the Ld. CIT (A). We therefore, uphold the decision of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.

8. Vide Ground No. 2, the revenue has challenged the action of the Ld. CIT (A) in deleting the addition of an amount of Rs. 1,40,786/- made by the AO u/s 14A read with rule 8D of the Income Tax Rules. The Ld. DR submitted that since the AO has made the addition in accordance with the provisions of law, CIT (A) has wrongly deleted the disallowance made by the AO.

Assessment Year: 2013-14

9. On the other hand, the Ld. counsel for the assessee submitted that the Ld. CIT (A) has decided this issue in favour of the assessee by following the decision of his predecessor in the assessee's own case for the AY 2012-13 and since the said decision is based on the judgment of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT 378 ITR (Del) and other cases, there is no infirmity in the order of the Ld. CIT (A).

10. We have heard the rival submissions and also gone through the material on record in the light of the rival contentions of the parties. The Ld. CIT (A) has deleted the disallowance holding as under:-

"8.4 have carefully considered the facts of the case, discussion of the AC in the impugned order as well as oral contentions and written submissions of the appellant. I find that similar issue has come up for consideration in appellants own case for the preceding A.Y.2012-13. After considering the facts of the case and submissions of the appellant. the issue has been decided in favour of the appellant by my learned predecessor vide Appeal N1o.CIT(A)-6/IT-2/2014-15 dated 27.05.2016. The relevant portion of the order is reproduced hereunder for ready reference:

"6.2 1 have carefully considered the facts of the case and submission made by the Ld. AR. I have also gone through the decisions relied on by the Ld. AR. It has been contended by the Ld. AR that the appellant bank has not earned any exempt income during the previous year relevant to the subject assessment year. Hence, respectfully following the decisions of Cheminvest Ltd. V. CIT, 378 ITR 33 (Del) in the cases of Corrtech Energy (P.) Ltd. (supra), Lakhani Marketing Inc. (supra), Shivam Motors (P) Ltd. (supra), no disallowance is called for. Following these decisions, addition made by the AO is deleted. The ground is allowed.

8.5 Since the facts are similar, respectfully following the decisions relied upon by my learned predecessor. addition of Rs.1,40,786/- made by the AO is deleted. Accordingly, the ground of appeal is allowed."

Assessment Year: 2013-14

11. We notice that the findings of the Ld. CIT (A) are based on the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (supra) in which the Hon'ble High Court has held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. In the present case, admittedly the assessee bank had not earned any exempt income during the previous year, therefore the application of 14A does not arise. Since, the findings of the Ld. CIT (A) are based on the law laid down by the Hon'ble Delhi High Court, we do not find any infirmity in the order of the Ld. CIT (A) to interfere with. Hence, we uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.

12. Vide Ground No. 3 the revenue has challenged the action of the Ld. CIT (A) in deleting the addition made by the AO on account of depreciation on lease assets. The Ld. DR submitted that since the leased assets were purchased and leased out during the financial year relevant to the assessment years 1996-97, 1997-98, 1998-99, 1999-2000 and no new assets were purchased for leasing out during the assessment year under consideration, the AO has rightly rejected the claim of the assessee in respect of the assets in the current year. Hence, the order passed by the Ld. CIT (A) is liable to be set aside.

13. On the other hand, the Ld. counsel for the assessee submitted that this issue is covered in favour of the assessee by the decision of the coordinate Bench rendered in the assessee's own case for the AY 1996-97 to 2004-05 and AY 2008-09. Since, the findings of the Ld. CIT (A) are based on the findings of the Tribunal rendered in the assessee's own case, there is no merit in the contention of the department. Therefore, this ground of appeal is liable to be dismissed being devoid of merit.

14. We have perused the material on record in the light of the rival submissions of the parties. The Ld. CIT (A) has decided this issue in favour of the assessee holding as under:-

"9.4 I have carefully considered the facts of the case, discussion of the AO in the impugned order as well as oral 8 ITA No. 62/ MUM/2018 Assessment Year: 2013-14 contentions and written submissions of the appellant. I that similar issue has come up for consideration in appellant's own case for the preceding A.Y.2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant by my learned predecessor vide Appeal No. CIT(A)-6/IT-178/2014-15 dated 05.10.2015. The relevant portion of the order reproduced hereunder for ready reference:

"4.2 I have carefully considered the facts of the case and the submission of the appellant. This issue is covered in favour of the appellant directly by the Hon'ble Tribunal's order dated 20.03.2013 passed in respect of A.Ys.1996-97 to 2004-05 and also in respect of A.Y2 008-09. The Ld. CIT(A)-6, Mumbai has allowed the ground in appellant's own case for the immediately preceding A.Y.2010-11 in Appeal No. CIT(A)-6/IT- 108/Rg.2(3)12-13 dated 21.10.2013. Respectfully following the above orders, the disallowance made by the AO is deleted and the ground is allowed."

9.5 Similarly, in A.Y.2012-13, my learned predecessor has decided the issue in favour of the appellant vide Appeal No.CIT(A)-6/IT-2/2014-15 dated 27.05.2016. The relevant part of the order is reproduced hereunder for ready reference:

"5.2 I have carefully considered the facts of the case and submission made by the Ld. AR. I find that similar issue has come up for consideration in appellant's own case for the immediately preceding A. Y.2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant vide para 4.2 of Appeal No.CIT(A)-6/IT-178/2014-15 dated 05.10.2015. The relevant portion of the order is reproduced hereunder for ready reference and clarity:-

"4.2 I have carefully considered the facts of the case and the submission of the appellant. This issue is covered in favour of the appellant directly by the .Hon'ble Tribunal's order dated 20.03.2013 passed in respect of A.Ys.1996-97 to 2004-05 and also in respect of A.Y.2008-09. The Ld. CIT(A)-6, Mumbai has allowed the ground in appellant's own case for the immediately preceding A.Y.2010-11 in Appeal No.CIT(A)-6/IT- 1o8/Rg.2(3)/12-13 dated 21.10.2013. Respectfully following the above orders, the disallowance made by the AO is deleted and the ground is allowed."

Assessment Year: 2013-14 Since the facts are similar, following the reasons given in appellant's own case for A.Y.2011-12 (supra), no disallowance is called for in respect of depreciation on leased assets. Accordingly, the addition of Rs.19,57,8981made by the AO is deleted. The ground is allowed."

9.6 Since the facts are similar for the year under consideration, respectfully following he reasons given by my learned predecessor for A.Y.2011-12 and 2012-13, no disallowance is called for in respect of depreciation on leased assets. The addition of Rs.16,64,214/- made by the AC in respect of depreciation on leased assets is deleted. Accordingly, the ground is allowed."

15. We notice that the Ld. CIT (A) has decided this issue in favour of the assessee by following the order of his predecessor passed in the assessee's own case for the AY 2011-12 and 2012-13. We further notice that the said order is based on the findings of the co-ordinate Bench decided in the assessee's own case for the AYs 1996-97 to 2004-05 and 2008-09. Since, the findings of the Ld. CIT (A) are based on the decision of the co-ordinate Bench rendered in the assessee's own case for the earlier assessment years, there is no reason to interfere with the findings of the Ld. CIT (A). We therefore uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.

In the result, appeal filed by the revenue for assessment year 2013-2014 is dismissed.

Order pronounced in the open court on 7th May, 2019.

                Sd/-                                                    Sd/-
       (RAJESH KUMAR)                                            (RAM LAL NEGI)
      ACCOUNTANT MEMBER                                       JUDICIAL MEMBER
  मुंबई Mumbai; दिन ुं क Dated:     07/05/2019


Alindra, PS

आदे श प्रतितिति अग्रेतिि/Copy of the Order forwarded to :

1. अपील र्थी / The Appellant

2. प्रत्यर्थी / The Respondent.

Assessment Year: 2013-14

3. आयकर आयक्त(अपील) / The CIT(A)-

4. आयकर आयक्त / CIT

5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai

6. ग र्ड फ ईल / Guard file.

                                                आदे शानुसार/ BY ORDER,
सत्य दपि प्रदि //True Copy//
                                     उि/सहायक िंजीकार     (Dy./Asstt. Registrar)
                           आयकर अिीिीय अतिकरण, मुंबई / ITAT,          Mumbai