THE COMMISSIONER OF vs. M/S CANARA BANK

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ITA/361/2018HC KarnatakaKAHC01050986201808 November 2021Bench: S.SUJATHA,S RACHAIAH5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that Section 115JB of the Income Tax Act does not apply to banking companies, following its own previous rulings. The issue of depreciation on leased assets was also decided in favor of the assessee based on prior judgments.

What were the facts?

The Revenue appealed against an ITAT order concerning the assessment year 2012-13. The appeal raised substantial questions of law regarding the applicability of Section 115JB to banking companies and the disallowance of depreciation on leased assets.

What were the issues?

The primary issues were whether Section 115JB applies to banking companies and whether depreciation on leased assets should be disallowed.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 8TH DAY OF NOVEMBER, 2021

PRESENT

THE HON’BLE MRS. JUSTICE S. SUJATHA AND

THE HON’BLE MR. JUSTICE S. RACHAIAH

INCOME TAX APPEAL NO.361 OF 2018

BETWEEN

1.

THE COMMISSIONER

OF INCOME-TAX

LTU

7TH FLOOR, BMTC BUILDING

80 FEET ROAD,

KORAMANAGALA

BENGALURU-560 095.

2.

THE JOINT COMMISSIONER

OF INCOME TAX

LTU

7TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANAGALA

BENGALURU-560 095.

...APPELLANTS

(BY SHRI K.V. ARAVIND, ADVOCATE (PHYSICAL HEARING))

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AND

M/S. CANARA BANK BALANCE SHEET AND CENTRAL ACCOUNTS SECTION, FM & S WING, HEAD OFFICE 112, JC ROAD BENGALURU – 560 002. PAN:AAACG106G.

...RESPONDENT

(BY SHRI T. SURYANARAYANA, ADVOCATE (PHYSICAL HEARING))

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 17.11.2017 PASSED IN ITA NO.843/Bang/2017, FOR THE ASSESSMENT YEAR 2012- 2013.

THIS INCOME TAX APPEAL COMING ON FOR HEARING, THIS DAY, S.SUJATHA J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal is filed by the revenue/appellants under Section 260A of the Income Tax Act, 1961 [‘Act’ for short] assailing the order of the Income Tax Appellate Tribunal “C” Bench, Bangalore [‘Tribunal’ for short] dated 17.11.2017 passed in ITA No.843/Bang/2017 relating to the Assessment Year 2012-13.

- 3 -

2.

The appeal was admitted by this Court to consider the following substantial question of law.

“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside that the provisions of Section 115JB are not applicable to banking companies as no account are drawn up as per the requirement of Schedule VI of the Companies Act, 1956 by following its earlier orders which has not reached finality?”

3.

The other substantial questions of law i.e. 1 and 3 raised by the revenue are as under: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside in disallowing depreciation on assets by following earlier orders which has not reached finality even when the assessee is not entitled for depreciation on assets leased to others under the provisions of the Act? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting side relying upon

- 4 -

Circular No.18 of 2015 dated 2.11.2015, the fact that investments are shown as Stock in Trade in books of account, loss/depreciation on account of fall in value of securities held by assessee bank should be allowed as deduction and therefore the income arising therefrom should also be treated as business income ignoring Sec 45(2) which requires investments are to be treated as Stock in Trade?”

4.

As regards substantial question of law No.1 raised by the revenue, the issue is no more res integra in view of the ruling of this Court in the assessee’s own case in ITA No.332/2016 (DD 02.11.2020) wherein the order of disallowing depreciation of asset had been answered in favour of the assessee.

5.

As regards substantial question of law No.3 raised by the revenue, learned counsel for the revenue submits that the same is not pressed. Said submission is placed on record.

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6.

Regarding the substantial question of law which has been admitted by this Court as aforesaid, the Co-ordinate Bench of this Court in ITA No.18/2014 and connected matters, (DD 16.01.2020) in the case of The Commissioner of Income Tax & another v/s M/s.ING Vysaya Bank Limited has categorically held that the provisions of Section 115JB(2) of the Income Tax Act, 1961 do not apply to the Banking Companies. We have no reason to differ from the same. Accordingly, we answer the said substantial question of law in favour of the assessee and against the revenue in terms of the order dated 16.01.2020 in ITA No.18/2014 and connected matters. In the result, appeal stands dismissed.

Sd/- JUDGE

Sd/-

JUDGE UN

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