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Income Tax Appellate Tribunal, BENCH “G”, MUMBAI
Before: SHRI PAWAN SINGH & SHRI M. BALAGANESH
Assessee by : Shri K.K. Ved with Urvi Mehta (AR) Revenue by : Shri Santanu Kumar Saikia (DR) Date of hearing : 13.06.2019 Date of Pronouncement : 26.06.2019 Order under section 254(1) of Income-tax Act PER PAWAN SINGH, JM: 1. This was filed by the assessee bank challenging the order passed by Commissioner of Income Tax (CIT) under section 263 dated 17.09.2009. The appeal was appeal was initially adjudicated by Tribunal vide order dated 06.06.2012, wherein the validity of the order under section 263 and the deduction under section 36(1)(viia) was held against the assessee. However, the issue of deduction under section 36(1)(viii) was decided in favour of assessee bank. The assessee bank field Miscellaneous Application for recalling the order dated ITA No. 3145/M/2009 - State Bank of India 06.06.2012 vide M.A. No. 170/Mum/2013. The M.A. No. 170/Mum/2013 was partly allowed vide order dated 04.06.2014 by the Tribunal for limited purpose relates to withdrawal of deduction under section 36(1)(viia) in relation to provision of Standard Asset. The assessee filed appeal before Hon’ble Bombay High Court against the order dated 04.06.2014 vide of 2012. The Hon’ble High Court vide order dated 17.12.2014 in ITA No. 1481 of 2012 directed the Tribunal to re-hear the appeal and decide in accordance with law.
The revenue filed appeal against the order dated 06.06.2012 wherein the issue of deduction under section 36(1)(viii) was held in favour of assessee. The appeal filed by revenue vide of 2013 was dismissed vide order dated 04.02.2015.
However, the Tribunal while hearing of the appeal as per direction of Hon’ble Bombay High Court dated 17.12.2014 while hearing the appeal afresh, the issue relating to deduction under section 36(1)(viii) was held against the assessee bank vide order dated 06.09.2016.
However, on Miscellaneous Application filed by assessee vide M.A.
No. 417/Mum/2016, the order dated 06.09.2016 was recalled qua ground related to deduction under section 36(1)(viii) vide order dated 18.05.2018. In the aforesaid background, the appeal qua ground related to deduction under section 36(1)(viii) came up hearing afresh. - State Bank of India
4. The ld. Authorized Representative (AR) of the assessee further submits that initially the assessee challenged the order of ld. CIT(A) passed under section 263 dated 17.09.2009. The appeal of assessee was partly allowed by the Tribunal vide order dated 06.06.2012. The assessee filed M.A on 04.06.2014 wherein the order dated 06.06.2012 was partly recalled qua the ground related with withdrawal of deduction under section 36(1)(viia). The revenue has challenged the order of Tribunal in partly allowing the ground qua under section 36(1)(viii) dated 06.06.2012 before jurisdictional High Court. The jurisdictional High Court vide order dated 04.04.2015 directed the Tribunal vide order dated 04.02.2015 dismissed the appeal of revenue holding that the assessee bank is covered by the definition of “Financial Corporation” as stated in Explanation to section 36(1)(viii).
5. Thus, the Hon’ble Court had confirmed the order dated 06.06.2012 passed by Tribunal to the extent it held that the assessee is entitled to the claim of deduction under section 36(1)(viii). The ld. AR of the assessee further submits that the Tribunal after re-hearing the appeal in accordance with the direction of Hon’ble High Court while deciding the appeal decided the issue relating to deduction under section 36(1)(viii) against the assessee, which was recalled in M.A. No. 417/Mum/2016 dated 07.12.2016. The ld. AR of the assessee further submits that in the above background as explained above would submit that infact the - State Bank of India ground related to deduction under section 36(1)(viii) is covered in favour of assessee by the decision of Hon’ble Bombay High Court in assessee’s own case in ITA No. 269/2013 dated 04.02.2015.
6. On the other hand, the ld. DR for the revenue submits that the order dated 04.02.2015 passed by jurisdictional High Court is not clear on whether the assessee is eligible to claim deduction under section 36(1)(viii).
7. In response to the submission of ld. DR for the revenue, the ld. AR of the assessee submits that order of Hon’ble jurisdictional High Court has to be read along with the questions which were raised before the Hon’ble High Court. The ld. AR further submits that the Assessing Officer while passing the assessment order originally taken a possible view which has been fortified by the decision of Tribunal in case of Union Bank of India reported in [2011] 16 taxmann.com 304. The ld. AR of the assessee further submits that in para-8 & 9 of the High Court order dated 04.02.2015, the assessee is covered by the definition of “Financial Corporation” as stated in Explanation to section 36(1)(viii).
