DCIT, Hyderabad v. M/s State Bank Of Hyderabad, Hyderabad

ITA 584/HYD/2008 | 2005-2006
Pronouncement Date: 19-03-2010 | Result: Dismissed

Appeal Details

RSA Number 58422514 RSA 2008
Assessee PAN AADCS4009H
Bench Hyderabad
Appeal Number ITA 584/HYD/2008
Duration Of Justice 1 year(s) 11 month(s) 16 day(s)
Appellant DCIT, Hyderabad
Respondent M/s State Bank Of Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 19-03-2010
Date Of Final Hearing 17-03-2010
Next Hearing Date 17-03-2010
Assessment Year 2005-2006
Appeal Filed On 02-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRERSIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.584/HYD/08 : ASSESSMENT YEAR 2005-06 DY. COMMISSIONER OF INCOME- TAX CIRCLE-3(2) HYDERABAD. V/S. STATE BANK OF HYDERABAD HYDERABAD. (PAN AADCS 4009 H) (APPELLANT) (RESPONDENT) AND ITA NO.681/HYD/08 : ASSESSMENT YEAR 2005-06 STATE BANK OF HYDERABAD HYDERABAD. (PAN AADCS 4009 H) V/S. DY. COMMISSIONER OF INCOME- TAX CIRCLE-3(2) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PAVAN KUMAR DEPARTMENT BY : SHRI M S CHANDRA SEKHARAN O R D E R PER G.C.GUPTA VICE PRESIDENT THESE CROSS APPEALS FOR THE ASSESSMENT YEAR 2005-06 ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME -TAX(APPEALS). REVENUE'S APPEAL: ITA NO.584/HYD/08 : ASSESSMENT YEAR 2005-06 2. AT THE OUT SET IT HAS BEEN BROUGHT TO OUR NOTI CE THAT APPROVAL OF THE COMMITTEE ON DISPUTES HAS NOT BEEN RECE IVED BY THE ITA NO.584 & 681/HYD/08 STATE BANK OF HYDERABAD HYDERABAD. 2 REVENUE TO PURSUE THIS APPEAL. ASSESSEE BEING A PUBLIC SECT OR UNDERTAKING APPROVAL OF THE COMMITTEE ON DISPUTES IS MANDATORY TO PURSUE THIS APPEAL. IN THIS VIEW OF THE MATTER THIS A PPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED FOR WANT OF APPROVAL FROM COD. WE HOWEVER HOLD THAT THE APPELLANT SHALL BE AT LIBERTY TO REQUEST FOR RECALL OF THIS ORDER AND RESTORATION OF THIS APPEAL FOR ADJUD ICATION THEREOF ON MERITS IN CASE APPROVAL OF THE COD IS RECEIVED LATER. 3. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ASSESSEE'S APPEAL ITA NO.681/HYD/08 : ASSESSMENT YEAR 2005-06 4. GROUND OF APPEAL NO.1 OF THE ASSESSEE IS GENERAL IN NATURE . GROUNDS OF APPEAL NO.2.1 TO 2.5 ARE AS UNDER- '2.1 THE LEARNED CIT(A) ERRED IN SUSTAINING THE DI SALLOWANCE OF RS.318.60 CRO4RE BEING THE FALL IN THE MARKET VALUE/DEPRECIATION IN THE SECURITIES HELD BY THE BA NK AS STOCK-IN-TRADE. 2.2 THE LEARNED CIT(A) FAILED TO NOTE THAT THE SEC URITIES UNDER HELD TO MATURITY CATEGORY DID NOT CONSTITUTE CAPITA L ASSETS AND THE SAID CATEGORY OF SECURITIES ARE INTERCHANGE ABLE AND THAT THE SECURITIES OF PERMANENT CATEGORY WERE HELD AS STOCK-IN-TRADE IN THE ASSESSMENT YEAR 1994-95 AND T HE CONTENTION IS FULLY SUPPORTED BY THE DECISION OF TH E SUPREM E COURT IN 240 ITRT 355 AND A.P. HIGH COURT IN151 ITR 703 2.3 THE LOWER AUTHORITIES FURTHER ERRED IN DISALLOW ING THE CLAIM OF DEPRECIATION OF RS.318.60 CRORE IN THE VALUE OF SECURITIES CONSTITUTING STACK IN TRADE ON THE ALLEGED GROUND T HAT THE ABOVE DEPRECIATION WAS NOT PROVIDED IN THE BOOKS OF ACCOUNTS. THE LOWER AUTHORITIES FAILED TO NOTE THAT PROVISION FOR DEPRECIATION/FALL IN THE VALUE IS NOT A DECISIVE FACTOR FOR ALLOWANCE OF THE CLAIM. 2.4 THE APPELLANT CONTENDS THAT DISALLOWANCE OF FAL L IN THE MARKET VALUE OF THE SECURITIES ON EXTRANEOUS CONSID ERATION IS BAD IN LAW AS THE APPELLANT HOLDS THE SECURITIES AS STOCK- IN-TRADE AND THE METHOD/CLAIM WAS CONSISTENT. 2.5 WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT CO NTENDS THAT IN THE EVENT SECURITIES HELD TO MATURITY(HTM) ARE H ELD AS ITA NO.584 & 681/HYD/08 STATE BANK OF HYDERABAD HYDERABAD. 3 CAPITAL ASSETS DEPRECIATION/FALL RS.28.03 CRORE CLA IMED AGAINST HTM CATEGORY OF SECURITIES COULD ONLY BE DISALLOWED AND DEPRECIATION OF RS.610.08 CRORE IN R ESPECT OF OTHER SECURITIES BE ALLOWED.' 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE GROUNDS RELATE TO THE ISSUE OF DISALLOWANCE OF DEPRECIATI ON/FALL IN THE VALUE OF INVESTMENT AND THIS ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUN AL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2003-04 IN ITA NO.1232/HYD/0 6 DATED 28.11.2008. 6. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ISSUE INVOLVED IN THESE GROUNDS OF APPEAL BEING COVERED IN F AVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TR IBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 VIDE PAR A 6 THEREOF IT IS DECIDED IN FAVOUR OF THE ASSESSEE FOR THE YEAR UNDER APPEAL AS WELL AND THE GROUNDS OF APPEAL NO.2.1 TO 2.5 OF T HE ASSESSEE ARE ALLOWED. 8. GROUND OF APPEAL NO.3.1 TO 3.3 OF THE ASSESSEE REA D AS UNDER- '3.1 THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO WORK OUT DISALLOWANCE OF UNREALIZED INTEREST OF RS.5.36 CROR E IN RESPECT OF NPAS FOUND NOT RECOVERABLE AS PER RBI GUIDELINES. 3.2 THE LEARNED CIT(A) ERRED IN NOT CONSIDERING TH E CONTENTION THAT INTEREST CLAIMED IN RESPECT OF NPA' S DID NOT RELATE TO EARLIER PERIOD AND MISCONCEIVED THE FACT WHILE HE DIRECTED FOR DISALLOWANCE. 3.3 THE LEARNED CIT(A) FAILED TO NOTE THAT THE ABO VE CLAIM WAS IN RESPECT OF INTEREST RELATING TO THE YEAR UND ER CONSIDERATION IN RESPECT OF STICKY ADVANCES NOT ITA NO.584 & 681/HYD/08 STATE BANK OF HYDERABAD HYDERABAD. 4 ACCRUED/REALIZABLE AND SUCH INTEREST THEREFORE CANN OT BE SUBJECTED TO TAX.' 9. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE GROUNDS OF APPEAL RELATE TO DISALLOWANCE OF UNREALIZE D INTEREST ON NPAS HE FURTHER SUBMITTED THAT THIS ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUN AL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2003-04 IN ITA NO.1232/HYD/0 6 DATED 28.11.2008. 10. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ISSUE INVOLVED IN THESE GROUNDS OF APPEAL BEING COVERED IN F AVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE T RIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 VIDE PARA 9 THEREOF IT IS DECIDED IN FAVOUR OF THE ASSESSEE FOR THE YEAR UNDER APPEAL AS WELL AND THE GROUNDS OF APPEAL NO.3.1 TO 3.3 OF T HE ASSESSEE ARE ALLOWED. 