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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the Revenue against the order of CIT(A)- 8, Mumbai dated 12/01/2017 for A.Y.2005-06 in the matter of order passed u/s.154 of the IT Act. 2. The following grounds have been taken by the Revenue:- “M/s. IC1CI Bank Ltd. (AAAC11195H), A.Y2005-06 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the ground enumerated below: Whether, on the facts and the circumstances of the case and in Law, the Ld. CIT(A) erred in holding that the withdrawal of rebate u/s, 88E inadvertently and without application of mind allowed in regular
2 ITA No.3445/Mum/2017 M/s. ICICI Bank Ltd., assessment is not a mistake apparent from record rectifiable u/s. 154 of the Act by ignoring the Jurisdictional Tribunal decision given in Oasis Securities Ltd. v/s. Dy. CIT(2013) 134 TTJ 649 (Mumbai) and other such judgements. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the AO restored.”
Rival contentions have been heard and record perused. 4. Facts in brief are that the assessee company filed its return of income on October 31, 2005 declaring total income of Rs. 585,38,65,180 and a revised return on 27/3/2006 declaring business income of Rs.371,34,94,354/-, STCG of Rs. 227,78,26,053/-and book profit "u/s. 115JB at Rs.2062,72,44,181/-. The assessment for the year under consideration was completed u/s. 143(3) of the Income-tax Act, 1961 on 20/12/2007 assessing the total income at Rs. 2277,54,14,140/-. Thereafter, assessment u/s. 143(3) r.w. section 147 was passed on 29/12/2011 assessing the total income at Rs. 2277,54,14,140/-. 5. After completion of the assessment, the Assessing Officer on perusal of case records observed that rebate of Rs. 1,99,68,051 was allowed under section 88E of the Act as claimed. The Assessing Officer noted that the assessee had offered income of Rs. 196,21,84,740/- and short term capital gain in respect of taxable security transactions and accordingly tax was levied at the rate of 10% as these transactions were subjected to STT. It was also observed the Form number 10DB/10DC that total STT paid during the year was Rs. 1,99,68,051/- in respect of
3 ITA No.3445/Mum/2017 M/s. ICICI Bank Ltd., sale/purchase of equity shares and equity oriented units. Since the income from the taxable securities transactions were offered under the head 'capital gain' and not under the head 'profits and gains of business or profession' no rebate under section 88E was allowable for the assessment year under consideration. Therefore, this had resulted into wrong grant of rebate of Rs. 1,99,16,051/- u/s. 88E of the Act. Thereafter, AO passed order u/s.154 so as to disallow the rebate granted u/s.88 E amounting to Rs.1,99,68,051/- . 6. By the impugned order, CIT(A) allowed assessee’s claim after having the following observation:- 5.2.1. These grounds pertain to disallowance of amount of Rs.1,99,68,051/- on the ground that the appellant had failed to furnish documentary evidence in respect of the claim made under section 88E of the Act. A perusal of the instant order u/s. 154 reveals that the Assessing Officer has himself noted that a rebate of the impugned amount was "allowed u/s 88 E as claimed." Thus, there can be no doubt that at the time of assessment, the Assessing Officer had considered the claim of deduction u/s 88E, examined the documents filed including those along with the return of income an4-only then allowed the rebate that was claimed in the return of income filed by the appellant. It is seen that the appellant had also furnished necessary forms as required under Rule 20AB of Income Tax Rules, 1962 in Form 10DB and Form 10DC. This fact is also evident from the rectification order under consideration. Statement No. 8, 9 and 38 filed along with the return of income clearly show that rebate u/s.88E was claimed and bifurcations of profit on transfer of investments and profit on transfer of stock in trade was filed with the Assessing Officer and available at the time of assessment. 5.2.2 Thus, there can be no dispute that every aspect of the rebate claimed was available with the return of income. The appellant had also filed detailed explanation to the Assessing Officer during proceedings u/s. 154 vide letter dated 21/03/2012, which has been reproduced at para 3.1 of the order. The question of allowability of the rebate is a debatable issue and cannot be considered as mistake apparent from records.
