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Income Tax Appellate Tribunal, KOLKATA BENCH ‘B’, KOLKATA
Before: SHRI P.M. JAGTAP, VICE-(KZ) & SHRI A.T. VARKEY, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘B’, KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) & SHRI A.T. VARKEY, JM] ITA No. 806/Kol/2017 Assessment Year: 2011-12 D.C.I.T./A.C.I.T, LTU-1, Kolkata........................................................................................Appellant 6th Floor, Kendriya Utpad Shulk Bhawan, 180, Shantipally, Rajdanga Main Road, Kolkata – 700 107. M/s. United Bank of India……………………………………………………............................Respondent 16, Old Court House Street, Dalhousie, Kolkata – 700 107 [PAN : AAACU 5624 P] C.O. No. 47/Kol/2017 (Arising out of ITA No. 806/Kol/2017) Assessment Year: 2011-12 M/s. United Bank of India…………………………………………………….......................Cross-Objector 16, Old Court House Street, Dalhousie, Kolkata – 700 107 [PAN : AAACU 5624 P] D.C.I.T./A.C.I.T, LTU-1, Kolkata....................................................................................Respondent 6th Floor, Kendriya Utpad Shulk Bhawan, 180, Shantipally, Rajdanga Main Road, Kolkata – 700 107. Appearances by: Shri I. Jamir, CIT, DR appearing on behalf of the Revenue Shri Soumitra Choudhury, Advocate appearing on behalf of the Assessee Date of concluding the hearing : February 27, 2020 Date of pronouncing the order : May 29, 2020 ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) This appeal is preferred by the Revenue against the order of Ld. CIT (A) – 17, Kolkata dated 22.12.2016 and the same is being disposed of along with the cross-objection filed by the assessee being C.O. No. 47/Kol/2017.
The grounds raised by the Revenue in its appeal read as under:
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“1. The Ld. CIT(A) has erred in law and on facts in placing reliance on the judgement of M/s United Bank of India in the order of Hon'ble ITAT dated 30.12.2015 in ITA No. 1916/Kol/20l2 & 113/Kol/20l3 for the A.Y 2009-10 where the decision rendered is on misapprehension of the provision of section I l5JB of the IT Act- 1961 read with explanation 3 to Section 1I5JB of IT Act, l96l and ignoring the inclusive definition of company in Section I 15JB of the IT Act, 1961 . 2. The Hon’ble CIT(A) has erred in law and on facts that the expenses incurred in earlier years cannot be allowed during the relevant assessment year as the assessee is maintaining its books of accounts on mercantile system of accounting. 3. The Ld. CIT(A) has erred in law and on facts that the ATM card is revenue expenses when the ATM card is integral part of ATM Machine which is capital expenditure and hence the same is also capital expenditure. 4. The Ld. CIT(A) has erred in law and on facts in placing reliance on the concept of excess sufficient fund which is separate from its interest bearing fund. The assessee is a banking company who takes deposit from people and lends the money for loans and trades the money in shares and securities. The Ld. CIT (A) has erred in law by observing contradictorily the definition of excess sufficient funds and the nature of business of the assessee.”
We have heard the arguments of both the sides and also perused the relevant material available on record. As regards the issue involved in ground no. 1 relating to the applicability of section 115JB in the case of the assessee being a bank as raised in ground no. 1, the ld. representatives of both these sides have agreed that this issue is squarely covered in favour of the assessee by the decision of this Tribunal in assessee’s own case for A.Y. 2009-10 rendered vide its order dated 30.12.2015 passed in ITA No. 1916/Kol/2012 & 113/Kol/2013 wherein a similar issue was decided vide paragraph no. 3.2 as under:
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“3.2. We have heard the rival submissions and we find that this issue is squarely covered by the co-ordinate bench decision of this tribunal in the case of UCO Bank vs DCIT in ITA No. 1768/Kol/2009 dated 27.11.2015 for the Asst Year 2002-03. The Tribunal while rendering this judgement duly appreciated the relevant provisions of section 211 of Companies Act, 1956, Insertion of Explanation 3 to section 115JB of the IT Act, 1961, with effect from 1.4.2013 , relevant provisions of section 2(5) of the Companies Act, 1956, definition of 'company' under Banking Regulation Act, 1949, definition of 'company' under Companies Act, 1956, Notes to Clauses to Finance Act, 2012 on the subject of Minimum Alternate Tax (MAT) while introducing Explanation 3 to section 115JB of the IT Act, 1961, intention behind introduction of MAT provisions, Circular No. 762 dated 18.2.1998 on the subject of MAT, the Memorandum explaining the provisions in the Finance (No.2 ) Bill, 1996 on the subject of MAT and relevant rules of legal interpretation. The tribunal also placed reliance on the following decisions:- * Surana Steels P Ltd vs DCIT reported in (1999) 237 ITR 777 (SC) * State Bank of Hyderabad vs DCIT reported in (2013) 33 taxmann.com 312 (Hyderabad - Tribunal) vide order dated 7.9.2012 *Maharashtra State Electricity Board vs JCIT reported in (2002) 82 ITD 422 (Mumbai Tribunal) vide order dated 6.8.2001 ITA Nos.1916/K/12 & 113/K/13-C-AM United Bank of India 2 *Kerala State Electricity Board vs DCIT reported in (2010) 329 ITR 91 (Ker) * Indian Bank vs Addl CIT in ITA No. 469 / Mds / 2010 dated 3.8.2011 for Asst Year 2000-01 * Kurung Thai Bank vs JCIT reported in (2012) 49 SOT 12 (Mumbai Tribunal) * Union Bank of India vs ACIT in ITA No. 4702 to 4706 / Mum / 2010 for the Asst Years 2002-03 to 2006-07 * ICICI Lombard General Insurance Co Ltd vs ACIT reported in 2012- TIOL-690-ITAT-Mum in ITA No. 2398/ Mum / 2009 dated 10.10.2012 for the Asst Year 2003-04 * Bank of India vs All. CIT reported in 2014 (5) TMI 929 in ITA No. 1498/Mum/ 2011 dated 9.4.2014 (Mumbai Tribunal) It was held by this tribunal that the provisions of section 115JB of the Act are not applicable in the case of the assessee bank and further held that the amendment brought in section 115JB of the Act read with Explanation 3 thereon by the Finance Act 2012 is applicable only with effect from Asst Year 2013-14 onwards in line with the Notes to Clauses of Finance Act 2012 . 3.3. Respectfully following the co-ordinate bench decision of this tribunal in the case of UCO Bank (supra), we also hold accordingly. Hence the ground no. 2 raised by the assessee in this regard is allowed.”
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The aforesaid decision rendered in assessee’s case for A.Y. 2009-10 has been subsequently followed by the Tribunal to decide a similar issue in assessee’s own case for A.Y. 2010-11 vide its order dated 16.11.2018 passed in ITA No. 1972/Kol/2017. This issue thus is squarely covered in favour of the assessee by the orders of the Tribunal in assessee’s own case for the immediately preceding two years i.e. A.Y. 2009-10 and 2010-11 and respectfully following the same, we uphold the impugned order of the ld. CIT(A) holding that the provisions of section 115JB are not applicable in the case of the assessee being a bank. Ground No. 1 of the revenue’s appeal is accordingly dismissed.
As regards ground no. 2, the ld. representatives of both these sides have agreed that the issue involved therein relating to the assessee’s case for prior period expensesis also squarely covered in favour of the assessee by the order of the Tribunal dated 16.11.2018 (supra) for A.Y. 2010-11 & 2012-13 wherein a similar issue was decided in favour of the assessee vide paragraph no. 5 & 6 which read as under: “5. Ground No. 2 is relating to deletion of disallowance of expenses. 5.1. Heard both and perused the material available on record. We find that the CIT(A) by following Rule of Consistency as followed in assessee’s own case for AY 2011-12 deleted the addition. The relevant portion in order of CIT(A) is reproduced hereunder: ‘For that on the facts of the case, the AO was wrong in disallowing earlier year’s expenses amounting to Rs. 31,15,854/- without considering the fact that the liability arose and crystallized during this financial year, moreover, this is the regular method of accounting followed by the assessee; bank, therefore, the disallowance of such expenses amounting to Rs. 31,15,854/- is completely arbitrary, unjustified and illegal. Submission of Assessee:
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That Ground Nos. 6 to 8 relate to disallowance of Rs. 31,15,854/- for earlier year’s expenses. The liability arose and crystallized during this financial year. The assessee bank followed the regular method of accounting consistently year to year and has been allowed in all earlier years in assessment completed u/s 143(3)of the I.T. Act, therefore, the disallowance of Rs. 31,15,854/- may be allowed in full. That moreover CIT(A) has allowed the said expenditure in assessment year 2011-12 by order dated 21.12.2016. Decision:- The liability of Rs. 31,15,854/- pertain to previous years but crystallized during the year. In past assessment years also this disallowance was considered and allowed by CIT(A) in A.Y. 2011-12. Hence, considering the submission of AR and nature of expenses and following consistency, I, therefore, allow these expenses of Rs. 31,15,854/- this year also. Appellant gets relief of Rs. 31,15,854/-” As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2010-11 and 2012-13, we respectfully follow the order of the Tribunal for the said years and uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the AO on account of prior period expenses. Ground No. 2 is accordingly dismissed.
As regards the issue involved in Ground No. 3 relating to the deletion by the Ld. CIT(A) of the disallowance made by the AO on account of cost of debit card (ATM card) & ATM machine charges amounting to Rs. 135,39,660/-, the ld. representatives of both these sides have agreed that this issue is also squarely covered in favour of the assessee by the order of the Tribunal dated 16.11.2018 (supra) for A.Y. 2010-11 and 2012-13 wherein a similar issue was decided by the Tribunal in favour of the assessee vide paragraph no. 7 to 8 as under: “7. Ground No. 3 is relating to deletion of disallowance made on account of ATM machine charges.
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7.1. Heard both and perused the material available on record. We find that the CIT(A) followed the order of this Tribunal in assessee’s own case for AY 2011-12 vide order dated 21.11.2016. The relevant portion in order of CIT(A) is reproduced hereunder: Decision ‘The issue is whether the expenditure incurred towards debit cards is a revenue expenditure or a capital expenditure. It has been submitted by the assessee that the issue is covered by the decision of jurisdictional ITAT in their case of A.Y. 2009-10 wherein it has been held as under: ‘We have heard the rival submissions and we find that the issuance of ATM Cum Debit Cards to the customers of the assessee bank is part of the business activity of the assessee and there is no enduring benefit to the assessee out of incurring this expenditure. The Ld. CIT(A) had observed that in the past the department had been accepting this expenditure as a revenue expenditure and we find no change in facts and circumstances of the case for the year under appeal with regard to the impugned issue warranting the department to take CL different stand. This fact has not been controverted by the revenue before us. Though the principle of res judicata does not apply to income tax proceedings in our opinion the principle of consistency cannot be given to go bye. Reliance in this regard is placed on the decision of the Hon’ble Apex Court in the case of Radhasaomi Satsang reported in 193 ITR 321 (SC). Hence, we find no infirmity in the order of the Ld. CIT(A). Accordingly, the ground no. 2 raised by the revenue is dismissed. Respectfully following the decision of the jurisdictional tribunal, the debit card expenses of Rs. 20,92,000/- of the assessee is allowed. 8. In view of the above, we do not find any infirmity in the order of CIT(A). Ground No. 3 raised by the Revenue is dismissed.” As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2010-11 and 2012-13, we respectfully follow the order of Coordinate Bench of this Tribunal for the said years and uphold the impugned order of the Ld. CIT(A) giving relief to the assessee on this issue. Ground No. 3 of the revenue’s appeal is accordingly dismissed.
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At the time of hearing before us, the ld. representatives of both these sides have agreed that even the issue involved in ground no. 4 of the revenue’s appeal is squarely covered by the order of the Tribunal dated 13.12.2015 passed in assessee’s own case for A.Y. 2009-10 wherein a similar issue was decided in favour of the assessee for the following reasons given in paragraph no. 10 to 10.3 of its order: “l0. The last issue to be decided in this appeal is as to whether disallowance u/s 14A of the Act read with Rule 8D(2)(ii) of the Rules could be made applicable to the assessee bank in the facts and circumstances of the case.
10.1. The brief facts of this issue is that the assessee bank was in receipt of exempted dividend income of Rs. 3,54,45,760/-. The Learned AO invoked the provisions of section 14A of the Act read with Rule 8D(2)(ii) and (iii) of the Rules and made disallowance of Rs. 13,10,65,100/-/- and Rs. 1,21,01,500/- respectively. On first appeal, the Learned CIT(A) held that the assessee has got sufficient own funds to the extent of Rs.4532.27 crores as on 31.3.2009 to make investment of Rs. 242.03 crores and hence no part of borrowed funds were utilized for making investments. Accordingly, the provisions of Rule 8D(2Xii) cannot be made applicable and deleted the disallowance u/s 14A to the tune of Rs. 13,10,65,100/-. However, he upheld the disallowance under Rule 8D(2)(iii) of the Rules @ 0.5% of investments amounting to Rs. 1,21,01,500/-. Aggrieved, the revenue is in appeal before us on the following ground:- ‘4. Whether on the facts and circumstances of the case, ld. CIT(A) erred in law in holding that Section 14A Rule 8D is not applicable in respect of interest expenses made by the assessee.’ 10.2. The Ld. DR vehemently supported the order of the Ld. AO. In response to this, the Learned AR vehemently relied on the order of the Ld. CIT(A). 10.3. We have heard the rival submissions and find that the assessee bank has got sufficient own funds to the extent of Rs. 4532.27 crores as on 31.03.2009 which is very much available for making investment of Rs. 242.03 crores and hence it can safely be presumed that no part of borrowed funds were utilized for making investments yielding tax free income. Moreover, the Ld. AO had not brought on record any nexus between borrowed funds and amount invested by assessee. There are
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plethora of judgements in favour of the assessee on the impugned issue. Hence the addition deleted by the Ld. CIT(A) in respect of Rs. 13,10,65,100/- by invoking Rule 8D(2)(ii) of the Rule does not require any interference. Accordingly, the ground no 4 raised by the revenue is dismissed.”
Respectfully following the order of the Coordinate Bench of this Tribunal for A.Y. 2009-10 (supra) on a similar issue, we uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the AO u/s 14A read with Rule 8D and dismiss ground no. 4 of the revenue’s appeal.
Now, we shall take up the cross-objection filed by the assessee being CO. No. 47/Kol/2017 wherein the following grounds are raised. “1. For that on the facts and in the circumstances of the case the Ld. Commissioner of Income Tax (Appeals)-17, Kolkata erred in fact as well as in law in dismissing the assessee's ground against addition by the assessing officer u/s. 40(a)(ia) of Rs.14,84,01,248/- ignoring the fact that the entire amount was already paid the T.D.S. before 1iling of the return u/s. 139(1), therefore, the order passed by the Ld. CIT(A) is completely arbitrary, unjustified and illegal. 2. For that on the facts and in the circumstances of the case the Ld. C.I.T. (A)-17, Kolkata erred in fact as well as in law in dismissing the assessee's ground against addition by the assessing officer Rs.4,34,000/- on share issue expenses ignoring the fact that 1/5th of the total share issue expense is allowable u/s 35D for five successive assessment years. Therefore, the Ld CIT(A) was wrong in disallowing the total amount instead of allowing Rs. 86,800/- (1/5th of Rs. 4,34,000/-), as such his finding is completely arbitrary, unjustified and illegal. 3. For that on the facts and in the circumstances of the case the Ld. C.I.T. (A)-17, Kolkata erred in fact as well as in law in dismissing the assessee’s ground against addition by the assessing officer Rs.31,47,73,346/- u/s. 36(1)(viii). The A.O. has changed the allocation basis from asset to turnover basis thereby reducing the deduction u/s 36(1)(viii) by Rs.31,47,73,346/- which is confirmed by the Ld. CIT(A), as such his finding is completely arbitrary, unjustified and illegal.
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For that on the facts of the case, the Ld. CIT(A) was wrong in sustaining the addition Rs.42,000/- under Rule 8D(2)(iii) which is completely arbitrary, unjustified and illegal.” 10. We have heard the arguments of both the sides and also perused the relevant material available on record. As regards ground no. 1 of the assessee’s cross-objection, it is observed that a similar issue as raised therein relating to the disallowance u/s 40(a)(ia) for non-deposit of TDS was also involved in assessee’s own case for the immediately preceding year i.e. A.Y. 2010-11 and the same was decided by the Tribunal vide paragraph no. 12 of its order dated 19.02.2020 passed in ITA No. 74/Kol/2018 as under: “12. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. Before us, ld. Counsel for the assessee has reiterated the submissions made before the ld. CIT(A) and on the other hand the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. We note that the said TDS was paid before the filing of return of income u/s. 139(1) of the I.T. Act, therefore no addition should be made for that we rely on the judgement of Hon’ble Calcutta High Court in the case of CIT vs. Virgin Creations GA 3200/2011 wherein it was held that the said TDS should be allowed. Respectfully following the decision of jurisdictional High Court, we hold that since the assessee has deducted and deposited tax on contractual payments under consideration before the due date of filing of return of income, disallowance u/s 40(a)(ia) is not warranted, therefore, we delete the disallowance of Rs. 16,85,08,240/- 11. At the time of hearing before us, the ld. DR has not disputed the position that the issue in principle is covered by the decision of this Tribunal in assessee’s own case for A.Y. 2010-11 as well as by the decision of Hon’ble Calcutta High Court in the case of CIT vs Virgin Creations (supra). He however has contended the claim of the
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assessee of having paid the TDS before the date of filing of return of income u/s 139(1) of the Act for the year under consideration requires verification and the AO may be given an opportunity to verify the same. We find merit in this contention of the Ld. DR. This issue is accordingly restored to the file of the AO for the limited purpose of verifying the claim of the assessee of having paid the relevant TDS amount before the date of filing of return of income u/s 139(1) of the Act for the year under consideration and to decide the same accordingly keeping in view the decision of the Tribunal in assessee’s own case for A.Y. 2010-11 (supra) as well as the decision of Jurisdictional High Court in the case of Virgin Creations (supra). Ground No. 1 of the assessee’s cross-objection is accordingly treated as allowed for statistical purpose.
As regards the issue involved in Ground No 2 relating to the disallowance of share issue expenses of Rs. 4,34,000/- the limited relief that the learned counsel for the assessee has sought is for allowing the deduction only to the extent of Rs. 86,800/- being 1/5th of the total share issue expenses u/s 35D of the Act. It is observed that the case of the assessee on this issue is duly supported by the decision of Mumbai Bench of this Tribunal in the case of Indusind Bank Ltd. vs Addl. CIT vide order dated 28.02.2019 passed in ITA No. 3875 & 3876/M/2017 wherein a similar issue was decided by the Tribunal in favour of the assessee vide paragraph no. 17 to 20 of its order which read as under: “17. The issue raised in ground Nos.4, 5 & 6 is against the order of Ld. CIT(A) holding that new claim of deduction under section 35D can be admitted first time which was not raised before the AO at all.
