2018 (4) TMI 523 - HC - Income Tax

Broken period interest allowability - Held that - This issue stands concluded against the Revenue and in favour of the respondent-assessee by the decision of this Court in Principal Commissioner of Income- Tax-2 V/s. M/s. HDFC Bank Ltd. 2018 (4) TMI 455 - BOMBAY HIGH COURT . Claim for deduction under Section 36(1)(viia) - Held that - The impugned order rejected the Revenue s grievance by holding that, withdrawing the claim under Section 36(1)(viia) of the Act and making an additional claim of bad debt under Section 36(vii) of the Act by letter dated 13th August, 2012 had subsequently been withdrawn during the course of assessment proceedings. Thus, it held that withdrawal of the letter dated 13th August, 2012 would consequently result in the same being not taken cognizance of in assessing the respondent-assessee. Thus question proposed does not arise from the impugned order of the Tribunal.

Summary

Issues:
1. Allowability of broken period interest as a deduction.
2. Correctness of allowing deduction under Section 36(1)(viia) of the Income Tax Act.

Analysis:

Issue 1: Allowability of broken period interest as a deduction
The appellant challenged the order of the Income Tax Appellate Tribunal (the Tribunal) regarding the allowability of broken period interest as a deduction. The Tribunal had allowed the deduction, which the Revenue contested citing precedents. However, the High Court noted that a similar issue had been decided against the Revenue in a previous case involving HDFC Bank Ltd. The High Court held that the proposed question did not raise any substantial question of law based on the previous decision. Therefore, the High Court dismissed the appeal on this issue.

Issue 2: Correctness of allowing deduction under Section 36(1)(viia) of the Income Tax Act
The Revenue raised a question regarding the withdrawal and subsequent re-claiming of deduction under Section 36(1)(viia) of the Act by the respondent. The Tribunal had rejected the Revenue's grievance, stating that the withdrawal of the claim and subsequent re-claim had been made during the assessment proceedings. The High Court observed that the Revenue did not raise this specific question before the Tribunal, and it was not considered in the impugned order. As a result, the High Court held that since the proposed question did not arise from the Tribunal's order, there was no need to consider it. Consequently, the High Court dismissed the appeal on this issue as well, without any order as to costs.

In conclusion, the High Court upheld the Tribunal's decision on both issues, dismissing the appeal under Section 260-A of the Income Tax Act, 1961.