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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
order of the further appeal of the department before the Income Tax Appellate Tribunal was allowed. The appellant has approached this court and has submitted that the Tribunal was wrong in upholding the assessing officer's order. He has relied upon the decision of this court in National Thermal Power Company Ltd. v. CIT (1998) 229 ITR 383, to contend that it was open to the assessee to raise the points of law even before the Appellate Tribunal.
The decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961.” 19.1. Based on the above observations, we remand this issue back to the Ld.AO to verify the claim of the assessee in the light of the evidence is furnished in accordance law. Needless to say that proper opportunity of being heard must be granted to assessee.
Accordingly ground number 7 raised by the assessee stands allowed for statistical purposes.
Ground No.8 raised by the assessee is in respect of the disallowance of discount expenses claimed by the assessee on bonds.
& 4159/Mum/2014 ICICI Bank Ltd. 20.1. It is submitted that there is no finding on this issue by the Ld.AO. The Ld. CIT(A) on an appeal dismissed the claim of the assessee by stating that the issue does not arise out of the assessment order.
20.2. Before this Tribunal the Ld.AR submitted that, assessee had claimed identical expenditure during assessment to 2002-03 and this Tribunal in assessee’s own case in ITA number 836/UM/2008 vide order dated 07/07/2017 remanded the issue to the Ld.AO with a direction to allow proportionate expenditure on the issue to be spread over the period of the bonds. She submitted that similar issue again arose for assessment in 2007-08 wherein following the observations of this Tribunal for assessment year 2002-03 the issue was remanded with similar direction.
20.3. The Ld.DR supported the observations of the authorities below.
We have perused submissions advanced by both sides in the light of the records placed before us.
20.4. It is submitted that the claim of deduction was 1st made in the assessment year 2002-03 and coordinate bench of this Tribunal for assessment in 2002-03(supra) directed the Ld.AO to allow proportionate expenditure on the issue of discount of bonus to be spread over the period of bond. The Ld.AR has also submitted that for assessment in 2014-15 the assessing officer himself allowed the claim of assessee on proportionate basis.
& 4159/Mum/2014 ICICI Bank Ltd. We notice that for assessment of 2007-08 identical issue has been considered following the decision of coordinate bench of this Tribunal for assessment in 2002-03(supra) by observing as under:
“27. We heard the parties and perused he materials on record. We notice that the co-ordinate bench in assessee's own case for A.Y. 2002-03 had considered the similar issue and has issued a direction to spread the expenditure over the tenure of the bond. The relevant finding of the Tribunal in this regard is extracted below:- "22. We have heard the rival contentions of the parties and perused the material available on record. As far as the nature of expenditure it of bonds / debenture and issue expenses are concerned, dispute that such expenditure is revenue in nature. In fact, in case o Madras Industrial Corp. (supra), the Hon'ble Supreme Court expenditure incurred on issue and discount of bond/debenture are revenue in nature as the liability incurred by the assessee is wholly and exclusively for the purpose of business, However, at the same time, the Hon'ble Supreme Court held that since by incurring such expenditure the assessee secures a benefit for a mumber of years and there is continuing benefit to the business of the assessee over the entire period turbont debenture, the liability should be spread over the period of wonderlebent bond Though, the Assessing Officer has referred to the aforesaid decision Hon'ble Supreme Court and accepts the legal position, however den of the tond bleven the expenditure relating to the impugned assessment year oroheallowed that the assessee has not furnished the books of account for verifying the correctness of the claim. It needs to be mentioned, the learned Commissioner (Appeals) while accepting assessee's alternative claim has leaned Commissioner (Appeals able to the impugned assessment year has to be allowed and the auditor expenditure has to be spread, over the period of bond/debenture. We find the aforesaid reasoning of the learned Commissioner (Appeals) to be in tune with the ratio laid down by the Hon'ble Supreme Court in Madras Industrial Investment Corp. (supra). As discussed earlier, in the aforesaid decision, the Hon'bie Supreme Court, though held that the expenditure incurred on bonds/debenture is revenue in nature, the expenditure has to be spread ever the period of bond/ In fact, the learned Authorised Representative has before us that in the subsequent assessment years, the Officer has allowed such & 4159/Mum/2014 ICICI Bank Ltd. expenditure on pro-rata basis, r, as it appears from the record, the assessee itself was earlier following an accounting method under which the expenditure on issuance of discount and bond/debenture was spread over the tenure of the bond /debenture. In view of the aforesaid, we direct the Assessing Officer to allow the proportionate expenditure on the issue and discount of bonds / debenture as relatable to the impugned assessment year and the balance expenditure should be spread over to the tenure of bond/debenture. This ground is partly allowed."
Therefore, we see merit in the contention claim of the assessee that proportionate expenditure pertaining to the year under consideration should be allowed as a deduction. Accordingly, we direct the Assessing Officer to consider the claim of the assessee and allow the deduction in accordance with the directions given by the Tribunal.” Respectfully following the above view we direct the Ld.AR to allow the claim of the assessee on proportionate basis.
Accordingly ground number 8 raised by the assessee stands allowed.
Ground No.9 raised by the assessee is on short grant of relief under section 90 Admittedly assessee made additional claim during assessment proceedings against which the TDS certificate was been submitted. The Ld.AO is directed to verify the same and consider the claim of assessee in accordance with law.
Accordingly ground number 9 raised by the assessee stands allowed for statistical purposes.
