CIT v. Vijaya Bank

187 ITR 541Supreme Court of India1991#917 most cited

What is CIT v. Vijaya Bank authority for?

The 'broken period interest' paid on securities is considered part of the capital outlay for acquiring those securities and cannot be allowed as a revenue expenditure or business deduction. It must be capitalized.

116

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2012 to 2026.

Also referred to as

CIT v. Vijaya Bank · 187 ITR 541 · SC · broken period interest · securities · capital outlay · business deduction · capitalization · stock-in-trade · revenue expenditure

Sections most often in play

Section 14ASection 37(1)Section 40(a)(ia)Section 43BSection 115JBSection 145Section 250Section 36(1)(iii)

Issues it is cited on

section 57(i)section 2(d)section 36(2)(v)section 43dsection 41(4)section 36(1)(viia)section 46section 46ainterest on securitiessection 35dsection 36(2)right to receive

Judgments citing CIT v. Vijaya Bank

The Burdwan Central Co - Operative Bank Limited, Burdwan vs. A.C.I.T Cir - 2, Burdwan

In the result the appeal of the assessee is partly allowed

ITA 1243/KOL/2013[2009-10]Status: DisposedITAT Kolkata02 Sept 2016AY 2009-10

Bench: Hon’Ble Shri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am ] Assessment Year : 2009-10

For Appellant: Shri Pratap Kanti Ghosh, , FCAFor Respondent: Shri Sallong Yaden, Addl.CIT
Section 143(3)

…regarded as their stock in trade and the claim of loss, if debited in the books of account should be given the same treatment as given to stock in trade. 4 The AO however referred to the decision of the Hon’ble Supreme Court in the case of Vijaya Bank vs CIT 187 ITR 541 (SC) and also referred to the fact that consequent to the aforesaid judgement CBDT had issued vide Circular No.610 dated 31.07.1991 wherein it clarified that whether a particular investment in securities constitute stock in trade or capital asset was a question of fact and therefore AO should determine on the facts and circumstances of each case…

ADIT (It)-3(2), Mumbai vs. M/S. Barclays Bank Plc., Mumbai

ITA 2050/MUM/2007[2002-2003]Status: DisposedITAT Mumbai22 Jun 2016AY 2002-2003

Bench: Shri Rajendra & Shri C.N. Prasadआयकर अपील सं /I.Ta No.2050/Mum/2007 ("नधा"रण वष" / Assessment Year: 2002-03 The Adit(It)-3(2), Barclays Bank Plc, बनाम/ Scindia House, 21/23, Maker Chambers-Vi, Vs. N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.1728/Mum/2007 ("नधा"रण वष" / Assessment Year: 2002-03 Barclays Bank Plc, The Adit(It)-3(2), बनाम/ 21/23, Maker Chambers- Scindia House, Vs. Vi, N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.4654/Mum/2007 ("नधा"रण वष" / Assessment Year: 2003-04 The Adit(It)-3(2), Barclays Bank Plc, बनाम/ Scindia House, 21/23, Maker Chambers-Vi, Vs. N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.4668/Mum/2007 ("नधा"रण वष" / Assessment Year: 2003-04 Barclays Bank Plc, The Adit(It)-3(2), बनाम/ 21/23, Maker Chambers- Scindia House, Vs. Vi, N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacb 4876G .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Appellant: Shri P. PardiwalaFor Respondent: Deshpande
Section 115ASection 115A(1)Section 115A(1)(B)Section 28Section 57

…t paid should 5 Barclays Bank be allowed as deduction. The Ld. Counsel for the assessee submits that SLP of the department was also dismissed by the Supreme Court. 10. The Ld. Departmental Representative submits that in the case of Vijaya Bank Ltd Vs ACIT (187 ITR 541), it was held that broken period interest is not allowable as deduction and this decision of the Hon’ble Supreme Court was not considered in American Express International Banking Corpn. (supra). In reply the Ld. Counsel for the assessee bringing our attention to para-12 of the judgement in the case of American Express International Banking Corpn…

