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03-07-2019, ICICI Bank, Section 35DDA, 10(23G), Tribunal Mumbai

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3 months 1 week ago #9978 by amit
Section - 35DDA, 10(23G), 147, 36(1)(vii)
Order Date - 03-07-2019
Favouring - Partly
Court - Tribunal Mumbai
Appellant - DCIT
Respondent - ICICI Bank Limited
Citation - 719Taxpundit67
Appeal No. - I .T.A. No.5191/Mum/2009
Asstt. Year - 2004-05


PER : Manoj Kumar Aggarwal

1. Aforesaid appeal by revenue for Assessment Year [in short referred to as ‘AY’] 2004-05 contest the order of Ld. Commissioner of Income-Tax (Appeals)-XXVII, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-XXVII/DCIT/-3(1)/IT-3/09-10 dated 30/06/2009 on following grounds of appeal: -

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing 100% deduction amounting to Rs.11,07,20,000/- (Rs.49,27,20,000/- as claimed by the assessee - Rs.38,20,00,000/- as allowed by the AO in the re-assessment proceedings) in contravention of the provision of section 35DDA of the I.T. Act, 1961.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 492,25,70,772/- made by the Assessing Officer on account of bad debts.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs 45,92,32,087/- made by the AO in respect of exemption u/s 10(23G) of the l.T.Act.

4 On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that the assessee is not eligible to exemption u/s. 10(23G) as it is not an infrastructure capital company as defined in Explanation 1 to section 10(23G) of the IT. Act, 1961.

5. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

The assessee, upon receipt of notice of hearing, has filed cross objections against the same. The memorandum of cross-objections read as under: -

[1] On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - XXVII, Mumbai [CIT(A)] erred in upholding the order of the Assessing Officer passed under section 143(3) r.w.s. 147 of the Act on the ground that the Assessing Officer had reasons to believe that the income chargeable to tax had escaped assessment.

[2] The CIT(A) failed to appreciate that the claim of deduction of bad debts under section 36(1)(vii), exemption under section 10(23G), deduction under section 35DDA had been considered in the assessment order passed under section 143(3) dated December 29, 2006 and section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion as has been held by the Delhi High Court (FB) in the case of CIT v. Kelvinator of India (256 ITR 1) and affirmed by the Supreme Court in 320 ITR 561.

2.1 Facts in brief are that the assessee being resident corporate assessee stated to be engaged in the business of Banking and Finance was subjected to re-assessment proceedings u/s. 143(3) read with Section 147 of the Income Tax Act, 1961 for the impugned AY vide order dated 25/02/2009 wherein the income of the assessee was determined at Rs.1908.20 Crores under normal provisions after certain additions / disallowances as against income of Rs.1396.45 Crores determined in scrutiny / regular assessment u/s 143(3) vide order dated 29/12/2006.

2.2 The case of the assessee for impugned AY was reopened u/s 147 by issuance of notice u/s 148 on 26/06/2008 which is within 4 years from the end of relevant assessment year In response to the same, the assessee filed return of income on 07/08/2008 and demanded copy of reasons for reopening the assessment which were supplied along with statutory notices u/s 143(2) and 142(1) calling for requisite information / evidences. The assessee, inter-alia, submitted that the reopening was on mere change of opinion and therefore, not valid in law. However, the said plea could not find favor with Ld. AO. The assessee, vide its submissions dated 22/12/2008, contested each and every issue for which the reassessment proceedings were triggered against the assessee, the copy of which has been placed on record.

2.3 The following quantum additions as made in the reassessment proceedings are the subject matter of present dispute before us: - The brief facts of each of the impugned additions are as follows: -

2.3.1 Deduction u/s 35DDA

It transpired that the assessee floated an Early Retirement Option Scheme 2003 [hereinafter referred to as ERO Scheme] during the month of July, 2003 for all employees who completed 40 years of age and 7 years with the assessee bank. In accordance with the terms of Scheme as approved by RBI, the payment under ERO Scheme aggregated to Rs.191 Crores, the break-up of which was as follows: -

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