TMI Blog2017 (10) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... to banking companies since they are not required to prepare a Profit & Loss Account in accordance with the provisions of Parts II and Part III of the Schedule VI of the Companies Act, 1956. We hold that since the provisions of Section 115JA are not applicable to the assessee. No additional interest has been computed u/s 234D in reassessment proceedings and the same did not arise out of reassessment proceedings. Sale of shares - treated as capital gain and not as business income chargeable to tax u/s. 28 - Held that:- We find that the assessee is consistently following such classification and treatment of income from investment since past many years. The revenue has nowhere disputed that permanent investment were carried at cost price. Further, upon perusal of the order of Ld. CIT(A) for AY 2002-03, we find that the same issue arose in that year also and Ld. CIT(A) upheld the stand of the assessee and concluded that the income from investment was rightly offered under the head capital gains. It is noteworthy that the revenue, in its appeal for AY 2002-03, accepted the stand of Ld. CIT(A) and did not prefer any further appeal qua this issue. Therefore, following the rule of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efly stated, the assessee being resident corporate assessee engaged in the business of banking was assessed for impugned AY [1999-2000] u/s 143(3) on 18/03/2002 at ₹ 67.19 crores under normal provisions as against returned loss of ₹ 126.25 crores filed by the assessee on 29/03/2001 as per revised return of income . The book profits within the meaning of Section 115JA has been computed at ₹ 48.90 crores as against book loss of ₹ 152.72 crores as per return of income. 2.2 The revenue has raised five grounds of appeal in ITA No.8581/M/2010 out of which Ground No.1 5 are general in nature. The effective grounds are Ground Numbers 2 to 4 which contest the order of Ld.CIT(A) qua relief provided to the assessee on account of adjustment of Bad Debts diminution in value of investments from computation of book profits u/s 115JA. The assessee, in cross objections, has raised two grounds which contest reopening of assessment and certain adjustment to book profits u/s 115JA. The assessee, by way of additional ground of appeal, has questioned the very applicability of provisions of Section 115JA in the case of the assessee and since the same is legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature and do not require any further elaboration or adjudication. Resultantly, revenue s appeal stands dismissed whereas assessee s cross objections succeeds on legal grounds i.e. applicability of Section 115JA to the assessee bank and therefore, stands partly allowed. ITA No. 8582/M/2010, AY 2002-2003 5. This is revenue s appeal for AY 2002-03 which assails the order of Ld. Commissioner of Income Tax (Appeals)-4, Mumbai [CIT(A)] Appeal No. CIT(A)4/R-2(1)/IT-246/09-10 dated 23/09/2010. The assessment was framed by Ld. Income Tax Officer Range 2(1)(1), Mumbai on 31/10/2006 u/s 143(3) read with Section 147. The revenue has raised the following effective ground of appeal:- 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that interest u/s. 234D cannot be charged in the A.Y.2002-03 without appreciating that chargeability of interest is in relation to the period in which the order is passed and not the assessment year of the case. 6. Facts giving rise to the dispute is that the assessee has been assessed u/s 143(3) read with Section 147 on 31/10/2006 at ₹ 457.12 crores. The assessee contested the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. The revenue had also contested certain issues for this year before this Tribunal vide ITA No. 2364/Mum/2011 order dated 12/08/2016 but apparently the issue of 234D is not in dispute in that appeal also. The assessee, in reassessment proceedings, have been saddled with certain further additions which have been further contested before Ld. CIT(A) vide impugned order dated 23/09/2010. However, upon perusal of the impugned order of Ld. CIT(A), we find that the amount of interest computed u/s 234D remains the same i.e. ₹ 8.01 crores, which lead us to conclude that no further interest u/s 234D has been computed by revenue in reassessment proceedings. 9. On merits, we find that Explanation-2 to Section 234D squarely applies to the assessee since the original quantum assessment order u/s 143(3) was passed after 01/06/2003. The Ld.CIT(A) has provided relief to the assessee by placing reliance on the decision of Special Bench of Delhi Tribunal in ITO Vs. Ekta Promoters Private Limited [305 ITR 1 SB DELHI]. However, we find that the impugned issue stood squarely against the assessee in view of the judgment of Hon ble Bombay High Court rendered in CIT Vs. Indian Oil Coprorati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( iii) the assessee bank has held the investments as business assets in its banking business. 11. Facts leading to the same are that the assessee was subjected to reassessment proceedings for impugned AY vide quantum assessment order dated 31/10/2006 passed u/s 143(3) read with section 147. The reassessment proceedings were initiated on the premises that the assessee earned Long Term Capital Gains [LTCG] on sale of certain investment and claimed set-off of brought forward Long Term Capital Losses of earlier years from the same. However, the investments in question, in the opinion of Ld. AO, constituted business assets held in the normal course of banking business and therefore assessable under the head Business Income. Accordingly, the assessee was not eligible to claim indexation or set-off of brought forward Long Term Capital Losses against the same. 12. Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 29/11/2010 where Ld. CIT(A) agreed with the contentions of the assessee by making following observations:- 7. I have duly considered the submissions of the authorized representative and I find that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to permanent investment since current investment was always treated under the head business income . The permanent investments were held by the assessee for a minimum period of one year and the same was carried in the books only at cost price. Further, the assessee was consistently following such practice of classification and treatment since past several years, which the revenue has accepted in earlier years. Our attention is drawn to the fact that similar issue was decided in assessee s favor by first appellate authority in immediately preceding assessment year i.e. 2002-2003 and the revenue, while accepting the same, did not prefer any appeal against the same. 14. We have heard the rival contentions. We find that the assessee is consistently following such classification and treatment of income from investment since past many years. The revenue has nowhere disputed that permanent investment were carried at cost price. Further, upon perusal of the order of Ld. CIT(A) for AY 2002-03, we find that the same issue arose in that year also and Ld. CIT(A) upheld the stand of the assessee and concluded that the income from investment was rightly offered under the head c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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