9911796707
TMI Blog2017 (10) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... strative expenditure disallowance of 3,33,94,517/-. It is no more an issue that the above co-ordinate bench had upheld the same in preceding assessment year. We therefore adopt consistency to affirm this latter disallowance of administrative expenditure. This first substantive ground is taken as partly accepted. Adding speculative gains amortized as per RBI guidelines as well as in disallowing such related gain as taxed in preceding assessment years - Held that:- We draw support from above co-ordinate bench findings to delete addition of speculative gains of 2,64,27,796/- amortized as per RBI guidelines. The assessee at this stage submits that it no more wishes to press for its latter grievance qua addition of 3,21,05,491/- as an instance of double addition since assessed in earlier assessment years because of the fact that it has not been taxed till date. We appreciate this fair stand to confirm the above latter addition of 3.21crores. This second substantive ground is therefore partly accepted. Claiming employees’ stock option scheme “ESOP” as per SEBI guidelines, 1999 as revenue expenditure - Held that:- It is not in dispute that assessee’s relevant details pertaining to the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there has to be an express satisfaction u/s.14A(2) qua its accounts establishing a direct nexus with the exempt income in question, its interest free funds were much more than tax free investments and that the relevant facts involved in deriving the impugned exempt income did not warrant any such disallowance. The Assessing Officer however rejected all these contentions in his assessment order. He observed first of all that the assessee has not discharged its initial onus of proving the above direct nexus between tax free investments vis-àvis the non interest bearing funds. He then invoked proportionate interest and administrative disallowance under Rule 8D (2) (ii & iii) to the tune of ₹ 37,11,56,870/- and ₹ 3,33,94,517/-; respectively totaling to ₹ 40,45,51,387/- as reduced by the above suo motu disallowance of ₹ 1,00,21,247/-; coming to ₹ 39,45,30,140/- under challenge being made in assessment order dated 21.12.2011. 3. The CIT(A) affirms Assessing Officer's action by placing reliance upon his corresponding findings in preceding assessment year 2008-09 as under: "4.4 Identical issue came up in appellant's own case for A.Y. 2008-09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14 A, assessing officer disallowed expenses relatable to exempt income as per rule 3D which is mandatory from assessment year 2008-09. For interest, proportionate expense is disallowable whereas for other expenses 5% of average investment value is disallowable. Considering the fact that appellant claimed huge administrative and other expenses, the disallowance of administrative expenses made by the assessing officer @.5% of investment resulting in exempt income is as per the formula given in rule 3D which is mandatory for making disallowance. In view of this the addition @ 5% of investment resulting in exempt income made by the assessing officer is confirmed. Since rule 8D is mandatory from this year, disallowance of administrative and other expenses relating to exempt income are to be computed as per this. The basis of disallowance in earlier years cannot be applied this year since rule 8D is mandatory and has to be applied for this year onwards. Accordingly the orders of appeal in earlier years are not relevant for this year. As regards interest, appellant had borrowed funds on which interest was paid. While making investments, both borrowed funds as well as own funds wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 63.84lacs. We take cue therefrom to notice that assessee's tax free investments in the impugned assessment year read a figure of ₹ 684crores as against interest free funds in the nature of share capital and reserves amounting to ₹ 10,214crores. We therefore find no reason to concur with the above proportionate interest disallowance of ₹ 37,11,56,870/-. We now proceed to deal with administrative expenditure disallowance of ₹ 3,33,94,517/-. It is no more an issue that the above co-ordinate bench had upheld the same in preceding assessment year. We therefore adopt consistency to affirm this latter disallowance of administrative expenditure. This first substantive ground is taken as partly accepted. 5. The assessee's second substantive ground pleads that both the lower authorities have erred in law as well as on facts in adding speculative gains of ₹ 2,64,27,796/- amortized as per RBI guidelines as well as in disallowing such related gain of ₹ 3,21,04,491/- as taxed in preceding assessment years. Both parties very fairly take us to page 85 of the paper book wherein the above co5 ordinate bench has accepted assessee's identical arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee contended as under: GAIN ON SECURITIZATION OF ASSET OF ₹ 2.93 CRORES AS PER PARA 5.1.15 OF THE AUDITED ACCOUNTS During the hearing held on 10.11.2009, you have requested us to provide explanation that where the net gain of ₹ 2.93 on securitization transactions, as per para 5.1.15 (Page No. 60 of the annual report), has been accounted in the Profit and Loss. In this regard we submit as follows: For the year under consideration, the Bank has recognized income of ₹ 2,00,28,097 under the head Other Income, (Schedule 14, sub-clause, VII, miscellaneous income) and ₹ 93,13,051 was shown under the head other liabilities and provisions (Schedule 5, sub clause VII, others including provisions). The method of accounting followed in this regard is as per the RBI guidelines. In terms of the RBI Notification, a copy of which is enclosed for your reference, any loss arising on account of the sale pursuant to securitization proposal should be accounted and charged to the Profit and Loss account for the year during which the sale upon secularization is effected and any profit/premium arising on account of such sale should be amortized over the life of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our considered opinion, the amortization merely represents a timing difference and since the bank is consistently making profits and paying tax at the highest rate without claiming any tax holiday benefit, it can be safely concluded that the method followed is revenue neutral. We draw support from the decision of the Hon'ble High Court of Bombay in the case of Nagri Mills Co. Ltd. 33 ITR 681. 29. Considering the facts in totality in the light of the judicial decisions referred to hereinabove, we do not find any merit in the findings of the ld. CIT(A). We accordingly set aside the findings of the ld. CIT(A) and direct the A.O to delete the addition of ₹ 93.13 lacs. Ground no. 3 is accordingly allowed. 20. As no distinguishing decision has been brought to our notice, respectfully following the findings of the Co-ordinate Bench (supra), we direct the A.O. to delete the impugned disallowance/additions. Ground no. 3 is accordingly allowed." 6. We draw support from above co-ordinate bench findings to delete addition of speculative gains of ₹ 2,64,27,796/- amortized as per RBI guidelines. The assessee at this stage submits that it no more wishes to press for its latter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. vs. Commissioner of Income-tax (supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the assessing officer. Income Tax proceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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