THE DCIT CIR 3(1), MUMBAI v. M/S. ICICI BANK LTD (IN RESPECT OF ERSTWHILE M.S, ICICI CAPITAL SERVICES LTD.) ICICI BANK TOWERS ,, MUMBAI

ITA 3310/MUM/2008 | 2001-2002
Pronouncement Date: 21-01-2010 | Result: Dismissed

Appeal Details

RSA Number 331019914 RSA 2008
Bench Mumbai
Appeal Number ITA 3310/MUM/2008
Duration Of Justice 1 year(s) 8 month(s) 9 day(s)
Appellant THE DCIT CIR 3(1), MUMBAI
Respondent M/S. ICICI BANK LTD (IN RESPECT OF ERSTWHILE M.S, ICICI CAPITAL SERVICES LTD.) ICICI BANK TOWERS ,, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 21-01-2010
Assessment Year 2001-2002
Appeal Filed On 12-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA. NO. 3310/MUM/2008 ASSESSMENT YEAR 2001-2002 DCIT CIRCLE 3 (1) MUMBAI 400 020. VS. M/S. ICICI BANK LTD. (IN RESPECT OF ERSTWHILE M/S. ICICI CAPITAL SERVICES LTD.) MUMBAI 400 051 PAN AAACT-1398-K (APPLICANT) (RESPONDENT) FOR APPLICANT : SHRI S.K. MAHAPATRA SR. D.R. FOR RESPONDENT : MS. AARTI VISSANJI ORDER PER SHRI D. MANMOHAN V.P. 1. PENALTY LEVIED BY THE ASSESSING OFFICER UNDER S ECTION 271 (1) (C) OF THE ACT HAVING BEEN CANCELLED BY THE LEARNE D CIT(A) REVENUE IS IN APPEAL BEFORE US CONTENDING INTER ALIA THAT THE CIT(A) ERRED IN NOT APPRECIATING THAT AN INACCURATE CLAIM FOR BAD DEBTS AS WELL AS INCORRECT COMPUTATION OF LONG TERM CAPITAL GAINS ON SALE OF N SC MEMBERSHIP CARD WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULAR S OF INCOME WHICH ATTRACTS LEVY OF PENALTY. 2. WE HAVE HEARD THE LEARNED D.R. AS WELL AS LE ARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE AND C AREFULLY PERUSED THE RECORD. AT THE TIME OF HEARING LEARNED D.R. SUBMIT TED THAT A WRONG CLAIM WHICH IS NOT ADMISSIBLE IN LAW WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE PENALTY IS IMPOSABLE BY INVOKING THE EXPLANATION TO SECTION 271 (1) (C) OF THE ACT IN THE EVENT OF CONFIRMATION OF THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER. 2 3. ON THE OTHER HAND LEARNED COUNSEL APPEARING O N BEHALF OF THE ASSESSEE SUBMITTED THAT AN AMOUNT OF RS.3 40 84 6/- WAS ADVANCED TO ONE OF THE EMPLOYEES OF THE ASSESSEE-COMPANY AND UPON HIS LEAVING THE COMPANY WITHOUT REPAYING THE AMOUNT THE AMOUN T WAS WRITTEN OFF AS BAD DEBT. THE ASSESSING OFFICER DISALLOWED THE C LAIM OF THE ASSESSEE ON THE GROUND THAT IN ORDER TO CLAIM DEDUCTION OF A NY AMOUNT AS A BAD DEBT IT HAS TO BE CREDITED TO THE P & L ACCOUNT IN AN EARLIER YEAR WHEREAS IN THE INSTANT CASE IT WAS DECLARED ONLY AS A LOAN TO THE EMPLOYEE AND THUS IT WAS CONCLUDED THAT THE CLAIM DOES NOT QUANT IFY FOR DEDUCTION UNDER SECTION 36(I) (VII) OF THE I.T. ACT. HOWEVER AN AMOUNT LENT TO THE EMPLOYEE BUT NOT RECOVERED IS OTHERWISE ALLOWABLE A S TRADING LOSS. SINCE NO SUCH CLAIM WAS SPECIFICALLY MADE BEFORE THE ASSE SSING OFFICER AND ALSO HAVING REGARD TO THE SMALLNESS OF THE AMOUNT GROUN D URGED BEFORE THE ITAT IN THE QUANTUM PROCEEDINGS WAS NOT PURSUED AND THE ASSESSEES COUNSEL WAS ADVISED NOT TO PRESS THE GROUND. IN THE ORDER DATED 6 TH NOVEMBER 2008 (ITA. NO. 222/ M/05) THE ITAT REJECT ED THE CLAIM OF DEDUCTION ON ACCOUNT OF BAD DEBTS IN VIEW OF THE FA CT THAT THE SAID GROUND WAS NOT PRESSED. HOWEVER IT IS NOT THE CASE OF THE ASSESSING OFFICER AT ANY STAGE THAT AMOUNT WAS NOT LENT TO TH E EMPLOYEE AND IT CANNOT BE TREATED AS A TRADING LOSS. A MERE WRONG C LAIM CANNOT ATTRACT PENALTY PROVISIONS IF THE VIEW TAKEN BY THE ASSESSE E IS ONE OF THE POSSIBLE VIEWS OR IF A CLAIM OF DEDUCTION IS BASED ON BONAFI DE GROUNDS. IT WAS THUS CONTENDED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN CANCELING THE PENALTY REFERABLE TO THE DISALLOWANCE OF RS.3 40 846/-. 4. SIMILARLY ASSESSEE ACQUIRED MEMBERSHIP OF NATI ONAL STOCK EXCHANGE BY PAYING INTEREST FREE REFUNDABLE DEPOSIT OF RS.1.50 CRORES AND THE RIGHTS THEREIN WERE SOLD TO ICICI WEB TRADE LIMITED. THE ASSESSING OFFICER BIFURCATED THE CONSIDERATION INTO INITIAL DEPOSIT AND THE BALANCE AMOUNT AS GOODWILL; HE SOUGHT TO TAX THE EN TIRE AMOUNT OF GOODWILL COMPONENT AS CAPITAL GAINS BY TAKING THE COST OF GOODWILL AT NIL. 3 THE ASSESSEE FURNISHED RELEVANT DETAILS BEFORE THE ASSESSING OFFICER TO CLAIM THAT THE DEPOSIT HAS TO BE TREATED AS A COST INCURRED FOR ACQUIRING THE NSC MEMBERSHIP AND HAS TO BE CONSIDERED AS A CO ST OF ACQUISITION. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAVING DISC ONTINUED SECONDARY MARKET OPERATIONS ASSESSING THE GAIN OF RS.91 50 0 00/- AS GOODWILL IS NOT CORRECT. THE CLAIM OF THE ASSESSEE WAS NOT ACCE PTED BY THE ASSESSING OFFICER AND THE ORDER PASSED BY THE ASSESSING OFFIC ER WAS AFFIRMED BY THE ITAT CITED (SUPRA) BY FOLLOWING THE DECISION O F SPECIAL BENCH OF THE TRIBUNAL IN THE CASE REPORTED IN R.M. VALLIAPPAN VS . ACIT (2006)103 ITD 63 (CHENNAI). LEARNED COUNSEL SUBMITTED THAT THE P LEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER IS BONAFIDE AND IN THE EVENT OF NON- ACCEPTANCE OF LEGAL CLAIM IT CANNOT BE CONCLUDED TH AT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. SHE THU S STRONGLY RELIED UPON THE ORDER OF THE LEARNED CIT(A) TO SUBMIT THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 5. HAVING HEARD THE RIVAL SUBMISSIONS WE ARE OF TH E VIEW THAT MERE DISALLOWANCE OF CLAIM MADE BY THE ASSESSEE SHO ULD NOT LEAD TO LEVY OF PENALTY WHEN CLAIMS WERE MADE ON BONAFIDE GROUND S. SINCE THE LEARNED CIT(A) CANCELLED THE PENALTY BY GIVING COGE NT REASONS WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). UNDER THESE CIRCUMSTANCES THE APPEAL FILED BY THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 2 1 ST DAY OF JANUARY 2010. SD/- SD/- (R.K. PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 21 ST JANUARY 2010. VBP/- 4 COPY TO 1. DCIT CIRCLE 3 (1) ROOM NO. 607 AAYAKAR BHAVAN MUMBAI 400 020. PAN AAACT-1398-K 2. M/S. ICICI BANK LTD. (IN RESPECT OF ERSTWHILE M/ S. ICICI CAPITAL SERVICES LTD.) ICICI BANK TOWERS BANDRA-KURLA COMPLEX BANDRA (EAST) MUMBAI 400 051. PAN AAACT-1398-K 4. CIT(A)-XXVII MUMBAI 400 021. 5. CIT CITY-III MUMBAI 6. D.R. I BENCH MUMBAI. 7. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI. SNO DATE INITIALS 1 DRAFT DICTATED ON 19-01-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 20-01-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER