ACIT, CIRCLE -3(4), MUMBAI, MUMBAI vs. UNION BANK OF INDIA, MUMBAI

ITA 2118/MUM/2024Status: DisposedITAT Mumbai11 June 2025AY 2021-2240 pages
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What did the Tribunal hold?

The Tribunal held that for AY 2020-21 and AY 2021-22, no disallowance under Section 14A read with Rule 8D is warranted where the assessee earned exempt income on shares/stocks held as 'stock-in-trade'. This decision was based on respectfully following the coordinate bench's ruling in the assessee's own case, which relied on the Supreme Court's decision in Maxopp Investment Pvt. Ltd. and other precedents. Consequently, the disallowance made by the AO was directed to be deleted. Regarding the taxability of recovery of bad debts, the Tribunal respectfully followed the coordinate bench's decision, which in turn relied on the jurisdictional High Court's ruling in HDFC Bank Ltd. and the Supreme Court's decision in CIT vs. Citi Bank, holding that the AO was incorrect in making the disallowance towards broken period interest. Therefore, the deletion of this disallowance by the CIT(A) was upheld. For the disallowance of amortisation of premium paid on securities in the HTM category, the Tribunal, by respectfully following the coordinate bench's decision which relied on the Bombay High Court's ruling in HDFC Bank Ltd., declined to interfere with the CIT(A)'s decision. For AY 2020-21, the ground relating to the deletion of disallowance under Section 14A read with Rule 8D in computing book profit was rendered infructuous as the Tribunal had held that Section 115JB did not apply. The appeals of the revenue were dismissed, and the appeals of the assessee were partly allowed.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, heard cross-appeals filed by Union Bank of India (the assessee) and the Revenue for Assessment Years (AYs) 2020-21 and 2021-22. The appeals were filed against the order dated 21.02.2024 passed by the NFAC, Delhi (CIT(A)). The common issues involved in these appeals led to their consolidated hearing and disposal. The assessee is Union Bank of India, and the respondent is the DCIT or ACIT, Mumbai. The appeals challenge the disallowances made by the Assessing Officer (AO) and the subsequent orders of the CIT(A).

What were the issues?

The Tribunal had to decide the following issues: 1. Whether disallowance under Section 14A read with Rule 8D of the Income Tax Act, 1961, is warranted when exempt income is earned on shares/stocks held as 'stock-in-trade' (AY 2020-21 and AY 2021-22). - Assessee's contention: No disallowance is warranted as the shares/bonds on which tax-free income was earned are held as 'stock-in-trade', citing the Supreme Court decision in Maxopp Investment Pvt. Ltd. and other High Court and Tribunal rulings. - Revenue's contention: Not recorded in the judgment. 2. Whether the recovery of bad debts previously written off and not allowed as a deduction is taxable (AY 2020-21 and AY 2021-22). - Assessee's contention: Covered in its favour by a coordinate bench decision in its own case for AY 2013-14, which followed the Bombay High Court's decision in HDFC Bank Ltd. and the Supreme Court's decision in CIT vs. Citi Bank. - Revenue's contention: Relied on the contrary view of the Rajasthan High Court in CIT Vs. Bank of Rajasthan Ltd. 3. Whether the disallowance of amortisation of premium paid on securities in the Held To Maturity (HTM) category is justified (AY 2020-21 and AY 2021-22). - Assessee's contention: The amortized premium should be allowed as a deduction as per RBI Guidelines, citing the Bombay High Court's decision in HDFC Bank Ltd. - Revenue's contention: Not recorded in the judgment. 4. Whether the deletion of disallowance under Section 14A read with Rule 8D in computing book profit is correct (AY 2020-21).

Which sections of the Income-tax Act were involved?

Section 14A,Section 36(1)(viia),Section 115JB

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Cases cited in this judgment(22)Show list

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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 v/s. बनाम DCIT, Circle- (LTU) 2, Mumbai Room No. 421, 4th Floor, Aayakar Bhavan, M. K.

Road, Mumbai-400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACU0564G Appellant/अपीलार्थी ..

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. बनाम 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 ..

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

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