THE COMMISSIONER OF INCOME TAX vs. STATE BANK OF TRAVANCORE

ITA/73/2014HC KeralaKLHC01026639201421 July 2015Author: HONOURABLE MR. JUSTICE SHAJI P.CHALY,HONOURABLE MR.JUSTICE ANTONY DOMINIC6 pages
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What were the facts?

The Revenue has filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) concerning the assessment year 2006-2007. The assessee, State Bank of Travancore, contributed Rs. 1.5 crores to a medical benefit scheme for its retired employees. The Assessing Officer disallowed this contribution. However, the Commissioner of Income Tax (Appeals) set aside the Assessing Officer's order and allowed the deduction. The ITAT dismissed the Revenue's appeal, leading to the present appeal before the High Court.

What did the High Court hold?

The High Court held that Section 40A(9) of the Income Tax Act, which starts with a non-obstante clause, disallows deduction for sums paid by an employer towards any fund, trust, or institution, except as provided by or under clause (iv) or (v) of sub-section (1) of section 36, or as required by any other law. The assessee did not claim that the contribution was permitted under Section 36. Therefore, in view of Section 40A(9), the payment could not be allowed as a deduction. The Court further noted that Section 40A(9) was introduced by the Finance Act, 1984, making the Madras High Court's judgment in T. Stanes & Company Ltd., rendered for earlier assessment years, irrelevant to the present case. The question of law was answered in favour of the Revenue, and the appeal was allowed.

What were the issues?

1. Whether, on the facts and circumstances of the case and in light of Section 40A(9) of the Income Tax Act, 1961, the assessee is entitled to claim deduction of the contribution made to the medical benefit scheme? Assessee's contentions: The assessee argued for deduction under Section 37 of the Income Tax Act and relied on the judgment in Commissioner of Income Tax, Madras II v. T. Stanes & Company Ltd. [105 ITR 251]. Revenue's contentions: The Revenue contended that in light of Section 40A(9) of the Act, the Tribunal could not have allowed deduction under Section 37 of the Act.

Which sections of the Income-tax Act were involved?

Section 40A(9),Section 37,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 SHAJI P.CHALY TUE AY, THE 21ST DAY OF JULY 2015/30TH ASHADHA, 1937 ------------------------- AGAINST THE ORDER IN ITA 381/2013 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 11-10-2013 APPELLANT/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/APPELLANT/RESPONDENT/ASSESSEE: ------------------------------------------------------------------------ STATE BANK OF TRAVANCORE, HEAD OFFICE, TAX CELL, POOJAPPURA TRIVANDRUM. R. BY ADV. SRI.P.BALAKRISHNAN (E) R. BY ADV. SRI.MOHAN PULIKKAL R. BY ADV. SRI.P.P.NARAYANAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 21-07-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A:OF THE ORDER OF THE ASSESSING OFFICER U/S 143(3) DATED 22.12.2008. ANNEXURE B:OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.

The order continues below.

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