M/S. Barclays Bank Plc, Mumbai vs. DDIT (I.T) - 3(2), Mumbai

ITA 1728/MUM/2007[2002-2003]Status: DisposedITAT Mumbai22 Jun 2016AY 2002-2003

Bench: Shri Rajendra & Shri C.N. Prasadआयकर अपील सं /I.Ta No.2050/Mum/2007 ("नधा"रण वष" / Assessment Year: 2002-03 The Adit(It)-3(2), Barclays Bank Plc, बनाम/ Scindia House, 21/23, Maker Chambers-Vi, Vs. N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.1728/Mum/2007 ("नधा"रण वष" / Assessment Year: 2002-03 Barclays Bank Plc, The Adit(It)-3(2), बनाम/ 21/23, Maker Chambers- Scindia House, Vs. Vi, N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.4654/Mum/2007 ("नधा"रण वष" / Assessment Year: 2003-04 The Adit(It)-3(2), Barclays Bank Plc, बनाम/ Scindia House, 21/23, Maker Chambers-Vi, Vs. N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 आयकर अपील सं /I.Ta No.4668/Mum/2007 ("नधा"रण वष" / Assessment Year: 2003-04 Barclays Bank Plc, The Adit(It)-3(2), बनाम/ 21/23, Maker Chambers- Scindia House, Vs. Vi, N.M. Road, Nariman Point, Mumbai-400 038 Mumbai-400 021 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacb 4876G .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Appellant: Shri P. PardiwalaFor Respondent: Deshpande
Section 115ASection 115A(1)Section 115A(1)(B)Section 28Section 57

…t paid should 5 Barclays Bank be allowed as deduction. The Ld. Counsel for the assessee submits that SLP of the department was also dismissed by the Supreme Court. 10. The Ld. Departmental Representative submits that in the case of Vijaya Bank Ltd Vs ACIT (187 ITR 541), it was held that broken period interest is not allowable as deduction and this decision of the Hon’ble Supreme Court was not considered in American Express International Banking Corpn. (supra). In reply the Ld. Counsel for the assessee bringing our attention to para-12 of the judgement in the case of American Express International Banking Corpn…

American Express Bank Ltd, Mumbai vs. DDIT (It) RG 1(1), Mumbai

In the result, all the appeals of the assessee stands allowed

ITA 6875/MUM/2012[1996-97]Status: DisposedITAT Mumbai31 May 2016AY 1996-97

Bench: Shri Rajendra & Shri Amit Shukla

Section 143(3)Section 250

…tions was shown at Rs.15,08,41,136/-. In the original round of assessment 5 अमेर"कन ए"स"ेस ब"क "ल"मटेड M/s American Express ITAs 6872 to 6875/Mum/2012 proceedings, the AO relying upon the decision of the Hon’ble Supreme Court in the case of Vijay Bank [1991] 187 ITR 541, held that investments in the debt Government securities was in the nature of capital assets and accordingly, the income from sale of such investments would qualify as “capital gains” as against the business income offered by the assessee. The AO also enhanced the profit on transfer on securities taxable under the head “capital gains” to Rs.24,68…

American Express Bank Ltd, Mumbai vs. DDIT (It) RG 1(1), Mumbai

In the result, all the appeals of the assessee stands allowed

ITA 6874/MUM/2012[1995-96]Status: DisposedITAT Mumbai31 May 2016AY 1995-96

Bench: Shri Rajendra & Shri Amit Shukla

Section 143(3)Section 250

…tions was shown at Rs.15,08,41,136/-. In the original round of assessment 5 अमेर"कन ए"स"ेस ब"क "ल"मटेड M/s American Express ITAs 6872 to 6875/Mum/2012 proceedings, the AO relying upon the decision of the Hon’ble Supreme Court in the case of Vijay Bank [1991] 187 ITR 541, held that investments in the debt Government securities was in the nature of capital assets and accordingly, the income from sale of such investments would qualify as “capital gains” as against the business income offered by the assessee. The AO also enhanced the profit on transfer on securities taxable under the head “capital gains” to Rs.24,68…

American Express Bank Ltd, Mumbai vs. DDIT (It) RG 1(1), Mumbai

In the result, all the appeals of the assessee stands allowed

ITA 6873/MUM/2012[1994-95]Status: DisposedITAT Mumbai31 May 2016AY 1994-95

Bench: Shri Rajendra & Shri Amit Shukla

Section 143(3)Section 250

…tions was shown at Rs.15,08,41,136/-. In the original round of assessment 5 अमेर"कन ए"स"ेस ब"क "ल"मटेड M/s American Express ITAs 6872 to 6875/Mum/2012 proceedings, the AO relying upon the decision of the Hon’ble Supreme Court in the case of Vijay Bank [1991] 187 ITR 541, held that investments in the debt Government securities was in the nature of capital assets and accordingly, the income from sale of such investments would qualify as “capital gains” as against the business income offered by the assessee. The AO also enhanced the profit on transfer on securities taxable under the head “capital gains” to Rs.24,68…

American Express Bank Ltd, Mumbai vs. DDIT (It) RG 1(1), Mumbai

In the result, all the appeals of the assessee stands allowed

ITA 6872/MUM/2012[1992-93]Status: DisposedITAT Mumbai31 May 2016AY 1992-93

Bench: Shri Rajendra & Shri Amit Shukla

Section 143(3)Section 250

…tions was shown at Rs.15,08,41,136/-. In the original round of assessment 5 अमेर"कन ए"स"ेस ब"क "ल"मटेड M/s American Express ITAs 6872 to 6875/Mum/2012 proceedings, the AO relying upon the decision of the Hon’ble Supreme Court in the case of Vijay Bank [1991] 187 ITR 541, held that investments in the debt Government securities was in the nature of capital assets and accordingly, the income from sale of such investments would qualify as “capital gains” as against the business income offered by the assessee. The AO also enhanced the profit on transfer on securities taxable under the head “capital gains” to Rs.24,68…

Mahindra Telecommunications Investment P.Ltd, Mumbai vs. ITO 2(2)(3), Mumbai

In the result, the assessee’s appeal is dismissed

ITA 2832/MUM/2012[2008-09]Status: DisposedITAT Mumbai24 May 2016AY 2008-09

Bench: Shri Joginder Singh, Jm & Shri Sanjay Arora, Am आयकर अपील सं./I.T.A. No. 2832/Mum/2012 ("नधा"रण वष" / Assessment Year: 2008-09) Mahindra Telecommunications Income Tax Officer, 2(2)(3), बनाम/ Investment Private Limited Aaykar Bhavan, Mumbai-400 020 Gateway Building, Apollo Bunder, Vs. Mumbai-400 001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aaacm 3774 E (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri H. P. Mahajani ""यथ" क" ओर से/Respondent By : Shri Randhir Gupta सुनवाई क" तार"ख / : 24.02.2016 Date Of Hearing घोषणा क" तार"ख / : 24.05.2016 Date Of Pronouncement आदेश / O R D E R Per Sanjay Arora, A. M.: This Is An Appeal By The Assessee Directed Against The Order By The Commissioner Of Income Tax (Appeals)-5, Mumbai (‘Cit(A)’ For Short) Dated 18.1.2012, Dismissing The Assessee’S Appeal Contesting Its Assessment U/S.143(3) Of The Income Tax Act, 1961 (‘The Act’ Hereinafter) For The Assessment Year (A.Y.) 2008-09 Vide Order Dated 30.12.2010. 2. The Background Facts The Facts Of The Case Are Simple & Undisputed. The Assessee-Company, Incorporated Under The Companies Act, 1956, Pursuant To A Shareholders’ Agreement Dated March

For Appellant: Shri H. P. MahajaniFor Respondent: Shri Randhir Gupta
Section 143(3)

…eflected interest accrued as on December 31, 1981, as interest relatable to the relevant period. The interest was, however, payable only after December 31, 1981. The same was held as not accrued for the relevant year, following Vijaya Bank Ltd. vs. CIT [1991] 187 ITR 541 (SC), in which case the appellant bank purchased securities, the price of which was contended as determined with reference to their actual value as well as the interest that had accrued on the securities till the date of purchase. The Apex Court found that the price paid was in the nature of capital outlay, so that no part of it could be set off…

ACIT, Gulbarga vs. M/S Krishna Grameena Bank, Gulbarga

In the result, the appeal of Revenue is partly allowed

ITA 592/BANG/2014[2010-11]Status: DisposedITAT Bangalore06 May 2016AY 2010-11

Bench: Shri Sunil Kumar Yadav & Shri A.K. Garodiaassessment Year : 2010-11

For Appellant: Shri Sanjay Kumar, CIT-III(DR)For Respondent: Shri G. Venkatesh, Advocate
Section 43B

…d on Government securities over remaining life of the securities even though such expenditure was disallowed by the AO relying on the CBDT Instruction 17/2008. 6. The learned CIT (A) erred in not relying on the decision in the case of Vijaya Bank vs Addl.CIT, 187 ITR 541 on the issue Page 8 of 12 of amortization of premium paid on purchase of Government securities. 7. Each of the above grounds is without prejudice to one another and the appellant craves to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal.” 15. The ld. DR of Revenue su…

The ADIT (I.T)3(1) vs. M/S. Honkong & Shanghani Banking Corpn. Ltd

In the result, ITA Nos.2519 and 2520/Mum/2004 by revenue stand dismissed, ITA No

ITA 2519/MUM/2004[1999-2000]Status: DisposedITAT Mumbai20 Nov 2015AY 1999-2000

Bench: S/Shri B.R.Baskaran, Am & Pawan Singh, Jm आयकर अपील सं./I.T.A. No.2519 & 2520/Mum/2004 ("नधा"रण वष" / Assessment Year:1999-2000 & 2000-01) M/S Hongkong & Shanghani Asstt.Direrctor Of Income Tax बनाम/ Banking Corporation Ltd., (International Taxation)-3(1), Vs. 52/60, M G Road, 136, Scindia House, Mumbai-400001 N M Marg, Ballard Estate, Mumbai-400038 .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

Section 143(3)

…आयकर अपील"य अ"धकरण, मुंबई "यायपीठ “एल” मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “L” BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM आयकर अपील सं./I.T.A. No.2519 and 2520/Mum/2004 ("नधा"रण वष" / Assessment Year:1999-2000 and 2000-01) M/s Hongkong and Shanghani Asstt.Direrctor of Income Tax बनाम/ Banking Corporation Ltd., (International Taxation)-3(1), Vs. 52/60, M G Road, 136, Scindia House, Mumbai-400001 N M Marg, Ballard Estate, Mumbai-400038 .. (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर अपील सं./I.T.A. No.2679 and 2680/Mum/2004 ("नधा"रण वष" / Assessment Year:1999-2000 and 2000-01) M/s H…

Dcb Bank Ltd, Mumbai vs. ACIT Cir 2(3), Mumbai

In the result, the appeal filed by the Revenue is dismissed and the appeal filed by the assessee is partly allowed

ITA 820/MUM/2014[2010-11]Status: DisposedITAT Mumbai04 Nov 2015AY 2010-11

Bench: Shri N.K. Billaiya & Shri Amarjit Singhआयकर अपील सं/ I.Ta No. 820/Mum/2014 ("नधा"रण वष" / Assessment Year:2010-11 Dcb Bank Ltd., The Acit-Circle 2(3), बनाम/ Formerly Development Aayakar Bhavan, Vs. Credit Bank Ltd., 6Th Floor, Mumbai-400 020 Peninsulla Business Park, Tower A, Senapati Bapat Marg, Lower Parel, Mumbai-400 013

For Appellant: Shri Satish ModyFor Respondent: Shri A.K. Srivastava
Section 14A

…No. B read as under: (B) Whether the Income-tax Appellate Tribunal was correct in law in holding that the broken period interest is allowable as a deduction, in spite of the hon'ble Supreme Court's decision in the case of Vijaya Bank Ltd. v. Addl. CIT [1991] 187 ITR 541(SC) and the Rajasthan High Court's decision in the case of CIT v. Bank of Rajasthan Ltd. [2009] 316 ITR 391? 11.1. The Hon’ble High Court answered the question as under: Even as far as question (B) is concerned, we find no infirmity in the orders passed by the Commissioner of Income-tax (Appeals) or the Income-tax Appellate Tribunal. In deciding…

ACIT 2(3), Mumbai vs. Development Credit Bank Ltd, Mumbai

In the result, the appeal filed by the Revenue is dismissed and the appeal filed by the assessee is partly allowed

ITA 615/MUM/2014[2010-11]Status: DisposedITAT Mumbai04 Nov 2015AY 2010-11

Bench: Shri N.K. Billaiya & Shri Amarjit Singhआयकर अपील सं/ I.Ta No. 820/Mum/2014 ("नधा"रण वष" / Assessment Year:2010-11 Dcb Bank Ltd., The Acit-Circle 2(3), बनाम/ Formerly Development Aayakar Bhavan, Vs. Credit Bank Ltd., 6Th Floor, Mumbai-400 020 Peninsulla Business Park, Tower A, Senapati Bapat Marg, Lower Parel, Mumbai-400 013

For Appellant: Shri Satish ModyFor Respondent: Shri A.K. Srivastava
Section 14A

…No. B read as under: (B) Whether the Income-tax Appellate Tribunal was correct in law in holding that the broken period interest is allowable as a deduction, in spite of the hon'ble Supreme Court's decision in the case of Vijaya Bank Ltd. v. Addl. CIT [1991] 187 ITR 541(SC) and the Rajasthan High Court's decision in the case of CIT v. Bank of Rajasthan Ltd. [2009] 316 ITR 391? 11.1. The Hon’ble High Court answered the question as under: Even as far as question (B) is concerned, we find no infirmity in the orders passed by the Commissioner of Income-tax (Appeals) or the Income-tax Appellate Tribunal. In deciding…

ACIT, New Delhi vs. Oriental Bank of Commerce, New Delhi

In the result, appeal of the assessee and revenue is partly allowed

ITA 1961/DEL/2011[2007-08]Status: DisposedITAT Delhi04 Nov 2015AY 2007-08

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am Asstt. Year: 2007-08

For Appellant: Sh. K.V.S.R.Krishna, CAFor Respondent: Sh. R.R.Singh, CIT., DR
Section 14ASection 36(1)(vii)Section 36(1)(viia)

…hile deciding the issue. Further, the revenue has also not contested this issue in earlier years. Hon Bombay high court in case of CIT V HDFC bank Limited in 366 ITR 505 has held that even after the decision of Hon. supreme court in case of CIT v Vijaya bank (187 ITR 541) broken period interest is allowable to the assesse. The issue raised before Honourable High court was (B) Whether the ITAT was correct in law in holding that the broken period interest is allowable as a deduction, inspite of the Hon'ble Supreme Court's decision in the case of CIT v. Vijay Bank (187 ITR 541) and the Rajasthan High Court's decisio…

Oriental Bank of Commerce, New Delhi vs. Addl. CIT, New Delhi

In the result, appeal of the assessee and revenue is partly allowed

ITA 1937/DEL/2011[2007-08]Status: DisposedITAT Delhi04 Nov 2015AY 2007-08

Bench: Sh. I.C.Sudhir, Jm & Sh. Prashant Maharishi, Am Asstt. Year: 2007-08

For Appellant: Sh. K.V.S.R.Krishna, CAFor Respondent: Sh. R.R.Singh, CIT., DR
Section 14ASection 36(1)(vii)Section 36(1)(viia)

…hile deciding the issue. Further, the revenue has also not contested this issue in earlier years. Hon Bombay high court in case of CIT V HDFC bank Limited in 366 ITR 505 has held that even after the decision of Hon. supreme court in case of CIT v Vijaya bank (187 ITR 541) broken period interest is allowable to the assesse. The issue raised before Honourable High court was (B) Whether the ITAT was correct in law in holding that the broken period interest is allowable as a deduction, inspite of the Hon'ble Supreme Court's decision in the case of CIT v. Vijay Bank (187 ITR 541) and the Rajasthan High Court's decisio…

Assistant Commissioner of Income Tax, Tumkur vs. M/S Tumkur Veerashiva Co.Operative Bank Ltd, Tumkur

In the result, the Revenue appeal is partly allowed for statistical purpose

ITA 1174/BANG/2014[2010-11]Status: DisposedITAT Bangalore16 Oct 2015AY 2010-11

Bench: Shri Vijaypal Rao & Shri G Manjunathathe Asst. Commissioner Of Income-Tax, Circle-1, Tumkur. . Appellant Vs. M/S Tumkur Veerashiva Co-Operative Bank Ltd., Dr. Radhkrishna Road, Ss Puram, Tumkur. . Respondent Appellant By : Shri Pk Srihari, Addl. Cit, Respondent By : Shri None Date Of Hearing : 08-10-2015 Date Of Pronouncement : 16-10-2015 O R D E R

For Appellant: Shri PK Srihari, Addl. CITFor Respondent: Shri None
Section 142(1)Section 143(2)Section 143(3)Section 37

…ium paid on purchase of these securities should be capitalised as part of cost of acquisition and cannot be treated as revenue expenditure. In support of his contention, he relied upon the Judgments of Hon’ble Supreme Court in the case of Vijaya bank vs CIT, 187 ITR 541 (SC) and Hon’ble Madras High Court decision in the case of T.N. Power Finance and Infrastructure Development Corporation Ltd vs JCIT (2006) 280 ITR 491 (Mad). 13. Aggrieved by the assessment order, the assessee preferred an appeal before CIT(A). The Ld. CIT(A) after considering the submissions of the assessee and also relied upon the Co-ordinat…

The Commissioner of Income Tax vs. Ing Vysya Bank Ltd

In the result, this appeal is allowed in part,

ITA/2886/2005HC Karnataka06 Jun 2012

Bench: B.MANOHAR,D.V.SHYLENDRA KUMAR

Section 143Section 260Section 36(1)(vii)Section 37(2)Section 80M

…o more applicable in the wake of two subsequent Board Circulars namely Circular No.610 dated 31-7-1991 whereby the Board purporting to act on the law enunciated by the Hon'ble Supreme Court in the case of VIJAYA BANK LIMITED V/S. CIT (ADDL.) reported in (1991)187 ITR 541, had withdrawn the earlier Board Circular No.599 dated 24-4-1991, but later on the overwhelming representation from the Indian Banks Association and many other Banking Companies realizing that not only the judgment of the Hon'ble Supreme Court in the case of Vijaya Bank Limited did not govern the question in issue but also that the earlier Board…