PR COMMISSIONER OF INCOME TAX-2 vs. CANARA BANK

PDF · subscribers
ITA/197/2024HC KarnatakaKAHC01032867202414 February 2025Bench: KRISHNA S DIXIT,G BASAVARAJA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Revenue's appeal, holding that it was devoid of merits. The Court noted that the ITAT had correctly followed the binding decision of a Coordinate Bench of the High Court in a similar case involving the same assessee. The Revenue's attempt to resist the appeal by mentioning that the said judgment was under challenge before the Apex Court was not accepted, particularly as no interim order had been granted by the Apex Court staying the High Court's judgment. Consequently, the appeal was rejected. However, the Court reserved liberty for the Revenue to seek revival of the appeal depending on the outcome of the challenge pending before the Apex Court, and all contentions of the parties were kept open. Costs were made easy.

What were the facts?

The Revenue is appealing against an order of the Income Tax Appellate Tribunal (ITAT) dated January 30, 2024. The ITAT had dismissed the Revenue's appeal (ITA No. 994/Bang/2023) for Assessment Year 2008-09. The ITAT's decision was based on a previous judgment by a Coordinate Bench of the High Court in ITA No. 346/2018 between Commissioner of Income Tax and M/s. Canara Bank, which was disposed of on February 10, 2023. The dispute involves the validity of a second order passed under Section 263 of the Income Tax Act, 1961, and the classification of trademark expenses as deductible or capital expenditure.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal's order was perverse in holding that a second order passed under Section 263 of the Act is null and void, despite the first Section 263 order being set aside, and ignoring that the two proceedings are distinct? 2. Whether the Tribunal was justified in relying on the Apex Court's decision in CIT v/s Finlay Mills Ltd (1951) when that decision applied to a period prior to the insertion of the definition of intangible assets under Section 32, effective from April 1, 1999? 3. Whether the Tribunal was justified in not appreciating that Section 32(1)(ii) clearly classifies a trademark as an intangible asset? 4. Whether the Tribunal was justified in confirming the appellate authority's order dated October 11, 2023, when the assessing authority had rightly disallowed the entire logo expenses as capital expenditure under Section 32(1)(ii) of the Act? Assessee's contention: The assessee argued that the Tribunal's order was correct as it merely followed the law declared by a Coordinate Bench of the High Court in M/s. Canara Bank supra. The assessee also contended that the Revenue's submission regarding the challenge to this judgment before the Apex Court was not a ground to reconsider the matter, especially in the absence of an interim order. Revenue's contention: The Revenue argued that the second Section 263 order was not void, that the Finlay Mills Ltd. judgment was misapplied, and that trademark expenses should be treated as capital expenditure under Section 32(1)(ii).

Which sections of the Income-tax Act were involved?

Section 263,Section 32(1)(ii),Section 32

AI-generated summary — verify with the full judgment below

- 1 -

NC: 2025:KHC:6665-DB ITA No. 197 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO.197 OF 2024 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX-2 BMTC BUILDING, KORAMANGALA, BENGALURU.

2.

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(1)(1), BANGALORE. …APPELLANTS (BY SRI. SANMATHI INDRAKUMAR AND SRI. DILIP.M, ADVOCATES)

AND:

CANARA BANK REP BY ITS DIRECTOR FM WING HEAD OFFICE, 112, J C ROAD, BANGALORE – 560 002. PAN NO. AAACC6106G …RESPONDENT (BY MS. MANASA ANANTHAN, ADVOCATE FOR SRI. TANMAYEE RAJKUMAR.,ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 30.1.2024 PASSED IN (IN ITA NO. 994/BANG/2023 FOR THE ASSESSMENT YEAR 2008-09 AND ETC.,

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT AND HON'BLE MR JUSTICE G BASAVARAJA

Digitally signed by LAKSHMINARAYAN N Location: High Court of Karnataka

- 2 -

NC: 2025:KHC:6665-DB ITA No. 197 of 2024

ORAL JUDGMENT

(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)

The Revenue is in appeal for laying a challenge to the ITAT order dated 30.01.2024 whereby its Appeal in ITA No.994/Bang/2023 has been negatived following a Coordinate Bench decision of this Court in ITA No.346/2018 between COMMISSIONER OF INCOME TAX vs. M/S. CANARA BANK disposed of on 10.02.2023.

2.

The Revenue has raised the following substantial questions of law for consideration: a. Whether on the facts and circumstances of the case and in law, the Tribunal's order can be said as perverse in holding that second order passed under Section 263 of the Act is null and void as the first 263 order has been set aside by Tribunal which is confirmed by this Hon'ble Court, ignoring that both proceedings are different and as such the second 263 cannot be said d null and void?

b. Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in following decision of Apex court in case of CIT V/s Finlay Mills Ltd (reported in 20 ITR page 475 (1951) which is applies to prior to the insertion of definition of

- 3 -

NC: 2025:KHC:6665-DB ITA No. 197 of 2024

intangible assets under Section 32 w.e.f 1/4/1999?

c. Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in not appreciating that Section 32(1)(ii) clearly classifies Trademark as an intangible asset?

d. Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in confirming the order passed by appellate authority dated 11/10/2023 when assessing authority rightly made disallowance entire logo expenses as same is capital expenditure as per Section 32 (1)9ii) of the Act?

3.

Learned counsel appearing for the Assessee resists the appeal contending that there is no error attributable to the order of the Tribunal, since it has simply followed the law declared by the Coordinate Bench in M/S. CANARA BANK supra. The reply of the panel counsel that this judgment is put in challenge before the Apex Court in Dairy No.44987/2023 and therefore, the matter requires consideration at the hands of this Court is difficult to countenance, especially when there is no interim order granted by the Apex Court staying the said judgment.

- 4 -

NC: 2025:KHC:6665-DB ITA No. 197 of 2024

In the above circumstances, this appeal being devoid of merits is liable to be and accordingly rejected reserving liberty to the Revenue to seek revival depending upon the outcome of the challenge now pending before the Apex Court. In that connection all contentions of the parties are kept open.

Costs made easy.

Sd/- (KRISHNA S DIXIT) JUDGE

Sd/- (G BASAVARAJA) JUDGE

DR List No.: 1 Sl No.: 12

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →