Income Tax Appellate Tribunal - Jaipur
Acit, Jaipur vs S B B J, Jaipur on 31 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 126/JP/2014 & 925/JP/2012
fu/kZkj.k o"kZ@Assessment Years : 2011-12.
State Bank of Bikaner & cuke Asstt. Commissioner of Income-
Jaipur, Vs. tax/DCIT, Circle-6,
Tilak Marg, C-Scheme, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AADCS 4750 R
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 30/JP/2013
fu/kZkj.k o"kZ@Assessment Years : 2011-12.
Asstt. Commissioner of cuke State Bank of Bikaner & Jaipur,
Income-tax, Circle-6, Vs. Tilak Marg, C-Scheme,
Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AADCS 4750 R
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Smt. Rolly Agarwal (CIT)
fu/kZkfjrh dh vksj ls@Assessee by : Shri P.C. Parwal (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 08.08.2017.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 31/08/2017.
vkns'k@ ORDER
PER BENCH :
These three appeals by the assessee and revenue are directed against two separate orders of ld. CIT (Appeals)-II, Jaipur dated 16.01.2014 and 18.10.2012 2 ITA No. 126/JP/14, 30/JP/13 & 925/JP/12 State Bank of Bikaner & Jaipur, Jaipur.
pertaining to A.Y. 2011-12. All these appeals are being disposed off by way of a consolidated order for the sake of convenience. First, we take up assessee's appeal in ITA No. 126/JP/2014. The assessee has raised the following grounds of appeal :-
" 1. Under the facts and circumstances of the case order by ld. Commissioner of Income Tax (appeals) u/s 154 is illegal and bad in law.
2. Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in disallowing Rs. 100,85,79,026/- on account of broken period interest paid by the bank by relying on the decision of Rajasthan High Court in case of CIT vs. Bank of Rajasthan Ltd., 316 ITR 391 dated 24.03.2008 by incorrectly distinguishing the subsequent judgment of Hon'ble Supreme Court in case of CIT vs. CITI Bank NA in Civil Appeal No. 1549/2006 dated 12.08.2008.
3. Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in making the above disallowance by making varius incorrect observations and also not considering the various contentions raised by the assessee.
4. Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in not dealing the alternate argument of assessee that even if disallowance is to be made it can be made only of net broken period interest paid as has been made by AO in earlier years on the ground that this issue is not decided by his predecessor CIT (A).
5. Appellant craves to add, amend, alter or modify any of the ground of appeal.
6. The appropriate cost be awarded to the assessee."
2. Briefly stated the facts of the case are that ld. CIT (A) rectified his order under section 154 on the basis that the in the appellate order dated 18.10.2012 the ld. CIT (A) did not consider the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. Bank of Rajasthan, 316 ITR 391 (Raj.) thereby the ld. CIT (A) 3 ITA No. 126/JP/14, 30/JP/13 & 925/JP/12 State Bank of Bikaner & Jaipur, Jaipur.
confirmed the addition on account of net broken period interest. Aggrieved, the assessee has preferred this appeal before this Tribunal.
3. The ld. Counsel for the assessee has reiterated the submissions as made in the written brief and submitted that this issue is squarely covered in favour of the assessee by the judgment of Hon'ble Rajasthan High Court in the assessee's own case.
3.1. On the contrary, the ld. D/R opposed the submissions. 3.2. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. We find that the Hon'ble Rajasthan High Court in D.B. Income Tax Appeal No. 446/2008 in the case of CIT vs. SBBJ had framed the question of law as under :-
" Whether in the facts and circumstances of the case, the ITAT has not acted illegally and perversely in holding that the broken period interest on purchase of securities is deductible u/s 37 of the Act as business expenditure ? "
The Hon'ble High Court after considering the various case laws decided the issue against the revenue. Therefore, respectfully following the judgment of the Hon'ble Jurisdictional High Court, we hereby direct the AO to delete the addition
4. Other grounds raised are general in nature and needs no adjudication.
5. In the result, appeal of the assessee is partly allowed.
6. Now we take up the appeal of the revenue in ITA No. 30/JP/2013 pertaining to assessment year 2011-12. The revenue has raised the following grounds of appeal :-
4ITA No. 126/JP/14, 30/JP/13 & 925/JP/12
State Bank of Bikaner & Jaipur, Jaipur.
" On the facts and in the circumstances of the case the ld. CIT (Appeals) has erred in -
1. Deleting the addition of Rs. 26,04,88,649/- for A.Y. 2011-12 made by the AO on account of including the interest of Government and other securities in the income of the assessee on accrual basis at Rs. 10,67,63,80,736/- as against the inclusion by the assessee bank on the due basis at Rs. 10,41,58,92,267/-.
2. Deleting addition of Rs. 1,00,85,79,026/- for A.Y. 2011-12 made by the AO on account of disallowance of broken period interest payment on purchases of securities.
3. Holding that the view taken by the AO in interest of valuation of investment by adopting global method of valuation of securities as against category wise method of valuation followed by the assessee is not correct.
4. Deleting the addition of Rs. 77,24,91,414/- for A.Y. 2011-12 made by the AO on account of disallowance of amortization in respect of permanent diminution in the value of securities held by the Bank under the "Head of Maturity" category.
5. Deleting the addition of Rs. 11,50,110/- for A.Y. 2011-12 made on account of expenditure claimed by the assessee in various heads by treating the same as prior period expense.
