Case Law Details
Brief of the Case
ITAT Ahmedabad held In the case of UTI Bank Ltd. vs. ACIT that we find that the assessee’s interest free deposits exceed its tax free investment in current year as well as in succeeding assessment year 2003-04. The tribunal and hon’ble jurisdictional high court deleted an identical section 14A disallowance based on the very presumption. The Revenue’s Special Leave Petition stand admitted qua administrative expenses only. The only distinction that is to be seen in these two assessment years is that the assessee has suo moto disallowed Rs. 6.23 crores in the impugned assessment year. The Revenue seeks to apply estoppel principle. We are of the view that purpose of scrutiny assessment is to determine correct taxable income as per law and not to rely on such technicalities. The same principle applies even in appellate proceedings being in the nature of continuity of original proceedings. Therefore, we follow consistency and hold that the impugned disallowance of Rs. 36.68 crores made in the course of assessment partly sustained in lower appellate proceedings; suo moto or the one computed by the lower authorities, is not liable to be sustained.
Facts of the Case
The assessee company M/s UTI Bank Ltd is now known as M/s Axis Bank Ltd. It started its banking operations in 1995. The assessee filed its return on 30-10-2002 admitting income of Rs. 208, 83,29,510/- and claimed refund of Rs. 42,15,67,337/-. This was followed by a revised return of income reading a sum of Rs. 208,95,81,108/- with refund of Rs. 41,76,27,996/-. The Assessing Officer took up scrutiny. He noticed exempt income of Rs. 39.65 crores arising from tax free bonds, debentures and dividends. The assessee had invested a sum of Rs. 4,14 crores in these instruments.
The assessee had suo moto disallowed a sum of Rs. 6.23 crores comprising of interest pertaining to incremental demand deposits. The Assessing Officer in assessment order computed section 14A disallowance of Rs. 36.68 crores i.e. net figure of Rs. 30.45 crores over and above Rs. 6.23 crores added back suo moto.
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With due regards to apex court judgment on the IInd part i.e. “Other operating expenses are concerned, appellant has not filed any details as to how much expenditure is to be apportioned for earning the exempt income. The total operating expenses are Rs. 205.47 Cr. and the exempt income claimed by the appellant is Rs. 39.65 Cr. whereas the total income earned by appellant is Rs. 1595.40 Cr. Hence the exempted income is 2.485% of the total income. Therefore, by allocating the operating expenses of Rs. 205.47 Cr. in this ratio, the expense allocable to the exempt income comes to Rs. 5.11 Cr. (205.47 x 2.485%) Therefore, this expenditure has to be disallowed out of the total expenditure for earning the exempt income under the provisions of Sec. 14 A.” The detail must be part of averments of petition. It could give better revenue to GOVT.