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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
आदेश / O R D E R Per Pawan Singh, JM : These are six appeals filed by the revenue and cross-appeals thereto by the assessee. The assessee also filed Cross-objection bearing CO NO.84/Mum/2006 arising out of for the assessment year 2001-02. These appeals are directed against the orders dated 15.1.2004, 20.1.2004 and 30.3.2005 passed by the respective CIT(A) and it relate to the assessment years 1999-2000, 2000-01 and 2001-02. Since issues urged in all these appeals and cross-objection are common, these appeals were heard together and are being decided by this consolidated order, for the sake of convenience.
3 and other six appeals 2. First we will deal with the appeal filed by the revenue being ITA No.2519/Mum/2004, in respect of AY 1999-2000.
The assessee herein is engaged in the business of Banking and financing activities. It filed return of income declaring total income of Rs.1,53,45,60,780/- on 31/12/1999. The AO made assessment u/s 143(3) of the Income Tax Act, 1961 and after making certain additions and disallowances computed total income of the assessee at Rs.1,90,83,89,060/- vide order dated 04/02/2002, against which an appeal was filed which was disposed of vide order dated 15/01/2004, against which the present appeal before us.
The first issue urged by the revenue is in respect of broken period interest of Rs.35,06,51,480/-.
The facts of the issue are that the assessee claimed disallowance of broken period interest on securities for Rs.35,06,51,480/-. Consequently claimed as deduction of Rs.13,25,23,374/- as broken period interest on securities sold during the year. The assessee claimed that the interest paid at the time purchase of securities be treated as revenue expenditure. The AO by following his earlier decisions and the precedent laid down by the Hon’ble Supreme Court in the case of Vijaya Bank Ltd reported in 187 ITR 541 broken period interest on unsold securities is added back the amount of Rs.35,06,51,480/-to the total income of assessee. Aggrieved by this the assessee preferred appeal before first appellate authority.
Before the ld.CIT(A), the ld.AR contended that an identical issue had come up in the assessee’s own case in the earlier years relevant to the assessment year under consideration and the ld. CIT(A) confirmed the action of the AO. The ld.AR submitted that subsequently the jurisdictional High Court in the case of American Express International Banking Corporation V/s CIT reported in 258 ITR 601 (Bom) has decided an identical issue in which the Hon’ble High Court held that the broken period 4 and other six appeals interest is permissible as a deduction. The ld. AR further submitted that following the decision of Bombay High Court in the case of American Express International Banking Corporation (supra), vide order dated 9.10.2002 allowed the claim of the assessee for the assessment years 1980-81 and 1981-82. He further submitted that this decision was not available before the ld.CIT(A) while deciding the issue before him for earlier years. Now the issue raised herein stands covered by the decision of the Jurisdictional High Court in the assessee’s own case.
After considering the submissions of the ld.AR as well as the decision rendered by the Jurisdictional High Court in the case of American Express International Banking Corporation (supra) decided this issue in favour of the assessee. Aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us.
The ld.DR submitted the facts of the case and relied on the order of AO.
At the time of hearing the ld.AR submitted that the issue raised by the revenue in this appeal is now stands covered in favour of the assessee and against the revenue by various decisions and orders of the Tribunal rendered in assessee’s own case. Therefore, he prayed that the issue raised in this appeal be rejected. In support of this contention he placed reliance on the following decisions: a) The Hongkong and Shanghai Banking Corporation Ltd V/s DCIT in ITA Nos.9587/Mum/92 and 9588/Mum/92 (AYs-1989-90 and 1990-91) order dated 22.2.2006 para 3 of the order; b) The Hongkong and Shanghai Banking Corporation Ltd V/s DCIT in ITA Nos.4082/Mum/97(AYs-1991-92) order dated 29.11.2006 para 5 to 10 of the order; c) The Hongkong and Shanghai Banking Corporation Ltd V/s JCIT in ITA Nos.709,2604,2605,4709/Mum/99 (AYs-1992-93 to 1994-95 & 1996-97 and 1997-98 order dated 15.2.2007 para 24 to 37 of the order; 5 ITA No.2519/Mum/2004 and other six appeals d) M/s Mercantile Bank Limited V/s Inspecting ACIT in Income Tax Reference No.153 of 1996 and RA No.865 and 866 of Bombay / 1992 order (AYs 1980-81 and 1991-92) dated 9.10.2002; e) Supreme Court in the case of British Bank of Middle East (through their successors HSBC) for the assessment year 1990-91; f) Bombay High Court in the case of British Bank of Middle East (through their successors HSBC) for the assessment year 1990-91; g) American Express International Banking Corporation V/s CIT(258 ITR 601 (Bom); h) CIT V/s City Bank N A –Civil Appeal No.1549 of 2006 order dated 12.08.2008 and i) CIT V/s Deutche Bank A G in Special Leave Petition No. 345 of 2004 order dated 27.1.2004
We heard both the sides and perused the record placed before us. We find that the issue raised by the Revenue in this ground stands covered by the orders and decisions of various courts including orders of the Tribunal. Therefore, respectfully following the same, we reject the ground No.1 raised by the Revenue.
The second issue raised by the revenue is in respect of directing the AO to delete salaries paid to expatriate employees amounting to Rs.12,83,33,473/-. 12. During the course of assessment proceedings, the AO observed that the assessee has paid an amount of Rs.12,83,33,473/- towards the salaries by ex-patriate officers employed in India. The AO called for the explanation from the assessee. In response to the query raised by the AO, the assessee submitted that thee expatriate officers rendered services in India, therefore any amount paid to them in India or outside is liable to be taxed in India. The assessee submitted that the assessee paid taxes of Rs.4,23,65,902/- on the salary paid to ex-patriate officers employed in India was paid in India. The assessee submitted that the services of 6 and other six appeals these officials were taken in India and accordingly they were paid in India. Therefore, they were eligible for deduction while computing taxable income. The explanation tendered by the assessee did not find favour of the AO. According, the assessing officer disallowed the claim of the assessee with a liberty to claim benefit of section 44C of the Act. Aggrieved by the decision of the AO, the assessee preferred an appeal before the first appellate authority.
Before the FFA/ ld.CIT(A), the ld.AR contended that an identical issue had come up before the ld. CIT(A) in assessee’s own case for the assessment years 1996-97 and 1997-98 and the ld.CIT(A) granted relief to the assessee.
The ld. CIT(A) by following the decision of his predecessor for the earlier years directed the AO to delete the addition made by him. Aggrieved by the decision of ld.CIT(A), the Revenue has filed this appeal before the Tribunal.
Before us the ld.DR submitted the facts as submitted before the lower authorities and relied on the order of AO. He submitted that the findings of the ld. CIT(A) is not in consonance with law and legal position. Therefore, he submitted that the order of ld.CIT(A) be set aside and that of AO be restored.
The ld. AR submitted that the issue raised in this ground stands cover in favour of the assessee by the decision of the Tribunal in JCIT V/s The British Bank of Middle East in ITA No.4908/Mum/2000(AY- 1997- 98) order dated 28.6.2005, para 117 and 119 and he also placed reliance on the following decisions: a) Emirtes Commercial bank Ltd (now known as Abu Dhabi Commercial Bank Ltd (262 ITR 55); b) M/s American Express Bank Limited in Income Tax Reference No.3 of 2002 R A No.568/Mum/1998 order dated 17.7.2003; c) Shinhan Bank V/s DCIT(IT) (2012) 54 SOT 140(Mum) = (2012) 23 taxmann.com 449(Mum); 7 and other six appeals d) DCIT (IT) V/s Chohang Bank 126 ITD 448 (Mum); e) ABN Amro Bank N V V/s JCIT in ITA No.692/Cal/2000(AY-1996-97) dated 30.3.2001; f) Kedarnath Jute Mfg Co. Ltd.V/s CIT- 82 ITR 363 g) The British Bank of Middle East V/s JCIT in ITA No.751/Mum/1998 (AY-1993-94) order dated 28.6.2005 para 71 and 72.
We have heard the parties on this issue and perused the materials placed before us including the case law relied upon by the parties. We find that the issue raised by the revenue in this appeal stands covered in favour of the assessee by the above said decisions. Therefore, following the principal of consistency, we dismiss Ground No.2 of revenue’s appeal.
The next ground of appeal
pertains to deletion of disallowance of Rs.33,86,167 incurred on guest house and holiday home in view of the section 37(4) of the Act .w.e.f.1.4.1998.
19. The AO made the disallowance of Rs.33,86,167/- for the expenses incurred by the assessee. Aggrieved by the decision of AO, the assessee preferred appeal before the ld.CIT(A), who in turn following the amendment in the provision of section 37(4) w.e.f.1.4.1998 directed the AO to delete the addition. Aggrieved by this, the revenue has urged this issue before us.
20. We find that since the provisions of section 37(4) has been deleted by Finance Act, 1997 with effect from 1.4.1998, therefore, this ground has become infructuous. Therefore, Ground No.3 is dismissed as infructuous.
21. The next issue relates to deletion of disallowance of Rs.10,62,000/- (in fact the total of the alleged amount is Rs.10,72,000/-) incurred on library subsidy, contributions to staff cultural committee and recreation club.
22. The AO observed that the assessee has incurred following amounts: a) Library subsidy Rs.22,000 b) Staff cultural committees and recreation club Rs.20,000 c) Holiday Home Rs.10,30,000 Total Rs.10,72,000
23. The AO called for the explanation from the assessee as to why these expenses should not be disallowed and added back to the total income of the assessee. In reply, the assessee contended that these expenses have been incurred for administrative convenience and therefore, the same cannot be considered as disallowance u/s 40A(9) of the Act. The AO was of the view that these payments are said to be made to staff associations, these are in the nature of contribution referred in section 40A(9) of the Act. Accordingly, the AO disallowed the claim of the assessee. Aggrieved, assessee preferred the appeal before the ld.CIT(A).
24. Before the ld.CIT(A), the ld.AR contended that an identical issue has been decided in favour of the assessee by the predecessor of ld.CIT(A) for the assessment years 1995-96 to 1998-99. 25. The ld. CIT(A) accepting the plea of the assessee granted relief to the assessee and directed the AO to delete the disallowance of Rs.10.62,000/-. Being aggrieved, by the direction of ld.CIT(A), the revenue is in appeal before us. 26. The ld.DR submitted the facts of the case and relied on the order of AO. He vehemently argued that the findings of the ld.CIT(A) in not in accordance with law. He submitted that the order of ld.CIT(A) be set aside and that of AO be restored. 27. On the contrary, the ld.AR submitted that an identical issue had come up before the Mumbai Bench of the Tribunal in Tribunal in JCIT V/s The British Bank of Middle East in 1992-93) order dated 28.6.2005, para 15 and 16 and in ITA No.751/Mum/98 (AY- 1994-95) para 68 and 69 of the order he also placed reliance on the following case laws: a) CIT V/s Bharat Petroleum Corporation Ltd (Bom HC) 252 ITR 43; b) CIT V/s Hind Lamps Limited (Allahabad High Court) 130 Taxman 586; 9 and other six appeals d) Associated Cement Co.Ltd repoted in 49 TTJ 623 (Bom-ITAT); e) Chloride Industries Ltd (79 ITD 1)(Cal ITAT). He submitted that the issue raised by the revenue now stands covered in favor of the assessee. Therefore, the issue raised by the revenue be dismissed.
28. After considering the rival submissions and on perusal of the record, we are of the considered opinion that this issue has already been decided in favour of the assessee by various judicial forum as mentioned above. Therefore, respectfully following the previous case law, we dismiss the Ground No.4 taken by the revenue.
29. The next issue raised by the revenue in this appeal pertains to deletion of disallowance of Rs.1,46,32,997/- in respect of entertainment expenses. 30 Facts relating to the issue are that the AO, during the course of assessment proceedings observed that the assessee has incurred following expenses : Entertainment expenses paid to club Rs.25,19,395 Expenditure in the nature of entertainment Rs.54,13,602 Entertainment in the nature of entertainment included under other heads, i.. staff welfare, training advertising, salts promotion, local travel and other expenses Rs.68,00,000 Rs.1,47,32,997 He further observed that assessee has not made any disallowance on account of above mentioned expenses on the ground that section 37(2) has been deleted by the Finance Act, 1997. The AO under the provisions of section 37(1) of the Act disallowed all the expenses and added back to the total income of the assessee. Aggrieved by this, assessee has filed appeal before the ld.CIT(A).
10 and other six appeals 31. In the first appellate proceedings, the ld.CIT(A) observed that the provisions of section 37(2A) had been deleted w.e.f.1.4.1998 and hence he was of the opinion that the expenditure on entertainment could not be disallowed. He further observed that mere claiming of deduction is not sufficient; the assessee has to prove its case. The assessee failed to justify it and hence AO was right in his decision. He further observed that the AO while applying the provisions of Act should take reasonable view. Accordingly, the ld. CIT(A) directed the AO to restrict the disallowance to Rs.1 lac on estimated basis and delete the balance disallowance of Rs.1,46,32,997/-. Aggrieved by this the revenue in appeal before us.
Before us, the ld. DR reiterate the same contentions as made before the authorities below and also relied on the order of AO.
On the contrary, the ld.AR submitted that an identical issue had come up before the Hon’ble Delhi High Court in the case of Director of Income Tax V/s Apparel Exports Promotion Council l (2010) 1 taxmann.com 222 (Delhi) and the Hon’ble High Court, observed and held that the assessee is entitled to deduction for the expenditure incurred for entertainment of the staff as well as outsiders for the promotion of business. He also placed reliance on the following case law: a) Credit Lyonnais (2012) 28 taxmann.com 91 (Mumbai); (2013) 21 ITR (T) 359(Mumbai), (2012) 139 ITD 681 (Mumbai) and b) Finance Act, 1997 deleting the provision of section 37(2).
He therefore prayed that the order passed the ld. CIT(A) be confirmed. 34. After considering the rival submissions and on perusal of the record, we are of the considered opinion that this issue has already been decided in favour of the assessee by various judicial forum as mentioned above. Therefore, respectfully following the previous case law, we dismiss the Ground No.5 taken by the revenue.
11 and other six appeals 35. The last issue pertains to exemption of interest of Rs.21,82,78,180/- earned on tax free bonds.
The facts regarding the issue are that the assessee earned interest to the tune of Rs.21,82,78,180/- on the investment made in tax free bonds and claimed that it is exempt income. The AO called for the explanation from the assessee as to why the interest earned on tax free should not be disallowed. The Assessee detailed explanation before the AO, but the AO did not accept the explanation tendered by the assessee and after calculating proportionate interest disallowed an interest of Rs.4,36,55,636/- and added to the total income of the assessee. Aggrieved by this the assessee preferred an appeal before the ld.CIT(A), who after discussing every of the matter allowed the claim of the assessee vide para 11.1 to 11.3 which is as under : “11.1 I have considered the above submissions made by the appellant as well as the findings of the AO. On identical issue my ld. predecessor in the earlier Ayr.98-99 vide order dtd.04/06/2001 decided in appellant's favour. The said finding is reproduced below: "In the assessment order the AO. has not established any nexus between the borrowings and the investment in the tax free bonds. Incidentally the investment in the tax free bonds were made in the past years. The AO. has disallowed an amount of interest on the basis of proportion........ In my view, as the nexus between the borrowings and the investments have not been established, it cannot be said that there was any expenditure laid out for earning the tax free income. Therefore the provisions of section 14A of the Income-tax introduced w.e.f. 1/4/1962 would be of no benefit to the revenue The AO. is therefore directed to allow a relief of Rs............ from the total income of the appellant.
" 11.2 In the year under consideration, the appellant has contended that if the appellant's net worth i.e. capital, profit reserve and surplus and current deposits is higher than the investment in tax free securities, then the investment in tax free securities should be regarded to be made from its own funds. The newly inserted section 14A of the Income-tax Act, 1961 with retrospective effect, clearly and specifically provides that in computing the total income no deduction shall be allowed in respect of expenditure incurred by the assessee in 12 and other six appeals relation to income which does not form part of the total income under this Act. In the memorandum explaining the provisions in the Finance Bill, it has been stated that the very idea of granting deduction of expenditure incurred in earning non-taxable or exempt income is against the basic principle of taxation whereby only the net income, i.e. gross income minus the expenditure is taxed. On the same analogy, the exemption is also in respect of the net income. Expenses incurred can be allowed only to the extent they are relatable to the earning of taxable income.
11.3 I find merits in the appellant's submission that no disallowance out of interest paid should be made when it has equivalent reserves and capital available. However, the appellant's contention that the increase in non-interest bearing deposits i.e. current account should also be considered as its own fund is not acceptable as in the business of banking the funds received as deposits from public at large are to be mainly utilised for the purpose of making advances and the bank cannot afford to have mismatch of short term borrowed funds being used for long term investment. Besides this, certain percentage of deposits whether it is interest free or interest bearing is also supposed to be kept in SLR as per the guidelines of RBI. The appellant is also supposed to pay interest on term deposits to its customers. Therefore, amounts lying in the current deposits and term deposits should not be categorized as own funds. In principle, I am also agreeable with the findings of the AO that the disallowance is called for u/s.14A of the I.T. Act. However, keeping in view the appellant's submission that it has interest free funds in the form of reserves relatable to profits and share capital, therefore, business prudence demands that the investment in tax free securities ought to come out of interest free funds which are in the form of reserves and share capital, I hold that no disallowance should be made to the extent of capital, profit reserve and surplus available with the bank. The AO is therefore directed to compute the disallowance accordingly and while doing it the AO should take into account the gross investment in tax free instruments during the year under consideration. All the above judgments cited by the appellant were rendered by the courts prior to the insertion of section 14A of the I.T. Act. The appellant gets relief accordingly. Appellant's appeal on this ground is partly allowed.”
Aggrieved by this the revenue is in appeal before us.
The ld. DR submitted the facts of the case and relied on the order of
Before us, the ld.AR argued that, the ld. CIT(A) has thoroughly discussed the factual and legal aspects of the case and he also relied On identical issue decided by his predecessor in the earlier Ayr.98-99 vide order dtd.04/06/2001. The Ld. DR could not differentiate how the issue raised again in this year is different from the previous year, nor been able to show any contrary law to us.
After considering the rival contentions and on perusal of the record, we find that the issue raised by the revenue in this appeal stands covered in favour of assessee by the decisions relied upon by the assessee. Therefore, we do not find any infirmity in the order of ld. CIT(A) accordingly, we confirm his order. Ground No.6 taken by the revenue stands dismissed.
Now we shall take up the appeal bearing by the revenue in respect of AY-2000-01.
The first issue urged by the revenue is in respect of broken period interest of Rs.58,32,26,272/-.
We find that we have decided an identical issue in the revenue’s appeal for the assessment year 1999-2000 vide para 2 to 10 of this order. Therefore, by following the principle of consistency, we dismiss Ground No.1 taken by the revenue. 44. The second issue raised by the revenue is in respect of directing the AO to delete salaries paid to expatriate employees amounting to Rs.9,77,26,439/-“.
14 and other six appeals 45. We have already decided similar issue raised by the revenue for the assessment year 1999-2000 against the revenue vide paragraphs 11 to 17 of this order. Therefore, we do not take different stand than the stand so taken by us in earlier year. Accordingly, we dismiss Ground No.2 of the revenue’s appeal. 46. The next ground of appeal pertains to deletion of disallowance of Rs.46,43,398/- incurred on guest house and holiday home in view of the section 37(4) of the Act .w.e.f.1.4.1998.
47. Since we have decided an identical ground against the revenue for the assessment year 1999-2000 vide para 18 and 19 of this order above, we taken the same view here also and dismiss Ground no.3 of revenue’s appeal.
48. The ground No.4 taken by the revenue pertains to deletion of disallowance of Rs.22,10,218/- incurred on library subsidy, contributions to staff cultural committee and recreation club.
49. We have already discussed similar ground of revenue’s appeal and vide paragraphs 21 to 28 of this order for the assessment year 1999- 2000, we have dismissed ground taken by revenue thereon. Therefore, following the above view, here also we dismiss Ground No.4 taken by Revenue.
50. The next issue raised by the revenue in this appeal pertains to deletion of disallowance of Rs.1,98,32,482/- in respect of entertainment expenses.
51. This ground being identical and no change in facts to that of Ground No.5 for the assessment year 1999-2000, we take similar view as taken therein vide para No.30 to 35 of this order. Accordingly, we dismiss Ground No.5 taken by Revenue.
15 and other six appeals 52. The last ground of this appeal pertain to deletion of addition of exemption of interest of Rs.27,91,32,253/- earned on tax free bonds.
Similar issue has come up before the Tribunal in Revenue’s appeal for the assessment year 1999-2000 and we, after through discussion dismissed the ground taken by the Revenue. Respectfully following the same, here also we take similar view and dismiss Ground No.6 of Revenue’s appeal.
Now we shall deal with the assessee’s appeal for the assessment year 1999-2000 being ITA No.2679/M/2004.
The first grounds relates to the confirmation of interest accrued but not due on securities as income of the assessee.
The interest accrues on securities for which due date of payment rises after the day which fall due for payment. The assessee did not added this interest income in the total income. The AO was of the view that since the interest in respect of securities for which the due date of payment arises after the end of the previous year i.e. 31.3.1999 is the income of the assessee. Therefore, he added the same to the total income of the assessee. In the appellate proceedings, the ld.CIT(A) by following the decisions in assessee’s own cases for the earlier assessment years 1995-96 to 1999-2000 confirmed the action of the AO. 57. Before us also, the ld.AR could not brought on record any material to reverse the view taken by the first appellate authority. On the contrary, the ld. AR fairly conceded that this issue stands covered in favour of the revenue by the decision of Tribunal in assessee’s own case in and 9588/Bom/92 (AY-1989-90 and 1990-91) order dated 22.2.2006 and vide para 2, this issue is decided against the assessee by holding that the retrospective amendment has been brought to section 145 w.e.f.AY 1989-90 interpreting that any interest on securities 16 ITA No.2519/Mum/2004 and other six appeals not charged to tax in an earlier year shall be charges to tax on receipt basis in a subsequent year. Similar view have been taken in ITA No.4082/Mum/97 (AY-1991-92) dated 29.11.2006 and vide ITA No.709/Mum/99 (AY-1992-93) order dated 15.2.2007 (para 22 and 38 of the order) 58. After considering the rival contentions and records available before us as well as the decisions relied upon by the parties, we are of the considered opinion that this issue is now settled against the assessee. Therefore, we dismiss the Ground No.1 taken by the assessee. 59. The second ground raised
by the assessee is regarding confirming the disallowance made by the AO on account of NRI deposit Mobilization of Rs.3,38,53,896/-.
60. At the time of hearing, the ld.AR submitted that an identical issue had been came up before this Tribunal in assessee’s own case in ITA Nos.9587/Mum/92 and 9588/Mum/92 (AYs-1989-90 and 1990-91) order dated 22.2.2006 and vide para 8 of the order, the Tribunal has decided this issue in favour of the assessee. In addition to this submissions, the ld.AR also relie don the following decisions : JCIT V/s The British Bank of Middle East in ITA a) No.4908/Mum/2000(AY- 1997-98) order dated 28.6.2005; b) Emirtes Commercial bank Ltd (now known as Abu Dhabi Commercial Bank Ltd (262 ITR 55); c) M/s American Express Bank Limited in Income Tax Reference No.3 of 2002 R A No.568/Mum/1998 order dated 17.7.2003; d) Kedarnath Jute Mfg Co. Ltd.V/s CIT- 82 ITR 363(SC)
The ld. DR strongly relied upon the order of the Authorities below.
After considering the rival contentions of the parties, on perusal of the records as well as orders of the Tribunal in assessee’s own case including the cases relied upon, we find that that the facts of the case relied upon by the assessee and case in hand are similar. The order relied upon by the assessee is dated 22.2.2006 and the present appeal pertains to the assessment year 1999- 17 and other six appeals 2000, and even today the revenue could not bring any material contrary to constrain to take a different view. Therefore, respectfully following the order of the Tribunal in assessee’s own case, we allow Ground No.2 taken by the assessee. 63. The third issue pertains to disallowance of fees paid to Master card and Visa towards services rendered by them. Before us both the parties conceded that an identical issue had 64. come up before the Tribunal in assessee’s own case in Hongkong and Shanghai Banking Corporation Ltd V/s JCIT in ITA Nos. 709,2604,2605,4709/Mum/99 (AYs-1992-93 to 1994-95 & 1996-97 and 1997-98 order dated 15.2.2007 para 53 to 55 of the order has restored this issue to the file of the AO. Facts being the same, we have no other alternative but to following the said decision of the precedent laid down by the Tribunal. Accordingly, we restore this ground to the file of the AO for verification of the facts and fresh decision. Ground No.3 of assessee’s appeals is allowed for statistical purposes. 65. The last ground pertains to the confirmation of disallowance made by the AO regarding the payment to the Great Eastern Shipping Company Limited (GESC), and also the claim of Rs.2 crores regarding depreciation rejected by the ld. CIT.(A). 66. The brief facts of the issue are that the A H Bhiwandiwalla and Co (AHB) was a tenant in the premises of assessee-bank and Great Eastern Shipping Co.Ltd (GESCO) was associated enterprise of AHB. Later on both merged into one company. Since, the assessee-bank was required more space, the assessee asked GESCO to vacate the premises. Consequent thereon, for vacating the said premises, the assessee-bank has paid Rs.20 crores to the tenant on the ground that the tenant has incurred huge amount for renovation of the premises. Accordingly, the assessee claimed the said expenses as revenue expenses and claimed deduction as revenue 18 and other six appeals expenses. The AO did not allow the claim of assessee on the ground that the premises in question will be useful for long time business purpose of the assessee-bank. Therefore, rejected the claim of the assessee as expenditure is revenue in nature rather than capital in nature. The AO also rejected the claim of depreciation of Rs.2 crores on the ground that cost of the vacated floor has already been included in the WDV on which depreciation has been claimed by the assessee every year. The ld. CIT(A) relying on the decision of the Hon’ble Kerala High Court in the case of CIT V/s Sea Lord Hotel Pvt Ltd reported in 245 ITR 601 confirmed the action of the AO holding that the expenses incurred for vacating the premises is permanent in nature and treating the same as capital expenditure, the AO is justified in rejecting the claim of the assessee. Aggrieved by the decision of ld.CIT(A), the assessee is in appeal before us.
The ld. AR submitted before us the facts as narrated before the lower authorities and also contended that the premises in question was very much in need of the assessee-bank and because of it assessee was facing acute shortage of place. Since the tenant was very old and it has incurred huge amount on renovation, it was not possible to it to get similar premises in the same vicinity in bare minimum cost it was the responsibility of the assessee-bank to get accommodation in the same area. Therefore, the assessee has no other alternative but to pay such huge amount to vacate the premises. Therefore, it was revenue in nature. He, therefore, prayed that the claim of the assessee be allowed. In support of his contentions he placed reliance on the following decisions: a) CIT Vs Versus Mohanlal Brother - 1982 133 ITR 642(Bom); b) CIT v Nav Bharat Nirman (P) Ltd [1983] 141 ITR 723 (Delhi). c) CIT v. Auto Distributors: 210 ITR 222 (Cal)
The ld. AR further submitted that the Hon’ble Bombay High Court in the case of Mohanlal Brother (supra) held that the amount paid for obtaining 19 and other six appeals the possession of premises is business expenditure u/s 37(1) of the Act. In the case of Nav Bharat Nirmal (P) Ltd (supra), it has also been held by the Hon’ble Delhi High Court that liability for non-eviction of tenant and liability to pay brokerage accrued to assessee in relevant accounting year is expenditure, section 28(i) r.w.s.145 of the Act. The facts of the case in CIT V/s Auto Distributors Ltd (supra) are similar to the facts of present case in the said case the Calcutta High Court allowed the claim of the assessee treating it as business expenditure u/s 37(1) of the Act.
The ld. DR relied on the orders of authorities below.
After hearing the contentions of both the parties and on perusal of records including the decisions relied upon by the assessee, we are of the considered opinion the expenditure incurred by the assessee for vacating the premises given to the tenant is a business expenditure and allowable as revenue expenditure. Therefore, we allow Ground No.4 in part.
Since we have allowed main claim of the assessee in respect of business expenditure, we reject the alternative plea taken by the assessee.
Now we shall take up the assessee’s appeal being ITA no.2680/Mum/2004 for AY-2000-01 .
Grounds of appeal
No.1 to 4 taken by the assessee in this appeal are identical to that of Grounds of appeal No.1 to 4 to the appeal bearing No.2679/Mum/2004. We have decided these grounds in favour of the assessee. Accordingly, we allow these grounds of appeal in favour of the assessee.
73. The fifth ground taken by the assessee is in respect of disallowing the loss of Rs.3,50,00,000/- in respect of replacement of shares of Zee Telefilms to a foreign Institutional Investors (FII).
74. In the computation of income, the assessee claimed a loss of Rs.3,50,00,000/- on account of replacement of shares to a Foreign Institutional Investor. The AO called for the explanation from the assessee 20 and other six appeals as to why this amount should not be added to the total income of the assessee. In reply, the assessee contended the assessee act as mediatory to holds securities, collect dividends, obtains deliveries, ensures transfer in the name of the clients and delivers the securities when the same are sold by the clients. During the course of such business proceedings. One client namely Capital Emerging Markets Growth Fund (EMGF) has purchased certain shares of Zee Telefilms in October, 1994. These shares were duly registered in the name of EMGF in December, 1994. Subsequently, a company viz Jas-One Diamonds Pvt Ltd filed a suit in Bombay High Court claiming that these share were in the name of Jas-One Diamonds Pvt Ltd and sent for registration in 1994, subsequently stolen and reintroduced into the market. EMGF was made a defendant. Meaning thereby, EMGF were holding custody of stolen shares. In December, 1998 the assessee sent these shares to Zee Tele Ltd. Since Jas-One Diamonds Pvt Ltd filed a case before the Hon’ble Bombay High Court and stay was on transfer of shares, dematerialization could not be effected. The bank referred the case to broker who had acted on behalf of the FII. However, the broker informed that the case had become time barred and relief sought by restoring to Arbitration proceedings through the Stock Exchange did not yield any positive result in view of the lapse of time. Chase Manhattan Bank, who acted as the Global Custodians for EMGF raised a claim against the bank on the ground that the FII and the Global Custodians were not duly notified of the notices/objections as required under the Custody Agreement. In these transactions, Chase and EMGF suffered loss of 3.5 crores. Since these clients are very important to the bank and to safeguard their interest the assessee spent Rs.3.5 crores and hence assessee claimed business loss in the computation of income. The AO did not accept the claim of assessee and disallowed the same. Aggrieved the assessing filed appeal before the ld. CIT(A). The ld.CIT(A) held that the assessee was 21 and other six appeals not responsible for theft of shares as well as the matter being sub-judice before Hon’ble High Court. The ld. CIT(A) confirmed the action of the AO.
75. Before us the ld.AR contended that the assessee is acting as mediatory to holds securities, collect dividends, obtains deliveries, ensures transfer in the name of the clients and delivers the securities when the same are sold by the clients. In this case also the client of assessee Capital Emerging Markets Growth Fund (EMGF) has purchased certain shares of Zee Telefilms in October, 1994. These shares were duly registered in the name of EMGF. The ld. AR submitted that one company viz Jas-One Diamonds Pvt Ltd filed a court case claiming these shares belong to it. Therefore, no further transactions could be continued with respect of these shares. Thereafter Chase Manhattan Bank, who acted as the Global Custodians for EMGF raised a claim against the bank on the ground that the FII and the Global Custodians were not duly notified of the notices/objections as required under the Custody Agreement. In these transactions, Chase and EMGF suffered loss of 3.5. These client being reputed clients and to maintain dignity in the market, the assessee company paid this amount to them and claimed as business expenses. He contended that in such type of business whatever losses suffered by the bank is business loss and should be allowed as business loss. Therefore, the AO was not justified in disallowing this payment as business loss. In support of his contention, he placed reliance on the decision of Apex Court in the case of CIT V/s Nainital Bank Ltd (1966) 62 ITR 638(SC).
The ld.Counsel/ AR submitted that in the case of Nainital Bank Ltd, the large number of currency notes and jewellery were stolen and the payment of these assets were made by the bank to the constituent and the Hon’ble Supreme Court allowed the claim of the assessee being loss incurred by the assessee as business expenditure. He, therefore, 22 and other six appeals submitted that the facts of the present case and the case cited supra are same and hence the payment made by the assessee to Zee Telefilms be allowed as business loss.
The ld. DR reiterated the facts of the case as made before the ld. CIT(A) and relied on the orders of authorities below. 78. After hearing both the parties and on perusal of records as well as the decision relied upon by the assessee in the case of Nainithal Bank Ltd, we find this issue stands covered in favour of the assessee. Respectfully following the decision relied upon by the ld. Counsel, we set aside the order of ld.CIT(A) and direct the AO to delete the addition made by the AO. 79. The Ground No.5 is therefore allowed.
Now we shall take up the appeal bearing No. respect of AY-2001-02, Appeal by Reveue.
The first issue urged by the revenue is in respect of broken period interest of Rs.1,08,09,47,760/-. 82. We find that we have decided an identical issue in the revenue’s appeal for the assessment year 1999-2000 vide para 2 to 10 of this order. Therefore, by following the principle of consistency, we dismiss Ground No.1 taken by the revenue. 83. The second issue raised by the revenue is in respect of directing the AO to delete bonus point on credit cards amounting to Rs.5,97,56,963/-. 84. Facts of the issue are the assessee bank give credit and bonus point to the customers on purchasing goods on credit cards. These credits points are converted into cash and credited to the account of the customers. Aggregating such bonus points on credits cards amounting to Rs.5,97,56,963/- claimed by the assessee-bank as an expenditure and 23 ITA No.2519/Mum/2004 and other six appeals deducted the same from the total income of the assessee. The AO disallowed the same on the ground no provision has been made in the Income Tax Act. The ld. CIT(A) allowed the claim of the assessee holding that the bonus points accruing to the customers is a liability against the commission income earned from the credit cards business, which is brought to tax as income. The commission income is offered to tax in the year in which it arises and therefore, the liability which is accrued on account of bonus points awarded should be allowed as deduction as these points are awarded on account of the purchase made and the earning of the commission is directly related to the purchases. Since the assessee is following the mercantile system of accounting, the liability accrued in the year consideration should also be allowed. Accordingly, the ld. CIT(A) allowed the claim of the assessee. Aggrieved revenue is in appeal before us. 85. The ld. DR reiterated the same contentions as made before the ld.CIT(A) and relied on the order of AO. 86. The ld.Counsel for the assessee submitted that the ld.CIT(A) has passed well reasoned order by considering all aspects of the matter and prayed that the ground raised
by the revenue be confirmed. In support of this contentions he placed reliance on the following decisions : a) ACIT V/s M/s Shoppers Stop Ltd –ITA No.1835/Mum/2010 (AY- 2003-04) dated 25.1.2012; b) Syndicate bank V/s DCIT (Bang ITAT) –(2013) 38 taxmann.com 25); c) Bharat Earth Movers V/s CIT -245 ITR 428 (SC); d) Calcutta Co. Ltd. vs. CIT (1959)
37. ITR
1. (SC); e) Rotork India Pvt. Ltd. Vs. CIT reported in 314 ITR
63. (SC); f) Taparia Tools Ltd v Joint CIT [2003] 260 ITR 102 (Bom),; g) Vinitee Corporation (P) Ltd. (2005) 146 Taxman 313 (Delhi); and h) CIT v. Beema Manufacturers P. Ltd. (2003) 130 Taxman 400 (Mad)
24 and other six appeals 87. We find that the ld.CIT(A) has considered this issue with detailed discussions, we also find that an identical issue had come up before the various forums/ Judicial authorities, and therein the Courts have decided this issue in favour of the assessee. Hence, this issue stands covered in favour of the assessee. Therefore, we do not find any infirmity in the order of ld.CIT(A). Accordingly, we confirmed his findings. Ground No.2 taken by the revenue is dismissed.
The Ground No.3 of appeal pertains to deletion of disallowance of Rs.77,17,146/- incurred on guest house and holiday home in view of the section 37(4) of the Act .w.e.f.1.4.1998.
Since we have decided an identical ground against the revenue for the assessment year 1999-2000 vide para 18 and 19 of this order above, we taken the same view here also and dismiss Ground no.3 of revenue’s appeal.
The ground No.4 taken by the revenue pertains to deletion of disallowance of Rs.14,99,000/- incurred on library subsidy, contributions to staff cultural committee and recreation club.
We have already discussed similar ground of revenue’s appeal and vide paragraphs 21 to 28 of this order for the assessment year 1999-2000, we have dismissed ground taken by revenue therein. Therefore, following the above view, here also we dismiss Ground No.4 taken by Revenue.
The next issue raised by the revenue in this appeal pertains to deletion of disallowance of Rs.2,37,21,174/- in respect of entertainment expenses.
This ground being identical and no change in facts to that of Ground No.5 for the assessment year 1999-2000, we take similar view as taken therein vide para No.30 to 35 of this order. Accordingly, we dismiss Ground No.5 taken by Revenue.
25 and other six appeals 94. The Sixth ground of this appeal pertain to deletion of addition of exemption of interest of Rs. 26,48,23,923/- earned on tax free bonds. 95. Similar issue has come up before the Tribunal in Revenue’s appeal for the assessment year 1999-2000 and we, after thorough discussion dismissed the ground taken by the Revenue. Respectfully following the same, here also we take similar view and dismiss Ground No.6 of Revenue’s appeal. 96. The Seventh ground of appeal is in respect of deletion of addition made by the AO on account of Deferred Guarantee Commission amounting to Rs.50,00,000/-.
97. Facts of the case are that the assessee-bank gives guarantee to the customers and charge commission there over. The receipt on this account is regularly accounted in the books of accounts for the entire period for which guarantee is issued. The AO did not allow the claim of the assessee and added the same to the total income of the assessee. Being aggrieved by the addition made by the AO, the assessee filed appeal before the ld. CIT(A) and the ld. CIT(A) by following the decision of Hon’ble Calcutta High Court in the case of CIT V/s Bank of Tokyo Ltd (71 Taxman 85) deleted the addition made by the AO. Aggrieved by the order of ld.CIT(A), the revenue is in appeal.
98. The ld. DR relied on the decision of the AO and also contented the facts of the issue as mentioned before the ld. CIT(A).
99. The ld. AR submitted the facts and contended that the ld. CIT(A) has considered the issue and decided in favour of the assessee. He submitted that the findings of the ld.CIT(A) are in consonance of the law and, he therefore prayed that the findings of the ld.CIT(A) be upheld. He also contended that an identical issue had come up before the various Courts and they have decided the issue in favour of assessee. Accordingly, he placed reliance on the following case law:
26 and other six appeals a) BNP Paribas SA (Bombay HC) (2013) (32 Taxman.com 276); b) CIT V/s Bank of Tokyo Ltd (71 Taxman 85) ; c) Bank of Baharain and Kuwait (Mumbai ITAT SB) (2010) 41 SOT 290).
After hearing both the parties on the issue and on perusal of the records including the case relied upon by the parties, we find that the ld. CIT(A) has passed well reasoned order and directed the AO to delete the addition. For the sake of convenience, we also reproduce the relevant findings of the Hon’ble Calcutta High Court( viz CIT Vs. Bank of Tokyo Ltd.) as under : “The Revenue contends that the right to receive the commission being a one-time right, its accrual shall coincide with the commencement of the service rendered by way of guaranteeing the debt repayment; it is immaterial that the repayment covers more than on previous year. Therefore the entirety of the commission accrues at a time. The assessee-bank on the other hand, submits that the service having a spread of years the accrual should be year by year. The Revenue's contention that the accrual of the entire commission is a point of time accrual is not tenable. The contesting submissions boil down to one question whether accrual is co-eval with the pay ability, the same may be payable but may not be apportionable until the happening of an event; in the present case the expiry of the period, for, the guarantee beyond the expiry date of the previous year the right to receive for unexpired period, for, the guarantee beyond the expiry date of the previous year remains in a suspense. It may or may not fructify into an actual right to receive for the subsequent period of the term of the guarantee as the sooner determination of the guarantee is a contingency not ruled out by the agreement. It is only upon certain conditions being fulfilled, viz., the guarantee running the full course or period of the debt guaranteed, that the right to the entirety of the commission can be said to have accrued”…..
Accordingly, we dismiss Ground No.7 taken by the revenue. 101. The last ground of appeal pertains deletion of addition of Rs.31,03,83,507/- u/s 40(a)(i) of the Act.
Facts of the case are that the assessee was appointed as one of the agent for mobilization and collection of India Millennium Deposits (IMD) issued by the State Bank of India, from which the assessee earned commission of Rs.50,26,52,906/-. Out of this the assessee offered tax of Rs.19,22,69,399/- and claimed balance amount of Rs.31,03,83,507/- as an expenditure incurred for earning the commission of Rs.50,26,52,906/- .The AO called for the explanation from the assessee, the assessee contended that assessee has paid commission of Rs.25,41,43,735/- to other re-arrangers which is in respect of services rendered by them outside Indian which is in the nature of their business income and is not liable to tax in India. The AO did not accept the contention of the assessee. The AO observed and held that the commission income paid to the outside parties is clearly in the nature of fee for technical services. The concerned parties have rendered services to collect deposits meant for Indian operations and thus there is a business connection and there income is clearly taxable as per the provisions of section 9 of the Act. The AO by placing reliance on the decision in the case of Raymonds Ltd V/s DCIT(80 TTJ 120) and by invoking the provisions of section 195 held that the assessee failed to deduct tax at source and hence he disallowed the expenditure u/s 40(a)(i) of the Act. Aggrieved by this finding of the assessing officer, the assessee filed appeal before the ld. CIT(A).
Before the ld.CIT(A), the assessee made detailed submissions and the ld.CIT(A) incorporated the same in the order vide para 31.1. to 32 of CIT(A)’s order. The ld. CIT(A) after considering the facts of the case and rival contentions and also considered the findings of the order of Tribunal in the case of Maharashtra State Electricity Board V/s DCIT( 2004 270 ITR 36 Mum), observed and held , which is as under :
28 and other six appeals “In a case where no portion of payment is eligible to tax, the question of application of Section 195(2) does not arise, because, as the section itself categorically provides that it comes to play "where the person responsible for paying any sum chargeable under this Act (other than salary) to a non-resident considers that whole of such sum would not be chargeable in the case of the recipient. It would thus follow that for invoking Section 195(2), it is a sine qua non that sum being paid to the non-resident is 'chargeable under the provisions of this Act', i.e., IT Act, 1961 whether fully or partly, i.e., the entire sum or the income hidden or embedded therein. When an income is not eligible to tax in India, by the virtue of the provisions of the applicable DTAA, the deduction of tax under Section 195 of the Act does not come to play at all. It leads us to the conclusion that the expression 'chargeable under the provisions of this Act' cannot include an income, which in terms of the specific provisions of the applicable DTTA is not eligible to tax in India.”
Accordingly, the ld CIT(A) allowed the claim of the assessee made u/s 40(a)(i) of the Act and directed the AO to delete the addition made on account of TDS not deducted.
Before us, the ld. DR reiterated the same submissions as made before the ld. CIT(A). He relied on the order of AO.
The ld.AR relied on the order of the ld. CIT(A) and in addition thereof the ld. AR also placed reliance on the decision in the cases of : a) Credit Lyonnais (through their successors: Calyon Bank) v. ADIT [2013] 35 taxmann.com 583 (MumTrib)]; b) DDIT V/s Abu Dhabi Commercial Bank Ltd (Mumbai ITAT) (60 SOT 71); and c) DDIT V/s Citi bank N A in (AY-2001-02) dated13.9.2013. Accordingly, the ld. AR submitted that the issue raised by the assessee in this appeal stands covered by the above said decisions and hence, the order of ld. CIT(A) be confirmed.
We have considered the rival contentions and perused the record available before us including the case law relied upon by the parties. We find that the an identical issue has come up before the Tribunal in number of cases and the Tribunal in the above cited cases decided the issue in 29 and other six appeals favour of the assessee. Before us, the ld.DR could not bring any material contrary to the findings of the Tribunal. Therefore, we have no other alternative but to dismiss the Ground No.8 taken by the revenue.
Now we shall take up the appeal bearing I.T.A. No.4670/Mum/2005 filed by Bank/ assessee in respect of AY2001-02.
The first ground raised by the assessee is regarding confirming the disallowance made by the AO on account of NRI deposit Mobilization of Rs.4,56,28,770/-.
This is an identical issue raised by the revenue in ITA No.2679/Mum/2005, which vide para 59 to 62 of this order has been dismissed. Accordingly, following the same, we confirm the order of ld.CIT(A) on this issue. Ground No.1 taken by the assessee is allowed.
The second issue raised by the revenue is in respect of directing the AO to delete salaries paid to expatriate employees amounting to Rs.11,39,00,527/-under section 44C of the Act.
While dealing with the appeal of revenue in ITA No.2519/Mum/2004, we have dismissed the ground taken by the revenue on the same issue vide para 11 to 17 of this order and confirmed the order of ld.CIT(A). Respectfully following the same, we direct the AO to allow the claim of assessee. Ground No.2 taken by the assessee is allowed.
The third issue pertains to disallowance of fees of Rs.2,83,77,518/- paid to Master card and Visa towards services rendered by them.
An identical issue had come up before the Tribunal in assessee’s own case in Hongkong and Shanghai Banking Corporation Ltd V/s JCIT in ITA Nos.709,2604,2605,4709/Mum/99 (AYs-1992-93 to 1994-95 & 1996-97 and 1997-98 order dated 15.2.2007 para 53 to 55 of the order has restored this issue to the file of the AO. Facts being the same, we have no other alternative but to follow the said decision of the Tribunal.
30 and other six appeals Accordingly, we set aside the order of ld.CIT(A) and restore this ground to the file of the AO for verification of the facts and fresh decision. Ground No.3 of assessee’s appeals is allowed for statistical purposes.
The fourth ground pertains to the confirmation of disallowance made by the AO regarding the payment to the Great Eastern Shipping Company Limited (GESC), and also the claim of Rs.20 crores regarding depreciation rejected by the ld. CIT.(A).
This ground is similar to that of Ground No.4 of ITA No.2679/Mum/2004 filed by the assessee and vide para 65 to 69 of this order, we have allowed the same. Therefore, following our observations above, we allow Ground No.4 of this appeal.
The last ground of this appeal Loss made on the outstanding forward contracts of Rs.15.16.14,000/- 117. During the year under consideration, the assessee booked a net loss of Rs.15,16,14,000/- on account of outstanding foreign contracts. The AO did not allow the claim of the assessee on the ground that the loss on valuation of foreign exchange contracts is notional in the sense that the loss has not finally occurred and the profit/loss will occur only when the contracts manure. Therefore, the AO disallowed the claim of the assessee. The ld. CIT(A) confirmed the action of the AO. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us.
The ld. AR contended that the loss has occurred due to the valuation, so as to reflect the true value of the asset so that the asset and liabilities given a true and fair value of the state of affairs of the concerns. The valuation is done as per guidelines of the RBI and this method of accounting has been regularly followed by the assessee, therefore, he prayed that no adjustment should be made on this account. He submitted time and again this Tribunal as well as the Apex Court held that the loss suffered by assessee on account of fluctuations of foreign exchange as on 31 and other six appeals the date of Balance Sheet is an item of expenditure under section 37(1), allowed the mark to market loss in the case of equity index/stock future as an allowable loss. Therefore, the ld. AR prayed that the loss suffered by assessee be allowed as business loss. In support of this contention, the ld.AR placed reliance on the following decisions: a) CIT vs. Woodward Governor India P. Ltd. 312 ITR 254(SC); and b) Bank of Bahrain (132 TTJ 505)Mum(SB).
The ld. DR reiterated the same contentions and relied on the orders of authorities below.
We have considered the rival submissions and perused the record. We find that the issue raised by the assessee stands covered by the decision of Hon’ble Supreme Court in the case of Woodward Governor India P. Ltd (supra) wherein the Hon’ble Supreme Court held that “that the loss suffered by assessee on account of fluctuations of foreign exchange as on the date of Balance Sheet is an item of expenditure under section 37(1), allowed the mark to market loss in the case of equity index/stock future as an allowable loss.”
We find that the issue in hand and the facts of the cases relied upon are same, therefore, respectfully following the decision of the Hon’ble Apex Court in the case of Woodward Governor India Pvt.Ltd (supra), we set aside the order of ld.CIT(A) and direct the AO to delete the addition. Ground No.5 taken by the assessee is allowed.
Now we shall take Cross Objection No.84/Mum/2006 filed by the assessee in respect of AY-2001-02. 122 The first issue raised by the assessee in cross-objection is regarding income assessable for the assessment year 2001-02 for the interest in respect of securities for which the due date of payment (coupon date) had not risen in the accounting year ended 31st Mach, 2001. Since, we have 32 and other six appeals dismissed Ground No.1 of revenue’s appeal bearing No. I.T.A. No.4424/Mum/2005 on the same issue. The cross objection on this Ground does not survive, therefore, rejected.
The second ground of cross-objection is regarding net loss of Rs.15,16,14,000/- on account of outstanding foreign contracts.
We have decided this ground in favour of the assessee vide paragraph 116 to 121 of this order. Therefore, this ground becomes infructuous. Therefore, dismissed as infructuous.
In the result, ITA Nos.2519 and 2520/Mum/2004 by revenue stand dismissed, ITA No.2679/M/2004 by assessee stands partly allowed for statistical purposes, ITA No.2680/M/2004 is allowed, ITA No.4424/M/2005 by revenue stands dismissed, ITA No.4670/M/2005 taken by assessee is partly allowed for statistical purposes and cross-objection Cross No.84/Mum/2006 filed by the assessee stands rejected.