7. At the time of hearing, the ld. Counsel for the assessee submitted that identical grounds were raised in the appeal in ITA No. 438/JP/2009 pertaining to A.Y. 2006-07 on behalf of the revenue. He submitted that the facts are identical as were in the A.Y. 2006-07. The issues are squarely covered in favour of the assessee by the judgment of the Hon'ble Jurisdictional High Court in the assessee's own case pertaining to A.Y. 1997-98 to 2000-01 and 2004-05.
7.1. The D/R has not controverted this fact.
5ITA No. 126/JP/14, 30/JP/13 & 925/JP/12
State Bank of Bikaner & Jaipur, Jaipur.
7.2. We have heard rival contentions and perused the material on record. Both the respective representatives of the parties have adopted the same arguments as were made in the revenue's appeal in ITA No. 438/JP/2009 and the appeal of the revenue on the identical grounds raised mentioned herein above have been decided by following judgment of the Hon'ble High Court of Rajasthan in appeals pertaining to the assessments 1997-98 to 2000-01 and 2004-05. The Ld. Counsel has invited our attention, to the judgments of Hon'ble High Court rendered in D.B. Income Tax Appeals No. 185/2014 and 27/2015. Therefore, taking a consistent view, we do not see any reason to interfere into the finding of the ld. CIT (A) in this appeal also, same is hereby affirmed. The grounds nos. (i) to (iv) of Revenue's appeal are rejected.
8. Ground No. (v) relates to deletion of addition of Rs. 11,50,110/- for A.Y. 2011-12 on account of expenditure claimed by the assessee under various heads by treating the same as prior period expenses.
8.1. We have discussed this issue in the appeal of the assessee in ITA No. 280/JP/2009 for the A.Y. 2006-07 in para 6.3 to 6.5 of the order. For the detailed reasons given therein and taking a consistent view of the earlier order of the ITAT, we reject this ground of the revenue.
9. In the result, appeal of the revenue is dismissed.
10. Now we take up assessee's appeal in ITA No. 925/JP/2012 pertaining to assessment year 2011-12. The assessee has raised the following grounds of appeal:-
6ITA No. 126/JP/14, 30/JP/13 & 925/JP/12
State Bank of Bikaner & Jaipur, Jaipur.
" 1. The ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the disallowance of Rs. 1,41,68,947/- made by AO under section 14A read with Rule 8D of the Income Tax Act, 1961.
2. Appellant craves to add, amend, alter or modify any of the ground of appeal.
3. the appropriate cost be awarded to the assessee.
11. Briefly stated the facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 06.03.2012. While framing the assessment, the AO made disallowance of Rs. 1,41,68,947/-under section 14A read with rule 8D on account of exempted income. Aggrieved, the assessee preferred an appeal before ld. CIT (A), who after considering the submissions, sustained the disallowance made by the AO. Now the assessee is in further appeal before this Tribunal.
12. We have heard the rival contentions and perused the material on record and gone through the orders of the authorities below. We have adjudicated identical ground in the assessee's appeal in ITA No. 280/JP/2009 for the A.Y. 2006-07 wherein we have deleted the addition by observing as under :-
"4.5 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. We find that Ld. CIT(A) has made disallowance by computing as per Rule 8D of the Income Tax Rules 1962. In our view, the Ld. CIT(A) was not justified in computing the disallowance as per rule 8D, as the Rule 8D became operational from the A.Y. 2008-09. Further, there is not dispute with regard to the fact that similar disallowances were made u/s 14A in the assessment year 2000-01, 2002-03 and 2003-04 and the matter traveled up to the Hon'ble Rajasthan High Court. The Hon'ble High court in DB Income Tax Appeal Nos. 172/2008, 119/2010, 141/2010 and 142/2010 was pleased to held that 7 ITA No. 126/JP/14, 30/JP/13 & 925/JP/12 State Bank of Bikaner & Jaipur, Jaipur.
in view of the decision of the Hon'ble Supreme Court in the case of Godrej Boyce Manufacturing Company Ltd. vs. DCIT. The order of disallowance was reversed. The facts are identical in the present year and also there is no change into facts and circumstances. As the assessee bank is having sufficient interest free funds which has been accepted by both the authorities below. Therefore, respectfully following the Judgment of the Hon'ble Jurisdictional High Court, we hereby direct the AO to delete the disallowance. Thus, this ground of assessee's appeal is allowed."
Since there is no change in the facts and circumstances of the case in the year under appeal and also following the judgment of the Hon'ble Jurisdictional High Court on this issue, therefore, taking a consistent view of the matter, we delete the addition for the year under consideration. The ground of the assessee is allowed.
13. Other grounds raised are general in nature and needs no adjudication.
14. In the result, appeal of the assessee is partly allowed.
15. In totality, the appeal of the revenue is dismissed whereas the appeals of the assessee are partly allowed.
Order pronounced in the open court on 31/08/2017.
Sd/- Sd/-
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(Vikram Singh Yadav) (Kul Bharat)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 31/08/2017.
das/
8
ITA No. 126/JP/14, 30/JP/13 & 925/JP/12
State Bank of Bikaner & Jaipur, Jaipur.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The ACIT/DCIT, Circle-6, Jaipur.
2. izR;FkhZ@ The Respondent- State Bank of Bikaner & Jaipur, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File {ITA No. 126/JP/2014, 30//JP/2013 & 925/JP/2012} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar