THE COMMISSIONER OF INCOME TAX vs. STATE BANK OF TRAVANCORE

ITA/50/2015HC KeralaKLHC01025451201502 March 2017Author: HONOURABLE MR.JUSTICE ANTONY DOMINIC6 pages
AI SummaryAllowed

What were the facts?

The Revenue has filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2007-08. The appeal concerns the disallowance of the assessee's (State Bank of Travancore) contribution to a Retired Employees Medical Benefit Scheme. The Assessing Officer had disallowed this contribution by invoking Section 40A(9) of the Income Tax Act. The Commissioner of Income Tax (Appeals) had set aside this disallowance. The ITAT, in turn, sustained the order of the Commissioner, relying on its own previous order for assessment year 2002-03.

What did the High Court hold?

The High Court held that the appeal by the Revenue should be answered in its favor. The Court noted that the very same question of law had been raised by the Revenue before it in the case of the assessee itself for assessment year 2006-07. In that prior judgment, reported as CIT v. State Bank of Travancore [2015] 378 ITR 219 (Ker), this Court had answered the question of law against the assessee, stating that Section 40A(9) of the Income Tax Act, prior to its amendment by the Finance Act, 2011, disallowed deductions for payments not permitted under Section 36. The Court found the disallowance by the Assessing Officer to be in line with the statutory provisions and held that the judgment of the Madras High Court in T. Stanes and Co. Ltd. was not relevant due to the introduction of sub-section (9) to Section 40A by the Finance Act, 1984. Despite the assessee's reliance on other judgments and Tribunal orders, the High Court declined to place reliance on them, considering the binding precedent of its own judgment in the assessee's own case. The appeal was disposed of answering the question of law in favor of the Revenue.

What were the issues?

1. Whether, in the facts and circumstances of the case, the contribution of the assessee towards the Retired Employees Benefit Scheme is an allowable deduction in view of the provisions contained in Section 40A(9) of the Income Tax Act. Assessee's Contentions: The assessee argued that this Court had previously considered the same issue in the case of P. Balakrishnan v. Travancore Cochin Chemicals [243] ITR 284. The assessee further contended that following this judgment, its own case was decided in its favor by the Tribunal for assessment years 2000-01 to 2005-06, specifically referencing the ITAT's order in ITA 861 of 2005 for assessment year 2002-03. Revenue's Contentions: The Revenue's appeal is based on the disallowance of the contribution under Section 40A(9). The Revenue relies on this Court's binding judgment in CIT v. State Bank of Travancore [2015] 378 ITR 219 (Ker) concerning the same assessee and a similar issue for assessment year 2006-07.

Which sections of the Income-tax Act were involved?

Section 40A(9),Section 36

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE K.P.JYOTHINDRANATH THUR AY, THE 2ND DAY OF MARCH 2017/11TH PHALGUNA, 1938 ITA.No. 50 of 2015 ---------------------- AGAINST THE ORDER IN ITA 110/2014 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 06-06-2014 ---------- APPELLANT(S)/APPELLANT/R3 RESPONDENT/REVENUE: -------------------------------------------- THE COMMISSIONER OF INCOME TAX TRIVANDRUM

BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: ----------------------------------------------------------- STATE BANK OF TRAVANCORE HEAD OFFICE, POOJAPURA, TRIVANDRUM - 695008. R1 BY ADV. SRI.A.KUMAR R1 BY ADV. SRI.P.J.ANILKUMAR R1 BY ADV. SMTG.MINI(1748) R1 BY ADV. SRI.P.S.SREE PRASAD THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 02-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ANTONY DOMINIC & K. P. JYOTHINDRANATH, JJ. ------------------------------------------------ I. T. A. No.50 of 2015 ------------------------------------------------ Dated this the 2nd day of March, 201

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