THE COMMISSIONER OF INCOME TAX vs. M/S. THE DHANALAKSHMI BANK LTD,

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ITA/1092/2009HC KeralaKLHC01025853200911 December 2018Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the disallowance under Section 14A of the Income Tax Act, 1961, can only be made from the assessment year 2007-2008 onwards. This finding is based on the Supreme Court's decision in Commissioner of Income Tax v. ESSAR Teleholdings [(2018) 401 ITR 445 (SC)]. Consequently, for the assessment year 2003-2004, which precedes the applicability of Section 14A as per the Supreme Court ruling, any disallowance made under this section must be set aside. The High Court upheld the order of the Income Tax Appellate Tribunal, which had presumably also taken this view. The question is answered in favour of the assessee and against the Revenue. No specific issue was left undecided.

What were the facts?

This appeal concerns assessment year 2003-2004. The Revenue, represented by the Commissioner of Income Tax, Thrissur, is the appellant, and M/s. The Dhanalakshmi Bank Ltd., Thrissur, is the respondent assessee. The dispute pertains to a disallowance made under Section 14A of the Income Tax Act, 1961. The order under challenge is an order passed by the Income Tax Appellate Tribunal, Cochin Bench, dated August 20, 2007, which had presumably ruled in favour of the assessee. The High Court of Kerala is hearing the appeal against the Tribunal's order.

What were the issues?

1. Whether the disallowance under Section 14A of the Income Tax Act, 1961, is applicable for the assessment year 2003-2004? The Revenue contends that the disallowance under Section 14A is valid for the assessment year in question. The Assessee, through its successful appeal before the Tribunal, argued that the disallowance under Section 14A was not applicable for the assessment year 2003-2004. The High Court relies on the Supreme Court decision in Commissioner of Income Tax v. ESSAR Teleholdings [(2018) 401 ITR 445 (SC)] to address this issue. The judgment does not record specific arguments from the Revenue beyond the implication of their appeal, nor does it detail the Assessee's specific arguments before the Tribunal.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 11TH DAY OF DECEMBER 2018 / 20TH AGRAHAYANA, 1940 ITA. No.1092 of 2009 AGAINST THE ORDER IN ITA NO.336/2006 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 20-08-2007 APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME TAX THRISSUR. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/RESPONDENT: M/S. THE DHANALAKSHMI BANK LTD., NAIKKANAL, THRISSUR. BY ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT

The appeal arises from the assessment year 2003-2004 and the question raised is on the disallowance made under Section 14A of the Income Tax Act, 1961. The Hon'ble Supreme Court in Commissioner of Income Tax v. ESSAR Teleholdings [(2018) 401 ITR 445 (SC)] held that Section 14A disallowance can be made only from the assessment year 2007-2008. The present appeal arises from a prior year and the disallowance had to be set aside. We uphold the order of the Tribunal. The question stands answered in favour of the assessee and against the Revenue. The appeal stands rejected. K.VINOD CHANDRAN sp/11/12/18 JUDGE ASHOK MENON JUDGE //// P.A. TO JUDGE

APPENDIX PETITIONER'S EXHIBITS: ANNEXURE-AOF THE ORDER OF THE ASSESSING OFFICER U/S. 143(3) DATED 15/12/2005. ANNEXURE-BOF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO.67/R.I./ TCR/CIT-V/05-06 DATED 17/03/2006. ANNEXURE-COF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA 336(COCH)/2006 DATED 20/08/2007. RESPONDENT'S EXHIBITS:- NIL //// P.A. TO JUDGE

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