THE COMMISSIONER vs. M/S CANARA BANK

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ITA/28/2017HC KarnatakaKAHC01037609201730 November 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law were already answered against the revenue in previous judgments by the same court. Therefore, the appeals filed by the revenue lacked merit.

What were the facts?

The Revenue appealed against the ITAT's order concerning assessment year 2006-07. The appeals raised substantial questions of law regarding disallowance of expenditure under Section 14A, depreciation on investments, applicability of Section 115JB, and additions to book profits.

What were the issues?

The key issues involved the correctness of the Tribunal's decision on disallowing expenditure for exempt income, depreciation on certain investments, and the applicability of minimum alternate tax provisions to banking companies.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 45(2),Section 260-A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 30TH DAY OF NOVEMBER, 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.27 OF 2017 c/w I.T.A. NO.28 OF 2017

IN I.T.A. NO.27 OF 2017

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX, LTU, JSS TOWERS, BSK III STAGE, BENGALURU-560085.

2.

THE ADDL. COMMISSIONER OF INCOME-TAX, LTU, JSS TOWERS, BSK III STAGE, BENGALURU-560085. …APPELLANTS

(BY SRI K.V.ARAVIND, ADV.)

AND:

M/S. CANARA BANK, BSCA SECTION, FM & S WING, HO, NO.112, JC ROAD,

BENGALURU-560002. …RESPONDENT

(BY SRI T.SURYANARAYANA, ADV.)

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED:30/03/2016 PASSED IN ITA NO.530/BANG/2009, FOR THE ASSESSMENT YEAR 2006-2007.

IN I.T.A. NO.28 OF 2017

BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX, LTU, JSS TOWERS, BSK III STAGE, BENGALURU-560085.

2.

THE ADDL. COMMISSIONER OF INCOME-TAX, LTU, JSS TOWERS, BSK III STAGE, BENGALURU-560085. …APPELLANTS

(BY SRI K.V.ARAVIND, ADV.)

AND:

M/S. CANARA BANK, BSCA SECTION, FM & S WING, HO, NO.112, JC ROAD, BENGALURU-560002. …RESPONDENT

(BY SRI T.SURYANARAYANA, ADV.)

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER

DATED:30/03/2016 PASSED IN ITA NO.479/BANG/2009, FOR THE ASSESSMENT YEAR 2006-2007.

THESE APPEALS COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: - - -

JUDGMENT

These appeals under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) have been preferred by the revenue. The subject matter of these appeals pertain to the Assessment Year 2006-07.

2.

At the outset, learned counsel for the revenue submitted that he is confining his submissions in respect of only four substantial questions of law, which are reproduced below:- ‘1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowance of expenditure of earning exempt income under Section 14A of the Act by erroneously holding that no

disallowance is called for under Section 14A of the Act by following earlier order which has not reached finality even when all the ingredients of Section 14A are satisfied in the case of assessee?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the disallowances of deprecation on HTM category of investments by erroneously holding that value of investments made pursuant to SLR requirements of RBI can be allowed as a deduction while computing business income of a banking company even though conversion of securities from investments to Stock in Trade attracts provision of Section 45(2) and also that the Bank had no working regarding deprecated value of assets and capital gains on sale of such assets?

3.

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 accounts 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?

4.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that addition to book profits under Section 115 JB towards expenditure on exempt income is purely academic in nature as the Tribunal has held that no disallowance can be made under the provisions of Section 14A in respect of Exempt Income, the question of adding back the amount of disallowances to the book profits does not arise even though bank earned exempt income from tax and as such assessing authority rightly estimated 5% of exempt income as expenditure and disallowed the same under provisions of Section 14A of the Act?’

3.

Learned counsel for the assessee submitted that the substantial questions of law No.1 and 4 are answered against the revenue by judgment dated 17.01.2020 passed by a Bench of this Court in ITA No.97/2010 and connected matter. It is further submitted that the substantial question of law No.2 is answered against the revenue by a Bench of this Court in ‘KARNATAKA BANK LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)’, [2013] 34 TAXMANN.COM 150 (KARNATAKA). It is further submitted that substantial question of law No.3 is covered by the judgment dated 16.01.2020 passed by a Bench of this Court in ITA No.18/2014 and connected matters. The aforesaid submission could not be disputed by learned counsel for the revenue.

4.

For the reasons assigned in the aforesaid judgments, we answer the substantial questions of law framed in these appeals against the revenue and in favour of the assessee.

In the result, we do not find merit in these appeals. The same fails and are hereby dismissed.

Sd/- JUDGE

Sd/- JUDGE

dn/- CT-HR

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