Icici Home Finance Co.Ltd, Mumbai vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "I", MUMBAI ौी. ौी. राजे ि, ि लेखा सदःय एवं ौी "ववेक वमा#, याियक सदःय के सम$ । BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA No. : 462/Mum/2012 (Assessment year: 2008-09) ICICI Home Finance Company Ltd, Vs Additional Commissioner of ICICI Bank Towers, Income -tax, Range-10(1), Bandra-Kurla Complex, R.No.455, 4th Floor, Bandra (East) Aayakar Bhavan, Mumbai -400 051 Mumbai -400 021 ःथयी लेखा सं.:PAN: AAACI 6285 N

अपीलाथ' (Appellant) ू)यथ' (Respondent) ITA No. : 7843/Mum/2011 (Assessment year: 2008-09) Additional Commissioner of Income - Vs M/s ICICI Home Finance tax, Range-10(1), Company Ltd, Mumbai -400 021 Mumbai -400 051 ःथयी लेखा सं.:PAN: AAACI 6285 N अपीलाथ' (Appellant) ू)यथ' (Respondent) Assessee by : Ms Aarti Vissanji Revenue by : Shri Kishan Vyas

सुनवाई क+ तार-ख /Date of Hearing : 01-12-2014 घोषणा क+ तार-ख /Date of Pronouncement : 20-02-2015

आदेश ORDER ी िववेक वमा , या स: PER VIVEK VARMA, JM:

Cross appeals have been filed by the assessee and the department against the order of the CIT(A)-21, Mumbai, dated 29.08.2011.

2. As both the appeals emanate from the same order of CIT(A), we are disposing off the two appeals through this common and consolidated order for the sake of convenience and brevity.

2 ICICI Home Finance Company Ltd ITA No. 462/Mum/2012 ITA No. 7843/Mum/2011 ITA No. 462/Mum/2012 :

3. The Following grounds have been taken by the assessee:

[1] Being aggrieved by the order bearing No. CIT(A)21/IT/253/2010-11 dated August 29, 2011 issued by the Commissioner of Income-tax (Appeals) -- 21, Mumbai (hereinafter called the CIT(A)) under section 250 of the Income-tax Act, 1961 [hereinafter called The Act] and communicated to the Appellant on November 22, 2011, the Appellant appeals against and on the following amongst other grounds which are without prejudice to each other.

(A) Re: Disallowance under section 14A read with Rule 8D [2] On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance under section 14A made by the Assessing Officer by applying Rule 8D.

[3] On the facts and circumstances of the case and in law, the CIT(A) failed to evaluate & verify the method for computing the disallowance under section 14A offered for taxation by the appellant voluntarily in its Return of Income.

[4] On the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating the rational ground considered for computing disallowance voluntarily for Rs. 20,26,263/- under section 14A based on rational basis and not arbitrarily. (B) Re: Special Reserve Deduction u/s 36(1)(viii) [5] On the facts and circumstances of the case and in law, the CIT(A) erred in excluding the following income on the ground that the same do not qualify for deduction under section 36(1)(viii) without allowing an opportunity to the appellant to explain further:

Srno. Particulars Amount Rs. 1 Interest on Buyout Portfolio 368,60,68,267 2 Interest-income-Securitisation 38,64,83,233 3 Premium Buyout Income (7,11,51,708) 4 Income-Securitisation of Home Loans (22,11,395)

[6] On the facts and circumstances of the case and in law, the CIT(A) failed to appreciate properly the Interest Income on Housing Loans for Rs. 3,17,93,48,463/-, Income from Securitisation -- Home Loan for Rs. (22,11,395) and Fee Income for Rs. 1,13,36,718/- as Income from providing housing finance for construction or purchase of residential houses in India without allowing an opportunity to the appellant to explain further. [7] On the facts and circumstances of the case and in law, the CIT(A) erred in computing the ratio of total income from eligible business qualifies under section 36(1)(viii) with the profits and gains from business or profession.