Ground number 10 is in respect of interest charged under section 234 B 234D of the act.
Ground number 11 is in respect of applicability of provision of section 115 JB of the act.
23.1. It is submitted that the Ld.CIT(A) dismissed the ground of assessee by observing that the issue does not arise out of the assessment order.
23.2. The Ld.AR submitted that the issue is covered in assessee’s own case assessment years 2004-05 and 2005-06 and subsequently the assessing officer himself has accepted the submissions of the assessee in the subsequent assessment years being suspended 2010-11 and 2011-12. She also placed reliance on the decision of Hon’ble Bombay High Court in case of CIT vs Union Bank of India reported in (2019) 177 DTR 305 and the decision of Hon’ble Karnataka High Court in case of CIT vs ING Vysys Bank Ltd., reported in (2020) 114 taxmann.com 506.
23.4. The Ld.DR on the country relied on orders passed by authorities below.
We have perused submissions advanced by both sides in the light of the records placed before this.
This issue is no longer res integra as it has been held by Hon’ble Bombay High Court and Hon’ble Supreme Court that provisions of 115 JB of the act is not applicable to banking institutions. Respectfully following the view, we do not find any merit in the Accordingly ground number 11 raised by the assessee is stands allowed.
Departmental appeal:
Ground number 1 raised by the revenue is against the claim of depreciation on leased assets allowed by the Ld. CIT(A).
24.1. During the year under consideration assessee has claimed depreciation of Rs.30,63,55,733/- on leased assets. The Ld.AO disallowed the claim of the assessee by holding that ownership of the assets is not established by the assessee and therefore these transactions are of financial transaction.
24.2. The Ld.CIT(A) followed its predecessors order in assessee’s own case of the preceding assessment years and allowed the claim of depreciation on leased assets.
Against the order of the Ld. CIT(A) the revenue is an appeal before this Tribunal.
24.3. At the outset both sides admit to the fact that identical issue has been considered by coordinate bench of this Tribunal in assessee’s own case from assessment year 2003-04 till assessment year 2007-08. It is also an admitted fact that no new lease transaction has been entered into by the assessee during the year under consideration. The learning DR has not been able to bring We note that identical issue has been considered by coordinate of this Tribunal in assessee’s own case for assessment year 2007-08 (supra) by observing as under:
“57. We have heard the parties and perused the material on record. We noticed that the Co-ordinate Bench in assessee's own case for AY 2004- 05 and 2005-06 (ITA No. 5276/Mum/2013 and dated 03.11.2017) has considered the similar issue and has held that "17. We have heard rival contentions and perused the material available on record. Learned Counsels appearing for both the parties have agreed before us that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for preceding assessment year as submitted in the paper book. As could be seen from the material on record, in the impugned assessment year, there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets and depreciation claimed on leased assets were continuing from past lease transactions. Notably, in assessment year 1997-98, the Tribunal while deciding the issue in ITA no.5424/Mum./2001, dated 13th July 2016, had allowed assessee's claim of depreciation. The same view was reiterated by the Tribunal while deciding the cross appeals for assessment year 2000-01 in ITA no.4657/Mum./2004 and ITA no.4826/Mum./2004 dated 31st January 2017. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) on this issue. Ground no.3 is dismissed."
Considering the fact that no new lease transactions are entered into by the assessee during the year and that the Co-ordinate Bench has been consistently hold the issue in favour of the assessee, where for the year under consideration see no reason to interfere with the decision of the Ld. CIT(A). This ground of the Revenue is dismissed.”
& 4159/Mum/2014 ICICI Bank Ltd. 24.4. Respectfully following the above view and also taking into consideration the fact that no new lease transaction has been entered into by the assesse, we do not find any infirmity in the view taken by the Ld. CIT(A).
Accordingly ground number 1 raised by the revenue stands dismissed.
Ground number 2 raised by the revenue is against the club membership fees being allowed as expenditure under section 37 of the act by the Ld. CIT(A).
25.1. During assessment proceedings are Ld.AO noted that ₹49,81,062/- assessee claimed towards club membership. Assessee was called upon to explain as to why the said expenditure should not be treated as capital expenditure. In response assessee submitted that membership fees peter the club is allowable as business expenditure since it is incurred to promote the business interest of the assessee. Assessee also relied on the decision of Hon’ble Bombay High Court in case of Otis elevators company India Ltd reported in 195 ITR 682. The Ld.AR however dismissed the claim of the assessee by treating the expenditure to be capital in nature.
25.2. On an appeal before the Ld. CIT(A) the claim of the assessee was allowed by following the order of the preceding assessment years on similar facts and circumstances.
Aggrieved by the order of the Ld. CIT(A) revenue is in appeal before this Tribunal.
25.4. The Ld.AR on the contrary relied on coordinate of this Tribunal in assessee’s own case for assessment year 2007-08 (supra) as well as observations of the Ld. CIT(A) for the year under consideration.
We have submissions advanced by both sides in the light of the records placed before us.
In assessee’s own case for assessment in 2007-08 (supra), this Tribunal followed the ratio of Hon’ble Bombay Court in case of Otis elevators company India Ltd (supra). We therefore do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld.
Accordingly ground number 2 raised by the revenue stands dismissed.
In the result, appeal filed by the assessee is stands partly allowed and appeal filed by the revenue stands dismissed.
Order pronounced in the open court on 30/04/2025