M/S UNION BANK OF INDIA,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-(LTU)-2, MUMBAI, MUMBAI

ITA 2037/MUM/2024Status: DisposedITAT Mumbai11 June 2025AY 2020-2140 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that no disallowance under Section 14A read with Rule 8D is warranted where the assessee has earned exempt income on shares/stocks held as 'stock-in-trade', respectfully following the decision of a coordinate bench in the assessee's own case. For the issue of recovery of bad debts, the Tribunal followed a coordinate bench decision which held that such recovery is not taxable. Regarding broken period interest, the Tribunal, respectfully following the decisions of the Supreme Court in CIT Vs. Citi Bank and the jurisdictional High Court in CIT Vs. HDFC Bank Ltd., held that the AO was not correct in making the disallowance. For amortisation of premium on securities in the HTM category, the Tribunal, respectfully following a coordinate bench decision which relied on the Bombay High Court's ruling in HDFC Bank Ltd., saw no reason to interfere with the CIT(A)'s decision. For AY 2020-21, the assessee's appeal was partly allowed and the revenue's appeal was dismissed. For AY 2021-22, the assessee's appeal was partly allowed and the revenue's appeal was dismissed.

What were the facts?

The appeals by the assessee (Union Bank of India) and the revenue (DCIT/ACIT) are against the orders of the NFAC, Delhi (CIT(A)) for Assessment Years (AY) 2020-21 and 2021-22. The appeals involve common issues. The assessee's appeals (ITA Nos. 2037/Mum/2024 and 2038/Mum/2024) challenge certain disallowances, while the revenue's appeals (ITA Nos. 2119/Mum/2024 and 2118/Mum/2024) contest the deletion of these disallowances by the CIT(A). The specific grounds relate to disallowance under Section 14A read with Rule 8D, taxability of recovery of bad debts, and amortisation of premium on securities.

What were the issues?

1. Whether disallowance under Section 14A read with Rule 8D is warranted when exempt income is earned on shares/stocks held as 'stock-in-trade'? The assessee argued that no disallowance is warranted as the shares/bonds were held as 'stock-in-trade', citing the Supreme Court decision in Maxopp Investment Pvt. Ltd. The revenue did not dispute this fact. 2. Whether recovery of bad debts written off, for which deduction was allowed, is taxable? The assessee contended that such recovery is not taxable, relying on a coordinate bench decision for AY 2013-14. The revenue supported the Assessing Officer's (AO) view. 3. Whether broken period interest is allowable as a deduction? The assessee argued for its allowability, relying on the Bombay High Court decision in CIT Vs. HDFC Bank Ltd. and the Supreme Court decision in CIT Vs. Citi Bank. The revenue supported the AO's disallowance, citing the Rajasthan High Court decision in CIT Vs. Bank of Rajasthan Ltd. 4. Whether amortisation of premium paid on securities in the HTM category is allowable as a deduction? The assessee claimed this deduction based on RBI guidelines. The AO disallowed it, stating RBI circulars cannot override income tax provisions. The assessee relied on the Bombay High Court decision in HDFC Bank Ltd.

Which sections of the Income-tax Act were involved?

Section 14A,Section 36(1)(viia)

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Heard together (4 matters)

ITA No. 2037/MUM/2024
ITA No. 2038/MUM/2024
ITA No. 2119/MUM/2024
ITA No. 2118/MUM/2024

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय न्यायाधिकरण न्यायपीठ, मुंबई | IN THE INCOME-TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2037/MUM/2024 (निर्धारण वर्ष / Assessment Year :2020-21) आयकर अपील सं./ITA No. 2038/MUM/2024 (निर्धारण वर्ष / Assessment Year :2021-22)

Union Bank of India, Finance & Accounts, Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai, Maharashtra- 400021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACU0564G Appellant/अपीलार्थी v/s. बनाम DCIT, Circle- (LTU) 2, Mumbai Room No. 421, 4th Floor, Aayakar Bhavan, M. K.

Road, Mumbai-400020 ..

Respondent/प्रतिवादी आयकर अपील सं./ITA No. 2119/MUM/2024 (निर्धारण वर्ष / Assessment Year :2020-21) आयकर अपील सं./ITA No. 2118/MUM/2024 (निर्धारण वर्ष / Assessment Year :2021-22) ACIT, Circle-3(4), Mumbai Room No. 559, 5th Floor, Aayakar Bhavan, M. K.

Road, Mumbai-400020 v/s.

Union Bank of India, बनाम | Finance & Accounts, Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai, Maharashtra- 400021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACU0564G Appellant/अपीलार्थी ..

Respondent/प्रतिवादी Page 2 ITA Nos.2037, 2119, 2038 & 2118/M

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