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TMI Blog2018 (4) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... bank. For this assessee has raised the identically worded grounds in both the years and facts and circumstances are also identical as conceded by both the sides. Hence, we will take the grounds from AY 2006-07 and decide the issue. The following are the grounds raised by the assessee: -. "1. RE: Quantification of Interest income exempt under section 10(23G) of the Income Tax Act, 1961 (the Act). 1.1 It is humbly prayed that it should be held that the exemption under Section 10(23G) of the Act is to be granted at interest income earned by the Bank and accordingly, the exemption granted under section 10(23G) of the Act is to be enhanced by Rs. 86,552,847/- and the income assessed is to be reduced accordingly. 1.2 Without prejudice to the prayer made hereinabove and in the alternate, it is humbly prayed that in the event it is held that the exemption under section 10(230) of the Act is to be granted at net interest income, i.e. net of interest cost, if any, then, for the said purpose, interest cost actually incurred on earmarked borrowings utilized by the appellant for granting long term finance to the enterprises, interest income whereof is exempt under section 10(23G) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered against assessee in assessee's own case for AY 2000-01 to 2002-03 in ITA No. 7361 to 7363/Mum/2005 order dated 14.08.2013 vide para 19 to 22 as under: -. "19. We have heard the rival contentions and the short issue before us is whether the exemption is to be allowed at Rs. 8,58,00,484/- or Rs. 6,70,94,603/-, as restricted by the AO. 20. From the details reproduced by the AO, we find that the impugned figures are expense of interest on loan given to Gujarat Pipavo Port Ltd. at Rs. 1,21,86,219/- and to Information Tech. Part at Rs. 65,19,660/-, being other then foreign currency borrowings. 21. Assessee is neither a company registered under the Companies Act nor is it a Banking Company as per the Banking Regulation Act, 1949. As per Banking Act, "banking" means the accepting, for the purpose of lending or investment, of deposits of money from its public, repayable on demand or otherwise, and withdrawal by cheques, draft, order or otherwise and "c banking Company" means any company which transacts the business of banking in India. Both these classifications does not embrace the assessee within itself. Therefore, the assessee is a "lender for loans" only and to earn i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest cost against dividend income and of Rs. 2,22,508/-, representing estimated managerial cost, by invoking the provisions of Section 14A of the Act should be deleted in its entirety and the income assessed is to he reduced accordingly." 7. At the outset, the learned Counsel for the assessee stated that this issue is covered in favour of assessee by the Tribunal decision as reproduced above of the Tribunal order in ITA No. 7361/Mum/2005 for AY 2000-01 order dated 14-08-2013 and also for AY 2005-06 in ITA No.347/Mum/2008 order dated 23-09-2015 wherein Tribunal vide para Para 3.6 decided the issue after following earlier years Tribunal's decision as under:- "3.6. The perusal of the above order would reveal that Hon'ble Bench has taken a view that Revenue cannot take a view of proposing the cost of interest to be separately induced on the assessee, as the entire costs have already got embedded in the costs/total expenses. Further, in any case, circular no. 780 dated 07.10.1999, relied upon by the department, cannot be made applicable on the assessee, as the assessee is a public financial institution and not a bank. Further, on going through the details, as filed, it is noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Tribunal in assessee's own case in assessment years 2000-01 to 2002-03 in ITA No.7361 to 7363/Mum/2005. The relevant portion of this order is reproduced below: "34. We have heard the arguments of both the sides and we find the assessee had substantial free funds coming from preceding years, which were pure income, as there was no liability of tax up to the current year. Basically moving on the same analogy, as in the earlier ground of appeal and decision taken therein, this ground, also deserves to be allowed in favour of the assessee. 35. The ground of appeal, is therefore, allowed. 4.6 We have heard both the parties and gone through the entire material. It is seen by us that the facts of the impugned year are similar to that as were discussed in the earlier years' orders. Detailed discussion has already been by us in this regard while disposing Ground No.1(a)(ii) and Ground No.2(a)(ii), above. It is seen by us that assessee's own funds exceed the investment made and therefore no disallowance could have been made by the assessing officer in the given facts and circumstances of the case and therefore, respectfully following judgments of Hon'ble Tribunal in assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.10 Without prejudice, the appellant has submitted that some adjustments need to be made while computing the disallowance under Rule 8D:- (I) Interest on foreign currency borrowings which are directly related to a particular source of income has to be excluded from the calculation. (ii) The foreign currency borrowings are made and utilized abroad and are therefore not related to investments made in India. (iii) An amount of Rs. 137 crores out of a balance of Rs. 901 crores of interest also relate to borrowings which are totally not connected with investments. They are :- (a) Borrowings under CBLO Rs. 12 crores. (b) Commercial Paper Borrowing Rs. 101 crores (c) S/Re. Short Term Swaps Rs. 21 crores. (d) Borrowings against Bank Deposit Rs. 3 crores. 211. Out of the above, the foreign currency loans are borrowed which are made abroad and also utilized abroad for lending in foreign currency and which yield income in foreign currency which is a specific source of income can be excluded under Rule 8D(2). 212. The interest earned from these borrowings is attributable to a particular income or receipt and therefore should be excluded. 2.13. I do not howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant." 16. Now before us, the assessee placed reliance on Tribunal's order for AY 2005-06 in ITA No. 316/Mum/2008 order dated 23-09-2015, wherein the Tribunal has principally decided the issue that reducing the amount of WDV on notional basis for the amount of depreciation, which was neither claimed nor actually allowed, should not have been deducted from the original cost of the asset. The Tribunal vide Para 8.5 observed as under:- 8.5. We have gone through the orders of the lower authorities. Ld DR has not been able to point out anything wrong in the findings of Ld CIT(A). It has been informed that decision of the Ld. CIT(A) on this issue, in earlier years, has attained finality, as it remained uncontested by the Revenue. Thus, as a matter of consistency and harmony, no different view can be taken in this year. Keeping in view, these facts and circumstances of the case, we find no reason to intervene in the findings recorded by Ld CIT(A), as per law. Action of the AO in reducing the amount of WDV on notional basis for the amount of depreciation which was neither claimed nor actually allowed, should not have been deducted from the original cost of the assets. Therefore, we hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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