12. GROUNDS OF APPEAL NO.4.1 TO 4.2 ARE AS UNDER- '4.1 THE LEARNED CIT(A) ERRED IN SUSTAINING THE AS SESSMENT OF PRIOR PERIOD EXPENDITURE OF RS.5.64 LAKHS WITHOUT TELESCOPING THE PRIOR PERIOD INCOME OF RS.26.52 LAK HS. 4.2 THE AUTHORITIES BELOW FAILED TO NOTE THAT THE PRIOR PERIOD EXPENDITURE WAS UNANTICIPATED AND THAT THE PRIOR PE RIOD INCOME WAS TAXED WHICH HAD NOT ACCRUED IN THE YEAR AND IN ANY EVENT AUTHORITIES BELOW WERE NOT CORRECT IN DI SLODGING REGULAR METHOD FOLLOWED.' 13. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SE GROUNDS RELATE TO THE DISALLOWANCE OF PRIOR PERIOD EXP ENSES. HE FURTHER SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE A SSESSEE WITH THE ITA NO.584 & 681/HYD/08 STATE BANK OF HYDERABAD HYDERABAD. 5 DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN ASSESSEE 'S OWN CASE FOR ASSESSMENT YEAR 2003-04 IN ITA NO.1232/HYD/06 DATED 28.11.2008. 14. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE INVOLVED IN THESE GROUNDS OF APPEAL BEING COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TR IBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 VIDE PARA 15 THEREOF IT IS DECIDED IN FAVOUR OF THE ASSESSEE FOR THE YEAR UNDER APPEAL AS WELL AND THE GROUNDS OF APPEAL NO.4.1 TO 4.2 OF T HE ASSESSEE IN THIS APPEAL ARE ALLOWED. 16. GROUNDS OF APPEAL NO.5 AND 6 OF THE ASSESSEE IN THI S APPEAL READ AS FOLLOWS- '5 THE LEARNED CIT(A) IS NOT CORRECT IN HOLDING TH AT THE PROVISION UNDER SECTION 36(1)(VIIA) IS ALLOWED TO T HE APPELLANT BANK SUBJECT TO MAKING PROVISION IN THE B OOKS OF ACCOUNT WHICH WE CONTENDED IS AGAINST SPIRIT OF LA W. 6. THE LEARNED CIT(A) IS NOT CORRECT TIN HOLDING T HAT THE PROVISION OF SECTION 115JB OF THE INCOME TAX ACT 19 61 ACT ARE APPLICABLE TO THE BANK ALTHOUGH THE APPELLANT B ANK BEING A SUBSIDIARY OF SBI NEITHER IS REQUIRED TO HO LD ANNUAL GENERAL MEETING NOR ADOPT ITS ACCOUNTS WHICH IS MANDATORY AS PER THE PROVISION OF SECTION 115JB OF THE ACT OF THE INCOME TAX ACT 1961.' AT THE TIME OF HEARING LEARNED COUNSEL FOR THE ASSESSE E DID NOT PRESS FOR THESE GROUNDS. THESE GROUNDS ARE ACCORDINGLY REJECTED AS NOT PRESSED. 17. IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWE D. ITA NO.584 & 681/HYD/08 STATE BANK OF HYDERABAD HYDERABAD. 6 18. TO SUM UP WHILE DEPARTMENT'S APPEAL BEING ITA NO.584/HYD/08 IS DISMISSED ASSESSEE'S APPEAL ITA NO.681/HYD/ 08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19.3.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER. VICE PRESIDENT. DT/- 19TH MARCH 2010 COPY FORWARDED TO: 1. DY. GENERAL MANAGER STATE BANK OF HYDERABAD ACCOU NTS & SERVICES DEPARTMENT. HYBANK TOWERS HEAD OFFICE GUNFOUNDRY HDYDERABAD-500 001. 2. DY. COMMISSIONER OF IT CIRCLE-3(2) HYDERABAD. 3. COMMISSIONER OF INCOME-TAX-IV HYDERABAD. 4. COMMISSIONER OF INCOME TAX III HYDERABAD. 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.