COMMISSIONER OF INCOME TAX vs. M/S. SYNDICATE BANK

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ITA/584/2013HC KarnatakaKAHC01047669201331 January 2020Bench: ALOK ARADHE,RAVI V HOSMANI4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first substantial question of law was covered by a previous judgment, and the second substantial question of law was also covered by another judgment in favor of the assessee. Therefore, the appeal was disposed of.

What were the facts?

The revenue appealed against an ITAT order allowing the assessee bank's claim for reversal of interest on NPA accounts and pre-acquisition of securities. The High Court admitted the appeal on substantial questions of law.

What were the issues?

Whether the Tribunal was justified in allowing reversal of interest on NPA accounts and pre-acquisition of securities when the assessee followed the mercantile system of accounting and RBI guidelines.

Which sections of the Income-tax Act were involved?

Section 36(1)(vii),Section 36(2),Section 43D

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 31ST DAY OF JANUARY 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND

THE HON’BLE MR. JUSTICE RAVI V. HOSMANI

ITA NO. 584 OF 2013

BETWEEN:

1.

COMMISSIONER OF INCOME TAX MANGALORE-575001

2.

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1 UDUPI-576001 ...APPELLANTS (BY SRI.JEEVAN.J.NEERALGI, ADVOCATE)

AND: M/S. SYNDICATE BANK H.O. MANIPAL-576104 …RESPONDENT (BY SRI.T SURYANARAYANA, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET

2 ASIDE THE APPELLATE ORDER DATED 07.06.2013 PASSED IN ITA NO.378/B/2010 BY THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, BANGALORE FOR ASSESSMENT YEAR 1999-2000.

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

JUDGMENT

Sri. Jeevan J. Neeralgi, learned counsel for the appellants. Sri. T. Suryanarayana, learned counsel for the respondent.

This appeal under Section 260 A of the Income Tax Act, 1961 has been filed by the revenue which was admitted by a Bench of this Court by an order dated 09.09.2014 on following substantial questions of law. “1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in allowing assessee’s claim for reversal of interest of Rs.5,42,12,404/- credited to its income even when the assessee has only reversed the earlier years’ income by treating the account as Non Performing Asset and such reversal of interest does not fall

3 within the purview of sec.36(1)(vii) r.w.s. 36(2) of the Act 1961 and that as per guidelines of Reserve Bank of India which is binding on the assessee u/s.43D, once the debt becomes NPA, only the interest credited in the current year can be reversed and interest already credited in the previous year cannot be reversed?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is correct in allowing on pre-acquisition of securities treated as capital (broken period interest) amounting to Rs.17,63,00,000/- which has not fallen due when the assessee bank is following mercantile system of accounting and as per RBI guidelines from A.Y.1992-93, the banks are required to hold 70% of the securities as permanent assets and shall remain with the bank till the date of maturity?”

2.

When the matter was taken up today, the learned counsel jointly submitted that the substantial question of law No. (1) is covered by the judgment dated 24.01.2020 passed in ITA No.258/2011.

4 3. Accordingly, the aforesaid substantial question of law are answered in terms of the aforesaid judgment.

4.

Learned counsel for the parties jointly submitted that the second substantial question of law framed by this Court is covered by the judgment dated 12.09.2012 passed in ITA No.433/2006 in favour of the assessee.

Accordingly, the aforesaid substantial questions of law are answered. In the result, the appeal is disposed of.

Sd/-

JUDGE

Sd/-

JUDGE

BVK

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