[8] The CIT(A) also erred in appreciating the fact that Interest income of Rs. 3,37,25,730/- earned from 3

ICICI Home Finance Company Ltd ITA No. 462/Mum/2012 ITA No. 7843/Mum/2011 fixed deposits with banks, govt. securities was also related to the eligible business of housing finance business of the Appellant as according to National Housing Bank's (NHB) regulations which mandates housing finance companies in India to invest in certain securities in order to maintain the statutory liquidity ratio. Thus these income are derived from the eligible business of providing long term finance and are eligible for deduction under section 36(1)(viii) of the Act. (C) GENERAL:

The Appellant craves leave and reserves its rights to vary, amend, alter and/or add to the grounds of appeal and to produce such oral and documentary evidence and file such compilation of documents as may be necessary at the time of hearing of the appeal".

ITA No. 7843/Mum/2011 : 4. The Following grounds have been taken by the department:

"1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the deduction u/s.36(1)(viii) of the Act when the assessee is not eligible for the deduction u/s,36(1)(viii) of the Act. 2 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in allowing the claim of deduction u/s.36(1)(viii) of the Act at Rs. 1,30,18,027/-. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.

The appellant craves leave to amend, or alter any grounds or add a new ground, which may be necessary".

5. At the time of hearing, the AR submitted that the Ground no. A along with its sub-grounds of the assessee's appeal is not pressed.

6. Since the ground is not pressed, it is rejected.

7. It was further pointed out that vide letter dated 28.11.2014, the assessee had filed certain additional evidences under Rule 29 of the Income Tax Appellate Rule, 1962, pertaining to the disallowance made u/s 36(1)(viii) of the Income Tax Act, 1961.

4 ICICI Home Finance Company Ltd ITA No. 462/Mum/2012 ITA No. 7843/Mum/2011

8. Since grounds no. B with sub grounds (5), (6), (7) & (8) in assessee's appeal and grounds no. 1 & 2 in department appeal pertain to section 36(1)(viii), we are of the opinion that the issue in the entirety should be restored to the file of the AO for de novo adjudication.

9. We, therefore, set aside the order of CIT(A) on the issue and direct the AO to adjudicate the issue de novo, taking into consideration the additional evidence filed by the assessee before the ITAT, which has been accepted by us. Needless to mention that the AO shall afford reasonable and adequate opportunity to present its case on the impugned issue.

10. Ground no. B along with its sub grounds, (5), (6), (7) & (8) are therefore allowed for statistical purposes.

11. Ground no. 1 and 9 are general in nature.

12. As a result, the appeal as filed by the assessee is treated as partly allowed.

13. As mentioned above grounds no. 1 & 2 of department appeal also pertain to disallowance of section 36(1)(viii) and we have set aside the issue to the file of the AO for de novo adjudication in ITA No. 462/Mum/2012, we are of the opinion that identical direction be given in this appeal as well, as in para 8, above.

14. We, therefore, set aside the order of the CIT(A) and restore the issue of disallowance made by the AO u/s 36(1)(viii) to the file of the AO for de novo adjudication, needless to mention that the AO shall afford reasonable and adequate opportunity to the assessee.

5 ICICI Home Finance Company Ltd ITA No. 462/Mum/2012 ITA No. 7843/Mum/2011

15. Grounds no. 1 & 2 are therefore allowed for statistical purposes.

16. As a result, the appeal as filed the department is treated as allowed for statistical purposes.

ITA No. 462/Mum/2012 appeal by the assessee is partly allowed for statistical purposes.

ITA No. 7843/Mum/2011 appeal by the department is allowed for statistical purposes.

Order pronounced in the open Court on 20th February, 2015.

Sd/- Sd/- राजे ) (राजे िववेक वमा ) (िववे लेखा सद य याईक सद य (RAJENDRA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Date: 20th February, 2015 ूित/Copy to:-

1) अपीलाथ' /The Appellant. 2) ू)यथ' /The Respondent. 3) The CIT(A) -21, Mumbai. 4) The CIT -MC-X, Mumbai.

5) "वभागीय ूितिनिध "आय", आयकर अपीलीय अिधकरण, मुबं ई/ The D.R. "I" Bench, Mumbai.

6) गाड# फाईल Copy to Guard File.

आदे शानुसार/By Order

/ / True Copy / / उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, मुबं ई Dy./Asstt. Registrar I.T.A.T., Mumbai

*च हान व.िन.स *Chavan, Sr.PS