THE CATHOLIC SYRIAN BANK LTD,ST.MARY'S vs. THE ADDL.COMMISSIONER OF INCOME TAX

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ITA/98/2011HC KeralaKLHC01026446201120 March 2012Author: HONOURABLE MR.JUSTICE B.P.RAY,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR5 pages
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What did the High Court hold?

The High Court held that the disallowance under Section 14A of the Income Tax Act was covered against the assessee by the High Court's own judgment in COMMISSIONER OF INCOME TAX Vs. CATHOLIC SYRIAN BANK LTD. & OTHERS, reported in 237 CTR 164, and thus answered this issue in favour of the Revenue. Regarding the excess cash in the suspense account, the Court noted the assessee's concession that it was excess cash with no claimant. The Court distinguished the cited Bombay High Court case, noting that the excess cash in the present case was carried over for several years. The Tribunal's finding that the amount did not represent a liability and was wrongly shown as such was confirmed for arrears carried forward for several years. However, the Court held that excess cash found in the previous year need not be treated as income and could be treated as surplus in the suspense account for three years to meet potential claims. The Tribunal's finding was confirmed except for Rs. 95,000/-, which was the excess found in the previous year.

What were the facts?

The appellant, The Catholic Syrian Bank Ltd., filed an appeal before the High Court of Kerala against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal concerned assessment year(s) not explicitly stated but related to orders of assessment dated 28/12/2007 and CIT(A)-V dated 14/10/2008. The dispute involved disallowance under Section 14A of the Income Tax Act and the assessment of excess cash held in a suspense account under 'other liabilities and provisions'. The ITAT's order was dated 11/02/2011. The High Court heard arguments from the assessee's counsel and the Revenue's standing counsel.

What were the issues?

1. Whether the disallowance under Section 14A of the Income Tax Act, 1961, is justified? The assessee argued against the disallowance, while the Revenue contended for its validity. This issue was stated to be covered by a previous judgment of the High Court. 2. Whether excess cash found in the assessee's suspense account, shown under 'other liabilities and provisions', should be treated as income? The assessee argued that it represented a liability or provision. The Revenue contended it was income. The assessee relied on the decision in COMMISSIONER OF INCOME TAX Vs. BANK OF RAJASTHAN (2010) 40 DTR (Bom.) 173. The Tribunal had found that the amount did not represent a liability and was wrongly shown as such by the assessee.

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 C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE B.P.RAY TUESDAY, THE 20TH DAY OF MARCH 2012/30TH PHALGUNA 1933 ITA.No. 98 of 2011 -------------------------- [I.T.A.NO.10/COCH/2009 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN] .............. APPELLANT/APPELLANT/APPELLANT: -------------------------------------------------------- THE CATHOLIC SYRIAN BANK LTD., ST.MARYS COLLEGE ROAD, THRISSUR. BY ADV. SRI.V.B.UNNIRAJ. RESPONDENT/RESPONDENT/DEPARTMENT: ----------------------------------------------------------------- THE ADDL.COMMISSIONER OF INCOME TAX, CIRCLE-1 (1), TRICHUR. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, SRI.JOSE JOSEPH, S.C. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 20-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.T.A. NO.98/2011: APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A: COPY OF THE ORDER OF ASSESSMENT DTD. 28/12/2007. ANNEXURE B: COPY OF THE ORDER OF THE CIT (A)-V DT.D 14/10/2008. ANNEXURE C: COPY OF THE ORDER OF THE TRIBUNAL DTD. 11/02/2011. RESPONDENT'S ANNEXURES: NIL. //TRUE COPY// P.A. TO JUDGE. Prv. C.N.RAMACHANDRAN NAIR, & BHABANI PRASAD RAY, JJ. .................................................................... I.T. Appeal No.98 of 2011 .................................................................... Dated this the 20th day of March, 2012.

JUDGMENT Ramachandran Nair, J. Heard Senior counsel Sri.Sarangan appearing for the appellant- SYRIAN BANK LTD. & OTHERS reported in 237 CTR 164. Following this judgment we answer this question against the assessee and in favour of the Revenue.

2.

Next question pertains to assessment of excess cash in the custody of the assessee which is kept in suspense account under the head “other liabilities and provisions”. On going through the Tribunal's order we notice that assessee themselves conceded that the Rs.95,000/- which is the excess found in the previous year.

C.N.RAMACHANDRAN NAIR Judge BHABANI PRASAD RAY Judge pms

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