THE COMMISSIONER OF INCOME TAX vs. THE FEDERAL BANK LTD.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY, THE 10TH DAY OF JANUARY 2014/20TH POUSHA, 1935 ITA.No. 66 of 2011 ( ) ----------------------- AGAINST THE ORDER IN ITA 718/COCH/2010 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 17-09-2010 APPELLANT/RESPONDENT.: ------------------------------ THE COMMISSIONER OF INCOME TAX-I, COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/RESPONDENT/APPELLANT.: -------------------------------------------------- THE FEDERAL BANK LTD., H.O.FEDERAL TOWER, ALUVA P.O., ALUVA-683 101. R BY ADV. SRI.V.ABRAHAM MARKOS R BY ADV. SRI.MATHEWS K.UTHUPPACHAN R BY ADV. SRI.BINU MATHEW R BY ADV. SRI.TERRY V.JAMES R BY ADV. SRI.B.J.JOHN PRAKASH R BY ADV. SRI.TOM THOMAS (KAKKUZHIYIL) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10-01-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

MANJULA CHELLUR,C.J. & A.M.SHAFFIQUE, J. = = = = = = = = = = = = = = = = I.T.A No.66 of 2011 = = = = = = = = = = = = = = = = = = = = = Dated this the 10 th day of January, 2014 JUDGMENT Manjula Chellur,CJ The following substantial questions of law arises for consideration:- “1. Whether on the facts and in the circumstances of the case and also in the light of the decision of this Hon'ble Court reported in 195 TAXMAN 57 the Tribunal is right in law and fact in interfering with the disallowance qua the provision for bad and doubtful debts of the advances made by the rural branches of the assessee under Sec.36(1)(viia) of the Income Tax Act in the sum of Rs.5,12,22,45,791/- by the Assessing Officer? 2. Whether, the assessee is entitled to depreciation on investments on securities like “Held to Maturity” “Available for sale” and “Held for Trade” 3. Whether on the facts and in the circumstances of the case is not the interest credited to P/L account by the assessee the income of the assessee and the ITAT is right in law in interfering with the same?”

I.T.A No.66 of 2011 2 2. All the three issues raised herein were answered in favour of the assessee by the Tribunal. Subsequent to filing of the above appeal, Division Bench of this Court had an occasion to deal with issue Nos.1 and 2 on similar issues in Commissioner of

Income-tax v. Lord Krishna Bank Ltd

(2011) 339 ITR 606) As a matter of fact, earlier decision in Commissioner of Income-tax v. Nedungadi Bank Ltd [(2003) 264 ITR 545] was also referred in the said decision. In the light of the above decision, 1st question has to be held against the assessee answering in favour of the Revenue. So far as 2nd question, the opinion of the Tribunal deserves to be confirmed in the light of the judgment in Lord Krishna Bank Ltd. referred above. So far as the 3rd question is concerned, it is also covered by the decision in Commissioner of Income-tax vs. Federal Bank Ltd [(2008)301 ITR 188], which was relied upon by the Tribunal in answering the issue in favour of the assessee.

I.T.A No.66 of 2011 3 In the light of the above observations, appeal of the Revenue is allowed in part, only so far as the 1st question is concerned. MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE.

sj 13/01