THE COMMISSIONER OF INCOME TAX, COCHIN vs. LORD KRISHNA BANK LTD., NEW INDIAN EXPRE

PDF · subscribers
ITA/718/2009HC KeralaKLHC01025479200910 October 2017Bench: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU,HONOURABLE MR.JUSTICE ANTONY DOMINIC4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the issue of the applicability of Section 14A of the Income Tax Act had to be answered in favour of the Revenue, citing the judgment in Commissioner of Income Tax v. Dhanalakshmy Bank Ltd. [2012] 344 ITR 259 (Ker). Consequently, the question of law was answered in favour of the Revenue, and the order of the Tribunal was set aside. However, the Court noted that the quantum of the amount allowable for disallowance under Section 14A still needed to be determined. This quantification was remitted to the Assessing Officer, who was directed to determine the disallowable amount after providing notice to the assessee and proceeding expeditiously. The issue of the scope of Section 14A and its interpretation by the Tribunal was implicitly decided in favour of the Revenue by setting aside the Tribunal's order.

What were the facts?

The Revenue is appealing an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2000-2001. The ITAT had followed its previous decision concerning the assessment year 1998-1999 and held that Section 14A of the Income Tax Act was inapplicable for the assessment year in question. Consequently, the ITAT dismissed the Revenue's appeal. The present appeal challenges this order of the ITAT. The assessee is Lord Krishna Bank Ltd., and the appellant is the Commissioner of Income Tax, Cochin.

What were the issues?

The questions of law before the High Court were: 1. Whether, on the facts and in the circumstances of the case and in the light of Section 14A of the I.T.Act, the Tribunal is right in law in interfering with the disallowance of the amount under Section 14A towards the element of expenditure attributable to investments in tax-free bonds? 2. Whether, on the facts and in the circumstances of the case, did the Tribunal consider the applicability of Section 14A to the facts of the case? 3. Whether, on the facts and in the circumstances of the case: i. did the Tribunal interpret the scope of Sec.14A? ii. is not the order of the Tribunal against the intendment of Section 14A of the I.T.Act? iii. in the light of Sec.14A of the I.T.Act, is not the order of the Assessing Officer in accordance with law and is the Tribunal justified in interfering with the same? The Revenue argued that the Tribunal erred in holding Section 14A inapplicable. The assessee's contentions were not explicitly recorded in the judgment, but the High Court heard their counsel.

Which sections of the Income-tax Act were involved?

Section 14A

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 DAMA SESHADRI NAIDU TUESDAY, THE 10TH DAY OF OCTOBER 2017/18TH ASWINA, 1939 ITA.No. 718 of 2009 ------------------- AGAINST THE ORDER IN ITA 357/2006 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 03-10-2007 APPELLANT/APPELLANT: -------------------- THE COMMISSIONER OF INCOME TAX, COCHIN.

BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: ---------------------- LORD KRISHNA BANK LTD., NEW INDIAN EXPRESS BUILDING, KALOOR, COCHIN-682 017

R,R BY ADV. SRI.V.ABRAHAM MARKOS R,R BY ADV. SRI.B.J.JOHN PRAKASH R,R BY ADV. SRI.TERRY V.JAMES THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ANTONY DOMINIC, J. & DAMA SESHADRI NAIDU, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.No.718 of 2009 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 10th day of October, 2017 JUDGMENT Antony Dominic, J. The Revenue is in appeal against the order of the Tribunal in ITA 357/06 concerning the assessment year 2000-2001. By the said order, following its previous order in the case of the assessee concerning the assessment year 1998-1999, the Tribunal has held that for the assessment year in question, Section 14A is inapplicable and on that basis, dismissed the appeal of the Revenue. It is this order, which is challenged by the Revenue in this appeal and the questions of law framed for the consideration of this court read as under: 1. Whether, on the facts and in the circumstances of the case and in the light of Section 14A of the I.T.Act the Tribunal is right in law in interfering with the disallowance of the amount under Section 14A towards the element of expenditure attributable to investments in tax free bonds? 2. Whether, on the facts and in the circumstances of the case did the Tribunal consider consider the applicability of Section 14A to the facts of the case?

I.T.A.No.718 of 2009 : 2 : 3. Whether, on the facts and in the circumstances of the case- i. did the Tribunal interpret the scope of Sec.14A? ii. is not the order of the Tribunal against the intendment of Section 14A of the I.T.Act? iii. in the light of Sec.14A of the I.T.Act is not the order of the Assessing Officer in accordance with law and the Tribunal is justified in interfering with the same?

2.

We heard the counsel for the Revenue and the learned Senior Counsel appearing for the assessee. 3. Since the only question that arises for consideration is regrading the applicability of Section 14A of the Income Tax Act, we find that this issue has to be answered in favour of the Revenue in the light of the judgment of this court in Commissioner of Income Tax v. Dhanalakshmy Bank Ltd. [2012] 344 ITR 259 (Ker). In that view of the matter, the question of law has to be answered in favour of the Revenue and the order of the Tribunal has to be set aside.

I.T.A.No.718 of 2009 : 3 : 4. However, question still remains as to the quantum of the amount allowable for disallowance under Section 14A. This involves quantification and is to be done by the Assessing Officer himself. Therefore, we set aside the order of the Tribunal and remit the matter to the Assessing Officer, who will determine the quantum to be disallowed with notice to the assessee and as expeditiously as possible. Appeal is disposed of. sd/- ANTONY DOMINIC

JUDGE sd/- DAMA SESHADRI NAIDU

JUDGE jes

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →