ACIT, CIRCLE-2(1)(1), MUMBAI v. M/S BANK OF BARODA, MUMBAI

ITA 5619/MUM/2019 | 2009-2010
Pronouncement Date: 08-03-2021 | Result: Dismissed

Appeal Details

RSA Number 561919914 RSA 2019
Assessee PAN AAACB1534F
Bench Mumbai
Appeal Number ITA 5619/MUM/2019
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant ACIT, CIRCLE-2(1)(1), MUMBAI
Respondent M/S BANK OF BARODA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-03-2021
Last Hearing Date 01-03-2021
First Hearing Date 01-03-2021
Assessment Year 2009-2010
Appeal Filed On 29-08-2019
Judgment Text
IN THE I NCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE : SHRI M.BALAGANESH AM & SHRI RAVISH SOOD JM ITA NO. 5619 /MUM/ 20 19 ( ASSESSMENT YEAR : 2009 - 10 ) ACIT CIRCLE - 2(1)(1) ROOM NO.561 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD MUMB AI 400 020 VS. M/S. BANK OF BARODA C - 26 G - BLOCK BARODA CORPORATE CENTRE BANDRA - KURLA COMPLEX BANDRA (E) MUMBAI 400 051 PAN/GIR NO. AAACB1534F (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI THARIAN OOMMEN ASSESSEE BY SHRI C. NARESH DATE OF HEARING 01 / 03 /202 1 DATE OF PRONOUNCEMENT 08 / 03 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5619/MUM/2019 FOR A.Y. 2009 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4 MUMBAI IN APPEAL NO. CIT(A) - 4/E - FILE - 276/ACIT 2(1)(1)/2018 - 19 DATED 26/06/2019 (LD. CIT(A) I N SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 254 OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED TO AS ACT) BY THE LD. ASST. COMMISSIONER OF INCOME TAX CIRCLE 2 (1)(1) MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 5619/MUM/2019 M/S. BANK OF BARODA 2 2. THE GROUND NO.1 RAISED BY THE REVENUE IS CHALLENGING THE ACTION OF THE LD. CIT(A) IN DELETING THE INTEREST DISALLOWANCE MADE U/S.14A OF THE ACT R.W. RULE 8D(2)(II) OF THE RULES ON THE GROUND THAT THE ASSESSEE BANK IS HAVING SUFFICIENT INTEREST FREE FUNDS TO MAKE INVESTMENTS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE HAD EARNED EXEMPT INCOME OF RS.58 43 00 883/ - BY WAY OF INTEREST ON TAX FRE E BONDS DIVIDENDS ON SHARES AND INTEREST WHICH IS EXEMPT U/S.10(15)(IV)( C ) & (F) OF THE ACT. THE ASSESSEE ALSO HOLDS CERTAIN SECURITIES AS STOCK IN TRADE. THE ASSESSEE PLEADED THAT ITS OWN FUNDS AVAILABLE BY WAY OF SHARE CAPITAL WAS RS.365.52 CRORES RES ERVES AND SURPLUS OF RS.12514.19 CRORES AND DEMAND DEPOSITS OF RS.14451.22 CRORES ON WHICH NO INTEREST WAS PAID. THE ASSESSEE PLEADED THAT THESE INTEREST FREE FUNDS WERE SUFFICIENT ENOUGH TO EXPLAIN THE INVESTMENTS MADE BY THE ASSESSEE WHICH HAD YIELDED EX EMPT INCOME. ACCORDINGLY THE ASSESSEE PLACED RELIANCE ON THE DECISION S OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HDFC BANK LIMITED 366 ITR 505 AND 383 ITR 529 TO DRIVE HOME THE POINT THAT INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE SUFFICIENT ENOUGH TO COVER THE INVESTMENTS THAT HAD YIELDED EXEMPT INCOME. 3.1. WE FIND THAT THE LD. AO DISREGARDED THE AFORESAID CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO DISALLOW RS.85 90 80 262/ - U/S.14A OF THE ACT R.W.RULE 8D(2) OF THE RULES. WE FI ND THAT ASSESSEE HAD VOLUNTARILY DISALLOWED THE SUM OF RS.7 94 39 436/ - UNDER RULE 8D(2) (III) OF THE RULES CONSIDERING THE INVESTMENTS WHICH HAD YIELDED EXEMPT INCOME. WE FIND THAT THE LD. CIT(A) ON APPRECIATING THE FACT THAT ASSESSEE HAS FLOODED WITH SUF FICIENT OWN AND INTEREST FREE FUNDS IN ITS KITTY WHICH WOULD SUFFICIENTLY EXPLAIN THE INVESTMENTS MADE BY IT WHICH HAD ACTUALLY YIELDED EXEMPT ITA NO . 