ICICI BANK LTD,MUMBAI vs. DCIT 2(3)(2), MUMBAI

ITA 1446/MUM/2016Status: DisposedITAT Mumbai20 February 2026AY 2010-1134 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided the following: Regarding Ground No. 12 (Club Expenses): The Tribunal dismissed the Revenue's ground, upholding the CIT(A)'s deletion of disallowance. The Tribunal relied on its own earlier decisions for AY 2008-09 and AY 2007-08, which in turn followed the Hon'ble Bombay High Court's decision in CIT vs. Otis Elevators Co. Ltd. The principle is that club membership fees incurred to promote business interests are allowable as business expenditure. Regarding Ground No. 13 (Business Loss and other Expenses): The Tribunal dismissed the Revenue's ground, upholding the CIT(A)'s deletion of disallowance. The Tribunal followed its own earlier decision for AY 2009-10, which allowed similar business losses incurred in the course of banking business based on consistency. The Tribunal also noted that revised claims can be allowed, referencing decisions of the Hon'ble Supreme Court in Jute Corporation of India Ltd. and the Hon'ble Bombay High Court in Pruthvi Brokers & Shareholders. The Tribunal noted that the appeals were cross-appeals and were partly allowed in terms of the observations made. Specific findings on other grounds were not detailed in the provided excerpt.

What were the facts?

The assessee, ICICI Bank Limited, and the Revenue have filed cross-appeals against the order of the Commissioner of Income Tax (Appeal)-54, Mumbai, dated 31.12.2015. This order arose from the assessment order dated 12.03.2014 passed by the Dy. CIT, Circle-3(1), Mumbai, under section 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961. The assessment year in question is 2010-11. The assessee's return was initially filed on 08.10.2010, disclosing a total income of Rs. 4671,80,98,310. It was later revised on 21.02.2014 to Rs. 4560,04,33,250. The Transfer Pricing Officer (TPO) recommended an adjustment of Rs. 2,61,09,160. The assessment order incorporated these adjustments along with other disallowances and additions.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the CIT(A) erred in upholding the comparables taken by the TPO and confirming the adjustment made to the arm's length price in respect of back office support services, as per Section 92CA(3) of the Act. The assessee contended that the CIT(A) erred in upholding the TPO's comparables. The Revenue's grounds (2, 3, and 4) also relate to transfer pricing adjustments concerning a comfort letter given by the assessee to the Monetary Authority of Singapore, arguing it was an unconditional, irrevocable, risky obligation that benefitted the AE and should be compensated, constituting an international transaction under Section 92B(1) and requiring consideration of Rule 10B(2)(b). 2. Whether the CIT(A) erred in confirming the apportionment of expenses at Rs. 48,32,00,000 as against Rs. 10,32,59,952 made by the assessee to income exempt under sections 10(15), 10(34), and 10(35) of the Act, by applying Rule 8D(2)(iii). The assessee argued for a lower apportionment. The Revenue's ground 6 challenges the deletion of disallowance under Rule 8D(2)(ii), stating expenses of Rs. 457.85 Cr were attributable to exempt income. 3. Whether the CIT(A) erred in confirming the disallowance of Rs. 133,74,36,609 in respect of provision for expenses created in March 2010, on the ground that it was contingent and unascertained. The assessee argued for its allowability. The Revenue's ground 10 challenges the deletion of disallowance of Rs. 79,21,46,381 for ESOS, deeming it unascertained and contingent. Other issues raised by the Revenue include marked to market loss (ground 5), depreciation on leased assets (grounds 7 & 8), bad debts (ground 9), expenses on bonds (ground 11), club membership fees (ground 12), and business losses (ground 13).

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143,Section 144C,Section 10,Section 37,Section 36,Section 32

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI ARUN KHODPIA, AM &

Per Arun Khodpia, AM:

The captioned Cross Appeals are filed by the assessee as well as

The order continues below.

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