Bank of India Vs ACIT (Bombay High Court)
Reopening Invalid Since Deduction for Broken Period Interest on HTM Securities Was No Longer Res Integra: Bombay HC; Bombay HC Sets Aside Section 148 Proceedings Due to Binding Precedents on Broken Period Interest; Revenue Cannot Ignore Settled Law Merely Because Appeals Are Pending: Bombay HC Quashes Reassessment; Broken Period Interest Deduction Allowed; Bombay HC Holds Reassessment Lacked Legal Foundation.
Summary: The Bombay High Court allowed the writ petition challenging reassessment proceedings initiated against the assessee in relation to deduction claimed towards broken period interest (BPI) on the purchase of Hold to Maturity (HTM) securities for AY 2018-19. The assessee had originally filed its return declaring a loss and had disclosed details of BPI amounting to ₹249.45 crore during the assessment proceedings. Although the draft assessment order proposed disallowance of the expenditure by treating it as capital in nature, the final assessment order passed under Sections 143(3) and 144B deleted the proposed addition. Nearly three years later, the Revenue issued a notice under Section 148A(b), relying on audit objections and the fact that no addition had ultimately been made despite the draft assessment order proposing such disallowance. The assessee objected, relying on earlier appellate orders in its own case and judicial precedents recognizing the deductibility of BPI.