We have considered the rival submission of the parties and perused the order of Tribunal dated 06.06.2012 wherein the issue related with deduction under section 36(1)(viii) was decided in favour of assessee.
Against the order of Tribunal dated 06.06.2012, the revenue filed - State Bank of India appeal before the Hon’ble jurisdictional High Court vide ITA No. 269 of 2013, wherein following question of law was framed:
(1) Whether on the facts and in the circumstances of the case and in law) the ITAT was correct in allowing the deduction u/s. 36(1)(viii) of the I. T. Act) following the decision in the case of Union Bank of India vis. ACIT [(2011) 16 Taxmann.com 304 ITAT (Mum)], ignoring the decision of the Kerala High Court in the case of Federal Bank Ltd. vis. ACIT (198 Taxmann 491) in which it is held that financial corporation are separate and distinct entities different from scheduled banks which are covered by the provisions of Banking Regulation Act?
The Hon’ble High Court after hearing the parties passed the following order: “3. We find that the impugned order dated 6th June, 2012 has held that there was no occasion for Commissioner of Income Tax to exercise its power of the revision under section 263 of the Act on the question of deduction claimed under section 6(1)(viii) of the Act. This conclusion was reached by following its decision in Union Bank of India v/s. ACIT (2011) 16 Taxmann.com 304 holding that deduction under Section 36(1)(viii) of the Act is to be allowed to the Government Banks even for the years prior to Assessment Year 2007-08. The amendment in the Assessment Year 2007-08 includes the banking companies.
We were at the very outset fairly informed by Mr. Suresh Kumar, learned Counsel appearing for the Revenue that on the aforesaid issue, the decision of the Tribunal in Union Bank of India (supra) has been accepted by the Revenue. Mr. Suresh Kumar points out that although an appeal has been filed by the Revenue on the other issues, no appeal has been filed on this issue.
We have on an earlier occasion in the case of CIT v/s. Smt. Veena G. Shroff have observed in our order dated 27" January, 2015 that when Revenue challenges the order of the Tribunal which in turn relies upon another decision rendered by it on the same issue, then in cases where the Revenue has accepted the order by not preferring any Appeal against the 5 - State Bank of India earlier order, the Revenue should not challenge the subsequent order on the same issue, In case an appeal is preferred from the subsequent order, then the Memo of appeal must indicate the reasons as to why an appeal is being preferred in later case when no appeal was preferred from the earlier order of the Tribunal which has merely been followed in the later case. In any case, the Officer concerned must atleast file an Affidavit before the matter comes up for admission, pointing out distinguishing features in the present case from the earlier case, warranting a different view in, case the appeal is being pressed. The absence of this being indicative of non-application of mind, does undoubtedly give an opportunity to the Revenue to arbitrarily pick and chose the orders of the Tribunal which they would challenge in the Appeal before the this Court. Uniformity in treatment at the hands of law is a basic premise of Rule of Law. We trust that the Revenue would take appropriate steps to ensure that the aforesaid directions be implemented in all subsequent matters which are pending Admissions before this Court. If this exercise is done by the Officers of the Revenue, precious time of all concerned would be saved.
Counsel for the Revenue is directed to serve copy of this order to the Chief Commissioner of Income Tax for appropriate action.
Be that as it may, in the facts of the present case, there is no occasion for the CIT to exercise his powers under Section 263 of the Act as the view taken by the Assessing Officer granting deduction under Section 36(1) (viii) to the Respondent-Assessee was a possible view. This possible view is further fortified by the decision of the Tribunal in Union Bank of India (supra) which has also been accepted by the Revenue.
8. Besides, even Explanation to Section 36(1) (viii) of the Act as existing at the relevant time, a Financial Corporation has been defined to include a Public Company and the Government Company.
9. We failed to understand how the Respondent-Assessee would not be covered by definition of 'Financial Corporation' as stated in the Explanation to Section 36(1) (viii) of the Act.”
Considering the decision of Hon’ble jurisdictional High Court, the ground qua the deduction under section 36(1)(viii) is already held in - State Bank of India favour of assessee and against the revenue. Therefore, we direct the Assessing Officer to allow the necessary deduction to the assessee.
Hence, the ground no. 3 to 9 qua the deduction under section 36(1)(viii) are allowed.
In the result, appeal filed by assessee is partly allowed. Order pronounced in the open court on this 26th June 2019