5619/MUM/2019 M/S. BANK OF BARODA 3 INCOME AND HENCE IT COULD BE SAFELY INFERRED THAT NO BORROWED FUNDS COULD HAVE BEEN UTILISED FOR THE SAME. ACCOR DINGLY BY PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE AND VARIOUS TRIBUNAL DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT WHICH HAS BEEN FOLLOWED BY THE LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE WE FIND NO INFIRMITY IN THE SAID ORDER OF THE LD. CIT(A). ACCORDINGLY THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 4. THE GROUND NO.2 RAISED BY THE REVENUE IS CHALLENGING THE ACTION OF THE LD. CIT(A) WHEREIN HE HAD DIRECTED THE LD. AO TO EXCLUDE THE INVESTM ENTS THAT WERE HELD AS STOCK IN TRADE WHILE COMPUTING DISALLOWANCE U/S.14A OF THE ACT R.W.RULE 8D(2) OF THE RULES. WE FIND THAT THE LD. CIT(A) HAD DIRECTED THE LD. AO TO IGNORE THE INVESTMENT IN SHARES AND SECURITIES THAT WERE HELD AS STOCK IN TRADE FO R THE PURPOSE OF COMPUTING DISALLOWANCE U/S. 14A OF THE ACT R.W.RULE 8D(2) OF THE RULES BY PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL IN CASE OF DCIT VS. INDIA ADVANTAGE SECURITIES LTD. IN ITA NO.6711/MUM/2011 DATED 14/09/2012 ; THE DECISION OF H ONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. SMT. LEENA RAMACHANDRAN REPORTED IN 339 ITR 296 AND ALSO ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INDIA ADVANTAGE SECURITIES LTD. IN ITA NO.1131 OF 2013 DATED 17/03/201 5. WE FIND THAT THIS ISSUE WAS THE SUBJECT MATTER OF ADJUDICATION BY THIS TRIBUNAL IN THE CASE OF CENTRAL BANK OF INDIA VS. DCIT IN ITA NO.3739/MUM/2018 & 3763/MUM/2018 FOR A.Y.2012 - 13 DATED 29/01/2020 WHICH IS AUTHORED BY THE UNDERSIGNED WHEREIN IT WAS HELD THAT THE HONBLE APEX COURT IN THE CASE OF MAXO P P INVESTMENT LTD. REPORTED IN 402 ITR 640 HAD CATEGORICALLY UPHELD THE FINDINGS RECORDED BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA REPORTED IN 78 TAXMANN.COM 3 (P & H) WITH REGARD TO NON - ITA NO . 5619/MUM/2019 M/S. BANK OF BARODA 4 APPLICABILITY OF PROVISIONS OF SECTION 14A OF THE ACT IN RESPECT OF INVESTMENTS HELD AS STOCK IN TRADE IN RESPECT OF BANKS. IT WAS ALSO HELD BY THIS TRIBUNAL THAT THE HONBLE PUNJAB AND HARYANA HIGH COURT IN ABOVE MENTIONED CASE HA D FURTHER PLACED RELIANCE ON THE CBDT CIRCULAR NO.18 /2015 DATED 02/11/2015. HENCE BY RESPECTFULLY FOLLOWING THE SAID DECISION WE HOLD THAT THERE WAS ABSOLUTELY NO ERROR IN THE ACTION OF THE LD. CIT(A) IN HOLDING THAT PROVISIONS OF SECTION 14A OF THE ACT COULD NOT BE MADE APPLICABLE IN RESPECT OF INVESTMENTS IN SHARES HELD AS STOCK IN TRADE IN THE CASE OF ASSESSEE BANK. ACCORDINGLY THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 5. THE GROUND NOS. 3 & 4 IS WITH REGARD TO GRANT OF INTEREST OF REFUN D U/S.244A OF THE ACT AND THE METHOD OF COMPUTATION OF INTEREST U/S.244A THEREON. 5.1. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ISSUE HAS ALREADY BEEN THE SUBJECT MATTER OF ADJUDICATION BY THIS TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y.1995 - 96 IN ITA NO.1646 AND 2565/MUM/2017 DATED 20/12/2018 AUTHORED BY THE UNDERSIGNED WHICH HAS BEEN RELIED UPON BY THE LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE. THE OPERATIVE PORTION OF THE SAID ORDER IS REPRO DUCED TOGETHER WITH THE FACTS BY THE LD. CIT(A) IN HIS ORDER FROM PAGES 11 TO 21 THEREON. HENCE THE SAME IS NOT REPRODUCED HEREIN FOR THE SAKE OF BREVITY. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.1995 - 96 REFERRED TO SUPRA WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDINGLY THE GROUND NOS. 3 & 4 RAISED BY THE REVENUE ARE DISMISSED. ITA NO . 5619/MUM/2019 M/S. BANK OF BARODA 5 6. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 08 / 03 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( RAVISH SOOD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 08 / 03 / 2021 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER ( ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//