THE COMMISSIONER OF INCOME TAX,TVM vs. STATE BANK OF TRAVANCORE,TVM
What did the High Court hold?
The High Court held that the appeals should be considered on merits and not dismissed for want of approval from the Committee on Disputes (CoD). The Court reasoned that the Supreme Court's judgment, while recalling earlier judgments on CoD, did not specify whether clearance was required for pending cases. Furthermore, the Court noted that the appeals raised substantial questions of law, which had been decided by a Full Bench. Following the Full Bench judgment in CIT v. South Indian Bank Ltd., 326 ITR 174 (Ker.), the Court answered the questions in favour of the revenue and against the assessee. The appeals were allowed, reversing the orders of the Tribunal and confirming the disallowance of the provision for bad debt claimed by the assessee to the extent it was against the Full Bench judgment. The assessing officer was directed to consider the disallowance after giving the assessee an opportunity to be heard.
What were the facts?
The appeals were filed by the Commissioner of Income-tax, Trivandrum, against the State Bank of Travancore, Trivandrum. The appeals concerned assessment years not explicitly stated but were previously referred to a Full Bench. The Full Bench decided the issues on merits for other assessees and sent these cases back to the Division Bench. At that stage, the revenue was required to obtain approval from the Committee on Disputes (CoD). When the appeals were heard, the revenue's counsel noted a Supreme Court judgment recalling judgments based on which CoD was constituted. The assessee's counsel argued that appeals filed before the Supreme Court judgment should not be entertained without CoD clearance. The High Court observed that the Supreme Court judgment did not clarify whether CoD clearance was required for pending cases.
What were the issues?
1. Whether the appeals should be entertained without clearance from the Committee on Disputes (CoD), given the Supreme Court's judgment recalling earlier judgments on CoD constitution. Assessee's contention: The appeals, filed prior to the Supreme Court's judgment, should not be entertained without clearance from the CoD. Revenue's contention: Not recorded, but the revenue filed the appeals. 2. Whether the disallowance of provision for bad debt claimed by the assessee should be confirmed, following the Full Bench judgment. Assessee's contention: Not recorded. Revenue's contention: Not recorded, but the appeals were filed by the revenue. The appeals were filed under Section 260A of the Income-tax Act, 1961, raising substantial questions of law.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT Ramachandran Nair, J. When these appeals were taken up for hearing counsel for the respondent-Bank submitted that Committee on Disputes' approval is not so far obtained by the revenue which has filed the appeals. These cases were once referred to the Full Bench for decision on the issue raised on merits. However, Full Bench decided the issues referred in respect of other assessees and sent back these cases to the Division Bench for hearing by order dated 15.12.2009. However, at that time requirement of approval by CoD was required and therefore it was mentioned that CoD approval will be produced by the revenue before the Division Bench. When the appeals were taken up today, standing counsel referred to the judgment of the Supreme Court in Civil Appeal No. 1883 of 2011 whereunder the Supreme Court has recalled all the judgments based on which CoD was constituted and approval was being granted. Counsel for the respondent-assessee submitted that since these appeals were filed prior to the above judgment of the Supreme Court, appeals should not be entertained without clearance from CoD. However, besides vacating earlier judgments constituting CoD for the purpose of granting approval, the Supreme Court does not state whether clearance from CoD is required in respect of pending cases or not. The main reason for the Supreme Court to recall earlier judgments is the failure of the CoD in exercising their powers in an even manner, leading to denial of approval to eligible cases and at the same time granting of the same in similar cases. So much so, we feel at least in respect of appeals pending before this Court, this Court should consider the appeals on merits and appeals should not be dismissed for want of approval from CoD. Moreover what we find is that these appeals are filed under Section 260A of the I.T. Act, where juri iction of the High Court is limited to interfering with finding on substantial question of law. Admittedly in these cases question raised is a substantial question of law, and therefore these were referred to Full Bench and the matter now stands decided by the Full Bench judgment. Following the judgment of the Full Bench in CIT V. SOUTH INDIAN BANK LTD., 326 ITR 174 (Ker.) we answer the questions referred in favour of the revenue and against the assessee and allow the appeals by reversing the orders of the Tribunal and confirming disallowance of provision for bad debt claimed by the respondent-assessee to the extent it was against the judgment of the Full Bench. However modification if required will be made in the assessment to make the disallowance in tune with the judgment of the Full Bench. Therefore there will be direction to the assessing officer to consider the disallowance after giving opportunity to the assessee as well.
(C.N.RAMACHANDRAN NAIR) Judge. (BHABANI PRASAD RAY) Judge.
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