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Rabo India Finance Limited, Forbes Building, 2nd floor, Charanjit Rai Marg, Fort, Mumbai-400001 Vs. Asstt. Commissioner of Income Tax, Range 1(3), Aayakar Bhavan, M K Road, Mumbai-400020
October, 31st 2014
                      ,    ""  
       IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM)
         .. ,                             .. ,   

                     ./I.T.A. No.2510/Mum/2011
                   (   / Assessment Year :2002-03)


  Rabo India Finance Limited,      /         Asstt. Commissioner of Income
  Forbes Building, 2nd floor,      Vs.       Tax, Range 1(3),
  Charanjit Rai Marg,                        Aayakar Bhavan,
  Fort,                                      M K Road, Mumbai-400020
  Mumbai-400001
        ( /Appellant)               ..       (    / Respondent)

                     ./I.T.A. No.3167/Mum/2011
                   (   / Assessment Year :2002-03)

  Jt. Commissioner of Income       /         Rabo India Finance Limited,
  Tax, Range 1(3),                 Vs.       Forbes Building, 2nd floor,
   R No.540/564, 5th floor,                  Charanjit Rai Marg,
  Aayakar Bhavan,                            Fort, Mumbai-400001
  New Marine Lines
  M K Road, Mumbai-400020
        ( /Appellant)               ..       (    / Respondent)

                . /   . / PAN/GIRNo. :AAACR6065R

             / Assessee by               :   Shri Dinesh Bafana
               /Revenue by :                 Shri Manjunatha Swami

              / Date of Hearing
                                                 : 28.10.2014
             /Date of Pronouncement : 29.10.2014

                                  / O R D E R


 Per B.R.BASKARAN, Accountant Member:

       These cross-appeals are directed against the order dated 1.2.2011
 passed by the ld.CIT(A)-2, Mumbai and they relate to the assessment year 2002-
 03.
                                                      I.T.A. No.2510 and 3167/Mum/2011
                                         2


2.    In the appeal filed by the assessee following three issues are urged :


      a)     validity of re-opening of assessment u/s 147 of the Income Tax
             Act, 1961 (the Act);

      b)     rejection of claim of exemption u/s 10(23G) of the Act; and

      c)     rejection of claim of deduction of interest of Rs.48,08,110/- relating
             to Foreign Currency Non-Residential (FCNR) loans under section
             43B of the Act.

3.    In the appeal filed by the revenue, the solitary ground urged relates to
deletion of interest charged u/s 234D of the Act.





4.    At the time of hearing, the ld. Counsel for the assessee submitted that the
ground No.2 relating to claim of exemption u/s 10(23G) of the Act has since been
decided in favour of the assessee by the co-ordinate bench of Tribunal in the
assessee's own case, vide its order dated 18.3.2010 in ITA No.3325/Mum/2009
and CO No.243/Mum/2009 relating to the AY-2004-05 . The ld. Counsel for the
assessee invited our attention to the copy of the order passed by the Tribunal
placed at pages 46 to 58 of the assessee's paper book. On perusal of the said
order, we notice that the Tribunal has allowed the claim of the assessee on
noticing that the deduction u/s 10(23G) is being allowed consistently from the
assessment year 2002-03 onwards. For the sake of convenience, we extract
below the operative portion of the order passed by the Tribunal:


      "5.     We have considered the issue. As the assessee satisfied the
      conditions for claiming he exemption under section 10(23G) as much as it
      involved in long term financing and thee entities were also notified under
      provisions of section 10(23G), the CIT(A)'s order require no modification.
      The AO's reasons for denying the claim that the assessee has not
      classified the loans as investments and further those companies have not
      invited funds by open offer from the public are not material as
      classification of amounts in the books of accounts are not a criteria, for
      considering the long term finance given by the assessee and further there
      is no stipulation that there should be an open offer in inviting long term
      finance under the rules. The conditions considered by the AO are not
      supported by the provisions of the Act and therefore the AO's action in
      denying the claim on infructuous reasons cannot be upheld. As rightly held
      by the CIT(A) both the assessee and those entities do classify under the
      provisions of the Act and accordingly the claim of 10(23G) is allowable. It
      is also on record that the claims were being consistently allowed from the
      AY 2002-03 and there is no need for deviating from the same stand in the
                                                       I.T.A. No.2510 and 3167/Mum/2011
                                        3


       year under consideration. Accordingly the ground raised by the revenue is
       dismissed".

5.     The ld. Counsel for the assessee further submitted that the revenue had
preferred appeal before the Hon'ble Bombay High Court challening the order of
the Tribunal on the issue relating to section 10(23G) of the Act and the Hon'ble
Bombay High Court vide its order dated 25.11.2012 passed in Income Tax
Appeal No.6983 of 2010 has dismissed the appeal filed by the revenue. The ld.
AR also furnished a copy of the said order of Hon'ble Bombay High Court. In
view of the decision rendered by the Tribunal which has since been confirmed by
the Hon'ble Bombay High Court, we set aside the order of ld. CIT(A) on this issue
and direct the AO to allow the claim of the assessee of exemption u/s 10(23G) of
the Act.


6.     With regard to the ground relating to disallowance of interest on (FCNR)
under section 43B of the Act, the ld. Counsel submitted that the AO has since
deleted the above said disallowance in the order dated 10.5.2011 passed under
section 154 of the Act.     Accordingly, he submitted that the assessee is not
pressing the said ground.     Accordingly, the said ground is dismissed as not
pressed.


7.   The ld. Counsel further submitted that the ground No.1 relating to validity of
reopening of the assessment would become academic, if all the additions made
by Assessing Officer is deleted. In the earlier paragraphs, we have directed the
AO to allow the exemption u/s 10(23G) of the Act and further disallowance of
interest has since been rectified by the AO in the order passed u/s 154 of the Act.
Hence, as submitted by the ld. A.R, the issue relating to validity of reopening of
assessment has become academic and hence we do not find it necessary to
adjudicate the same





8.     With regard to the appeal filed by the Revenue, both the parties have
agreed that the issue relating to interest u/s 234D would not arise, if both the
additions made by the AO are deleted. In the earlier paragraphs, we have
directed the AO to allow the exemption u/s 10(23G) of the Act and further
disallowance of interest has since been rectified by the AO in the order passed
                                                     I.T.A. No.2510 and 3167/Mum/2011
                                          4


u/s 144 of the Act.      Hence, as agreed by both the parties, the question of
charging interest u/s 234D would not arise. Accordingly, we reject the ground
urged by the revenue.


9.    In the result, the appeal filed by the assessee is treated as allowed and
the appeal of the revenue is dismissed.


      The above order was pronounced in the open court on 29th Oct, 2014.

            29th Oct, 2014    



      Sd                                            sd

(.. / H.L. KARWA)                             (..  ,/ B.R. BASKARAN)
  / PRESIDENT                                   /Accountant Member

  Mumbai:29th Oct,2014.


. ../ SRL , Sr. PS


        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.     () / The CIT(A)- concerned
4.      / CIT concerned
5.              ,     ,   /
     DR, ITAT, Mumbai concerned
6.     / Guard file.


                                                             / BY ORDER,
             True copy
                                                    (Asstt. Registrar)
                                        ,  /ITAT, Mumbai

 
 
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