4 ITA No.3445/Mum/2017 M/s. ICICI Bank Ltd., 5.2.3 This position is also supported by decision in Yes Bank Ltd vs DCIT, ITA No,5910&5833/MunV2012, of Hon'ble ITAT Mumbai. The relevant extract is as below: “9........... The disallowance has been made by the AO on the ground that the concerned securities are held as investments and not as stock-in-trade. The contention of assessee is that the investments are held as stock-in- trade and not as capital asset. The Balance Sheet format, as required under the Banking Regulations Act, does not envisage any heading as "stock-in-trade". Therefore, all investments are to be disclosed under the head "investments" on the asset side irrespective whether they are held as "stock-in-trade" or as "capital assets". We found that thesignificant accounting policy staled in the audited accounts state that the investments are valued in accordance with the RBI guidelines and that Securities held under "Available for Sale" (AFS) and "Held for Trading" (HFT) are valued script wise and depreciation and appreciation is aggregated for each category and that net depreciation, if any, is ignored. On the other hand securities that are classified and held under the category "Held to Maturity ("HTM") are not allowed to be depreciated. The profits and loss on sale of securities have always been treated as "business income" and never as "capital gains" in the assessee's assessments. This is evident from the computation of income wherein the entire profits as per the profit and loss account are reflected under the head "Business" and that the gross total income does not include any capital gains whatsoever. As per Schedule 13 to Profit and Loss Account the entire income on investments is also treated as 'business income' and not as "income from other sources. This entire amount is included in the profits of the business in the computation of the total income which is accepted by the AO. This position also remains the same for all the past years and future years. Since the profits on sale of investments and income from investments are always treated as 'business income', it Is Implied that the investments are treated as "stock-in-trade" and not as a "capital asset". The method of valuation of investments in accordance with RBI guidelines is indicated in the Tax Audit Report at Annexure-1." (emphasis underlined) 5.2.4 A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions, A decision on a debatable point of law is not a mistake apparent from the record. [T.S. Balaram, /TO v. Volkart Bros. [1971] 82 ITR 50 (SC)]. It has further been held by the Apex Court in the case of C/T v. Hero Cycles. (P.) Ltd. [1997] 228 ITR 463/ 94 Taxman 271 that 'A point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record'. 5.2.5 In the instant case, the issue of whether or not the impugned rebate was claimed was not examined in facts or in law and was accepted in the assessment order u/s. 143(3). In view of the decision of Hon'ble Apex
5 ITA No.3445/Mum/2017 M/s. ICICI Bank Ltd., Court, this issue cannot be dealt with as mistake apparent from record. These grounds are allowed. The rectification order in appeal is held as void.
Against the above order of CIT(A), Revenue is in further appeal before us. 8. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the case. From the record, we found that the original assessment was framed u/s.143(3) wherein assessee’s claim u/s.88E was allowed after due verification. While allowing deduction u/s.88E, AO has examined the documents filed including those alongwith return of income and only thereafter, rebate was allowed u/s.88E. We also observe that alongwith return of income, assessee has given due bifurcation of profit on transfer of investments and profit on transfer of stocks in trade. Thus, every aspect of the rebate claimed was available with the return of income, even before the proceedings u/s.154 assessee has filed detailed explanation. After consideration of the materials placed on record and considered by the AO in the course of original assessment proceedings as well as in the proceedings u/s.154, we observe that allowability of rebate u/s.88E is a debatable issue cannot be considered as a mistake apparent from record.
6 ITA No.3445/Mum/2017 M/s. ICICI Bank Ltd., Hon’ble Supreme Court in the case of Volkart Brothers, 82 ITR 50 have observed that mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. Thus, the decision on debatable points of law is not a mistake apparent from record. The detailed finding so recorded by CIT(A) are as per material on record, accordingly, we are inclined to agree with learned AR that there is no mistake in assessee’s claim of rebate u/s.88E so as to empower the AO to invoke provisions of Section 154. 9. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on this 27/09/2018 Sd/- Sd/- (SANDEEP GOSAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 27/09/2018 Karuna Sr.PS Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. BY ORDER, 6. Guard file. सत्यापित प्रतत //True Copy// (Asstt. Registrar) ITAT, Mumbai