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The facts in brief are that the assessee has raised the issue of non granting of deduction under section 35D in respect of preliminary expenses of Rs.4.55 crore incurred in connection with issue of shares under qualified institutional placement. The assessee has incurred expenditure of Rs.11.03 crores in A.Y. 2010-11 and Rs.14.11 crores in A.Y. 2011-12 respectively on shares issued under QIP route. As the issue was raised before the Ld. CIT(A) for the first time, the AO was asked to give his comments by way of remand report which was filed by the AO vide remand report bearing No.ACIT-2(3)(2)/remand report 2016-17 dated 27.06.2016 in which the AO stated that assessee has not claimed the said expenses either in the original or in the revised return and submitted that in view of the decision of Hon'ble Supreme Court in the case of Goetz India Ltd. 284 ITR 323 and Gurjargravurs Pvt. Ltd. 111 ITR 1 wherein it has been held that if claim is not made before the AO, the AAC cannot entertain such claim in the appeal proceedings. The AO stated that the assessment order was passed after giving reasonable and adequate opportunities to the assessee and therefore requested to uphold the disallowance. 19. The Ld. CIT(A) admitted the issue as legal issue by following the ratio laid down by the Hon'ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) and Grasim Industries Ltd. 2016-TIOL-292-HC-MUM-IT wherein the decision of the Hon’ble Supreme Court in the case of Goetz India Ltd. (supra) had been considered and it was held that appellate authorities have power to entertain the legal issues which are raised for the first time. Following the ratio laid down in the said decisions, the Ld. CIT(A) recorded a finding of fact that share issue expenditure is covered under section 35D of the Act and is a legal issue and thus came to the conclusion that the assessee is eligible for deduction under section 35D equal to 1/5th of the total preliminary expenses. Accordingly the ld CIT(A) decided the issue in favour of the assessee by directing the AO to allow the same. 20. After hearing both the parties and perusing the material on record, we find that the Revenue has challenged that the Ld. CIT(A) has erred in accepting the issue of grant of deduction in respect of share issue expenses under section 35D which was not raised before the AO. After perusing the appellate order, we find that the appellate authority has passed the order after following the decisions of the Hon'ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. and Grasim Industries Ltd. (supra) wherein the decisions of the Hon'ble Supreme Court in the case of Goetz India Ltd. has been considered and it was held that the fresh issue can be admitted before the appellate authority. We,
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therefore, do not find any infirmity in the order of the Ld. CIT(A) and accordingly the same is upheld. We also note that the similar issue has been decided by the co-ordinate bench of the Tribunal in DCIT vs. Deccan Chronicle Holding Ltd. 60 taxmann.com 240 and Transport Corporation of India vs. ACIT in ITA No.117/Hyd/2016. We, therefore, respectfully following the decisions as stated hereinabove uphold the order of the Ld. CIT(A) and the issue raised by the Revenue in ground Nos.4 to 6 is dismissed.” 13. Respectfully following the decision of Mumbai Bench of this Tribunal in the case of Indusind Bank Ltd. (supra), we direct the AO to allow the claim of the assessee for share issue expenses to the extent of Rs. 86,800/- u/s 35D of the Act being 15th of the total expenses of Rs. 4,34,000/-. Ground No. 2 of the assessee’s cross-objection is accordingly allowed.
As regards the issue involved in Ground No. 3 of the assessee’s cross-objection relating to the disallowance of assessee’s claim for deduction u/s 36(1)(viii) of the Act amounting to Rs. 31,47,73,346/-, it is observed that the claim of the assessee for deduction u/s 36(1)(viii) of the Act was examined by the AO during the course of assessment proceedings. On such examination, he found that the assessee had apportioned the operating expenses in the ratio of deposit, borrowings and advances. According to the AO, the assessee while apportioning the operating expenses had considered the non- performing assets also from which no income was recognised. He therefore held that the method adopted by the assessee was not correct and it would be prudent to apportion the operating expenses in the ratio of turnover. He accordingly recomputed the deduction allowable to the assessee u/s 36(1)(viii) of the Act which resulted in a disallowance of Rs. 31,47,73,346/-. On appeal, the ld. CIT(A)
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confirmed the disallowance made by the AO on this issue observing that the basis adopted by the AO for apportioning the operating expenses was more reasonable.
