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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)
O R D E R PER RAM LAL NEGI, JM These appeals by the revenue are directed against two separate orders dated 26/05/2016 and 27/05/2016 passed by the Ld. Commissioner of Income Tax (Appeals)-6, Mumbai, for the assessment years 2009-2010 and 2012-2013 respectively, whereby the Ld. CIT (A) has partly allowed the appeals filed by the assessee against assessment orders passed u/s 143 (3) and section 143 (3) read with section 147 of the Income Tax Act, 1961 (for short ‘the Act’) respectively. Since, both the appeals pertain to the same assessee for different assessment years and one of the issues involved in both the appeals are Assessment Years: 2009-10 & 2012-13 common, the same were clubbed, heard together and are being disposed of by this common order for the sake of convenience.
Brief facts of the case are that the assessee engaged in the business of banking, filed its return of income for the assessment year under consideration declaring nil income. The case was selected for scrutiny and accordingly notice u/s 143 (2) was issued by the AO. In compliance thereof the authorize representative of the assessee appeared before the AO and filed the details called for. The AO completed the assessment u/s 143 (3) of the Act determining the total income at nil after making inter alia addition of Rs. 4,71,69,218/- on account of broken period interest and Rs. 19,57,898/- on account of depreciation on lease assets. The assessee challenged the assessment order inter alia on the grounds that: a) the AO erred in disallowing depreciation of Rs. 19,57,898/- claimed on lease assets and b) that the AO erred in disallowing broken period interest on HTM Securities of Rs. 4,71,69,218/-. The Ld. CIT (A) after hearing the assessee allowed the first issue and deleted the addition by following the decision of ITAT, Mumbai passed in the assessee’s own case for the A.Y. 1996-97 to 2004-05 and A.Y. 2008-09 and the order passed by the CIT (A) in assessee’s own case for the A.Y. 2010-11. Similarly, the Ld. CIT (A) allowed the second issue and deleted the addition made by the AO on account of broken period interest on HTM Securities by following the decision of the Hon’ble Supreme Court in the case of CIT vs. Citi Bank in Civil Appeal No. 1549 of 2006 and the decision of the Hon’ble Bombay High Court in the case of American Express International Banking Corporation vs. CIT 258 ITR 601 (Bom). The revenue is in appeal before the Tribunal against the said findings of the Ld. CIT (A). Assessment Years: 2009-10 & 2012-13
The revenue has raised the following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):-
1. “On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made on account of depreciation of Rs. 19,57,898/- on leased assets relying on the decision of the Hon’ble ITAT in the A.Y. 2010-11 & 2011-12 in the assessee own case” by the AO on account of broken period interest of Rs. 96,35,392/- relying on the decision of the Hon’ble Supreme Court in the case of CIT v/s. City Bank in Civil Appeal 1549.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO on account of broken period interest of Rs. 4,71,69,218/- relying on the decision of the Hon’ble Supreme Court in the case of CIT v/s. City Bank in Civil Appeal 1549 of 2006, order of the Hon’ble Bombay High Court in the case of American Express International Banking Corporation v/s CIT 258 ITR 601 and the decision of the Tribunal in case of Dena Bank in dated 10.04.2014.”
At the outset, the Ld. counsel for the assessee submitted that both the grounds of appeal filed by the revenue are covered by the decisions of the Mumbai Benches of the Tribunals and the judgments of Hon’ble Supreme Court and the Hon’ble High Court of Bombay passed in CIT vs. Citi Bank (supra) and American Express International Banking Corporation vs. CIT (supra) respectively. The Ld. counsel further submitted that since the order passed by the Ld. CIT (A) in accordance with the aforesaid decisions, the appeal of the revenue is liable to be dismissed being devoid of merit.
On the other hand, the Ld. Departmental Representative (DR) did not controvert the aforesaid facts, however, relied on the assessment order passed by the AO. Assessment Years: 2009-10 & 2012-13
We have heard the rival submissions and gone through the material on record including the cases relied upon by the authorities below. The first issue pertains to disallowance of depreciation claimed by the assessee on leased assets. The Ld. CIT (A) has decided this issue in favour of the assessee holding as under:-
“5.2 I have carefully considered the facts of the case and submission made by the Ld. AR. I find that similar issue has come up for consideration in appellant’s own case for the immediately preceding A.Y. 2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant vide para 4.2 of Appeal NO. CIT (A)-6/IT-178/2014-15 dated 05.10.2015. The relevant portion of the order is reproduced hereunder for ready reference and clarity:-
4.2 I have carefully considered the facts of the case and submission of the appellant. This issue is covered in favour of the appellant directly by the Hon’ble Tribunal’s order dated 20.03.2013 passed in respect of A.Ys. 1996-97 to 2004-05 and also in respect of A.Y. 2008-09. The Ld. CIT (A)-6, Mumbai has allowed the ground in appellant’s own case for the immediately preceding A.Y. 2010-11 in Appeal No. CIT (A)-6/IT-108/Rg.2(3)/12-13 dated 21.10.2013. Respectfully following the above orders, the disallowance made by the AO is deleted and the ground is allowed.
Since the facts are similar, following the reasons given in appellant’s own case for A.Y. 2011-12 (supra), no disallowance is called for in respect of depreciation on leased assets. Accordingly, the addition of Rs. 19,57,898/- made by the AO is deleted. The ground is allowed.”
This issue has already been decided in favour of the assessee by the coordinate Bench in the assessee’s own cases aforesaid and the Ld. CIT (A)-6 Mumbai has allowed this ground of appeal in the assessee’s own case for the A.Y. 2010-11, vide order dated 21.10.2013 following the orders of the co- ordinate Bench. Since, the findings of the Ld. CIT (A) are based on the decision Assessment Years: 2009-10 & 2012-13 of the co-ordinate Bench passed in the assessee’s own cases aforesaid, no interference is warranted. We therefore, uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.
The second ground of appeal pertains to disallowance of broken period interest on HTM Securities claimed by the assessee. The Ld. CIT (A) has allowed this ground of appeal of the assessee holding as under:-
“7.2 I have carefully considered the facts of the case and submission made by the Ld. AR. I find that similar issue has come up for consideration in appellant’s own case for the immediately preceding A.Y. 2011-12. After considering the facts of the case and submissions of the appellant, the issue has been decided in favour of the appellant vide para 6.2 of Appeal No. CIT (A)-6/IT-178/2014-15 dated 05.10.2015. The relevant portion of the order is reproduced hereunder for ready reference:-
6.2 I have carefully considered the facts of the case and the submission of the appellant. I have also gone through the decisions relied upon by the Ld. AR and the AO. I find that similar issue has been decided in favour of the appellant by the Hon’ble Supreme Court in the case of CIT v. Citi Bank in Civil Appeal No. 1549 of 2006. Further, Hon’ble Bombay High Court in the case of American Express Bank (supra) has also decided this issue in favour of the appellant. It was also argued that the Hon’ble ITAT in the case of Dena Bank has decided this issue in assessee’s favour in dated 10.02.2014. Respectfully following the above decisions of Hon’ble Supreme Court, Bombay High Court and Mumbai ITAT, it is held that the broken period interest paid by the appellant is allowable as deduction in computing the total income. The ground is accordingly allowed.
Since the facts are similar, following the reasons given in appellant’s own case for A.Y. 2011-12 (supra), no disallowance is called for in respect of broken period interest on HTM securities. Accordingly, the addition of Rs. 4,71,69,218/- made by the AO is deleted. The ground is allowed.” Assessment Years: 2009-10 & 2012-13
In the case of Commissioner of Income Tax vs. CitiBank (supra), the issue before the Hon’ble Supreme Court was that whether on the facts and circumstances of the case the High Court was right in holding that the interest paid for broken period should not be considered as part of the purchase price but should be allowed as revenue expenditure in the year of purchase of the securities. The Hon’ble High Court had answered the same in favour of the assessee and against the revenue following its earlier decision in the case of American Express Vs. CIT 258 ITR 601 (Bom) and distinguishing the decision of Vijaya Bank vs. Commissioner of Income Tax 1991 supp. (2) SCC 147. The Hon’ble Supreme Court holding that the facts in the present case are similar to the facts in the American Express (supra) dismissed the two Special Leave petitions filed by the revenue and decided the said issue in favour of the assessee and against the revenue.
Since, the findings of the Ld. CIT (A) are based on the law laid down by the Hon’ble Supreme Court in the case of CIT vs. Citi Bank (supra) and the Hon’ble Bombay High Court in the case of American Expresses International Banking Corporation (supra) and the decision of the coordinate Bench, we do not find any infirmity in the findings of the Ld. CIT (A) to interfere with the same. We accordingly uphold the findings of the Ld. CIT (A) on this issue and dismiss this ground of appeal
of the revenue. The facts of the present appeal is identical to the facts of the case of the assessee in the assessee’s own case for the A.Y. 2012-13 discussed above and one of the issues raised in the said case is similar to the sole issue raised by the revenue in this appeal except the amount of addition made by the assessee on account of broken period interest. The revenue has challenged the action of Assessment Years: 2009-10 & 2012-13 the Ld. CIT (A) in deleting the addition made by the AO on account of broken period interest claimed by the assessee.
2. The revenue has raised the following effective grounds of appeal against the impugned order passed by the Ld. CIT (A):- “On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO on account of broken period interest of Rs. 96,35,392/- relying on the decision of the Hon’ble Supreme Court in the case of CIT v/s. City Bank in Civil Appeal 1549 of 2006, order of the Hon’ble Bombay High Court in the case of American Express International Banking Corporation v/s CIT 258 ITR 601 and the decision of the Tribunal in case of Dena Bank in dated 10.04.2014.”
3. This ground of appeal is identical to the second ground of appeal of the assessee for the A.Y. 2012-13 aforesaid except the quantum of amount involved. We have already upheld the findings of the Ld. CIT (A) and dismissed this ground of appeal of the revenue in the revenue’s appeal pertaining to the A.Y. 2012-13. Consistent with our own findings, we uphold the findings of the Ld. CIT (A) in this case for the reasons mentioned in our order for the A.Y. 2012-13 aforesaid and dismiss this ground of appeal of the revenue.