We have heard the arguments of both the sides and also perused the relevant material available on record. As rightly submitted by the learned counsel for the assessee, a similar issue was involved in the case of Allahabad Bank vs DCIT and vide its order dated June 19, 2019 passed in ITA No. 980 & 1009/Kol/2018, this tribunal decided the same in favour of the assessee for the following reasons given in paragraph no. 17 of its order: “17. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the apportionment of operating expenses made by the assessee in the ratio of eligible business to total business by taking into consideration the advances and deposits while determining the profit of the eligible business of long-term finance eligible for deduction under section 36(1)(viii) was not accepted by the authorities below mainly on the ground that the said basis adopted by the assessee had also taken into consideration the non- performing assets from which no income was recognized. According to them, when no income was recognized from the non-performing assets, there was no justification to apportion operating expenses by taking into consideration the non-performing assets which did not yield any income. As rightly contended on behalf of the assessee in this regard before the ld. CIT(Appeals) as well as before us, the operating expenses were required to be incurred by the assessee in relation to its total banking business and the non-performing assets definitely formed part of such business. The assessee-Bank was required to manage both performing as well as non- performing assets and the operating expenses incurred by it thus were attributable to non-performing assets also. It appears that this vital aspect was not appreciated by the authorities below in proper perspective and as righty contended by the ld. Counsel for the assessee, the basis adopted by them for apportioning the operating expenses without proper appreciation of the vital position resulted in a distorted picture. Keeping in view all these facts and circumstances of the case, we are of the view that the cases adopted by the assessee for the apportionment of operating
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expenses was more fair and reasonable and since the same followed consistency by the assessee in the earlier years was accepted by the revenue till assessment year 2010-11, we hold that the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on this issue by deviating from the stand consistently taken in the earlier year is not sustainable. We, therefore, delete the said disallowance and allow the appeal of the assessee.” 16. As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of Allahabad Bank (supra), we respectfully follow the order of the Coordinate Bench of this Tribunal passed in the case of Allahabad Bank and direct the A.O to allow the deduction u/s 36(1)(viii) of the Act as claimed by the assessee. Ground No.3 of the assessee’s cross-objection is accordingly allowed.
As regards Ground no.4 of the assessee’s cross-objection, it is observed that the issue involved therein relating to the disallowance made by the A.O and confirmed by the ld. CIT(A) u/s 14A of the Act read with rule 8D(2)(iii) amounting to Rs.42,000/-is squarely covered in favour of the assessee by the decision of Coordinate Bench of this Tribunal in assessee’s own case for A.Y 2010-11 rendered vide its order dated 19.02.20 (supra). As the issue involved in the present case as well as the material fact relevant thereto are similar to A.Y 2010-11 we respectfully follow the decision of the Tribunal for the said year and delete the disallowance of Rs.42,000/- made by the A.O and confirmed by the ld. CIT(A) u/s 14A read with rule 8D(2)(iii). Ground No.4 of assessee’s cross-objection is accordingly allowed. 18. As regards the issue involved in Ground No.5 of assessee’s cross-objection relating to the adoption of the Municipal Valuation by the ld. CIT(A) for determination of rental income from the relevant
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properties, it is observed that a similar issue was involved in assessee’s own case for A.Y 2009-10 and while deciding the same vide paragraph no.8.3 of its order dated 13.05.2012(supra), it was held by this Tribunal that the ld. CIT(A) had correctly adopted the municipal valuation for determination of rental income of the assessee from the concerned property owned by it. Respectfully following the said order of this Tribunal in assessee’s own case for A.Y 2009-10, we find no infirmity in the impugned order of the ld. CIT(A) directing the A.O to adopt municipal valuation to determine the rental income of the assessee from the concerned properties owned by it. Ground No.5 of assessee’s cross-objection is accordingly dismissed.
Before parting, it is noted that the order is being pronounced after ninety (90) days of hearing. However, taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co- ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited in ITA No. 6264/Mum/2018 & 6103/Mum/2018, Assessment Year 2013-14, order dt. 14th May, 2020.
In the result, the appeal of the revenue is dismissed whereas the cross-objection of the assessee is partly allowed. Order Pronounced in the Open Court on 29th May, 2020. Sd/- Sd/- (A.T. Varkey) (P.M. Jagtap) JUDICIAL MEMBER VICE-PRESIDENT Dated: 29/05/2020 Biswajit, Sr. PS
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Copy of order forwarded to: 1. M/s. United Bank of India. 2. DCIT/ACIT, LTU-1, Kolkata. 3. The CIT(A) 4. The CIT 5. DR True Copy, By order, Assistant Registrar / H.O.O. ITAT, Kolkata