COMMISSIONER OF INCOME TAX vs M/S. SYNDICATE BANK

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7TH DAY OF SEPTEMBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

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

I.T.A. NO.585/2013

BETWEEN:

COMMISSIONER OF INCOME TAX

MANGALORE.

DEPUTY COMMISSIONER OF INCOME TAX

CIRCLE-1, UDUPI-576101. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.)

AND:

M/S. SYNDICATE BANK CENTRAL ACCOUNTS DEPARTMENT TAX CELL, HEAD OFFICE MANIPAL – 576 104. ... 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 19-06-2013 PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010, FOR THE ASSESSMENT YEAR 2006-07, PRAYING TO:

I. DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED THE BY THE HON’BLE COURT AS DEEMED FIT. II. SET ASIDE THE APPELLATE ORDER DATED 19-06-2013 PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010 BY THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BANGALORE.

THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr.E.I.Sanmathi, learned counsel for the revenue. Mr.T.Suryanarayana, learned counsel for the assessee.

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue which was admitted by a Bench of this Court on 02.06.2014 to consider the following substantial questions of law:

“Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in allowing assessee’s claim of write off of bad debts relating to urban branches amounting to

Rs.1,70,62,86,484/- without first setting off the bad debts against the credit balance in the Provision for Bad and Doubtful Debts A/c? 2. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing reduction from provision for Bad and Doubtful debts, only of bad debts relating to rural branches, by not properly interpreting proviso to Sec.36(1)(vii) of the IT Act which stipulates that “the amount of deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for Bad and Doubtful Debts A/c? 3. “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in not taking cognizance of the fact that the orders of the Tribunal on this issue has not been accepted by the Department in the earlier assessment years and appeal to High Court has been filed?

“Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that depreciation on valuation of investment portfolio is allowable by treating the investments held by the assessee bank as stock-in-trade once the RBI Master Circular read with CBDT Circular No.665 came into force”?. 5. “Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in accepting assessee’s claim that the assessee has traded in securities, shown as investments in the Balance Sheet and that the assessee has incurred loss of Rs.374,97,43,513/- on account of revaluing the investments as on 31-03-2006 at cost or market value whichever is less”? 6. “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in not considering the fact that during the year the assessee has made profit of Rs.71,85,54,022/- on sale of investments, which is credited to P & L A/c as against loss of Rs.374,97,43,513/- claimed?

“Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not considering the fact that the amount incurred for issue of bonds is in fact incurred for expansion of capital and has to be considered as a capital expenditure and not an admissible revenue expenditure”? 8. “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the accumulated credit card reward points is an ascertained liability and not a contingent liability”? 9. “Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that provisions of section 115JB of the Act are not applicable to the assessee which is a banking company in contrary to its own decision in previous years wherein it has directed the assessing officer to decide the issue afresh on the basis of the P & L account and Balance Sheet redrawn by the assessee in

accordance with the provisions of Companies Act 1956”? 10. “Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that provisions of section 115JB of the Act are not applicable to the assessee which is a banking company without taking into consideration that provisions of section 115JB r/w Explanation (3) to section 115JB of the Act and recorded a perverse finding”?

When the matter was taken up today, learned counsel for the parties jointly submitted that the substantial question of law Nos.1 to 3 have already been answered by a Bench of this Court in ‘THE COMMISSIONER OF INCOME TAX & ANR. Vs. M/s. VIJAYA BANK’ vide order dated 21.10.2014 in ITA No.1066/2008 against the revenue.

For the reasons assigned in the aforesaid order, the substantial questions of law Nos.1 to 3 are answered against the revenue and in favour of the assessee.

It is also pointed out that the substantial question of law Nos.4 to 6 are covered by a decision of this Court in ‘KARNATAKA BANK LTD. Vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)’ (2013) 34 TAXMANN.COM 150 (KAR). For the reasons assigned in the aforesaid order, the substantial question of law Nos.4 to 6 are answered against the revenue and in favour of the assessee.

It is also urged that the substantial question of law No.7 has already been answered by a Bench of this Court in ‘COMMISSIONER OF INCOME-TAX Vs. ITC HOTELS LTD.’ (2010) 190 TAXMAN 430 (KAR). For the reasons assigned in the aforesaid order, the substantial question of law No.7 is answered against the revenue and in favour of the assessee.

It is also urged that the substantial question of law No.8 is covered by a decision of the Supreme Court in ‘BHARAT EARTH MOVERS Vs. COMMISSIONER OF INCOME-TAX’ (2000) 112 TAXMAN 61 (SC). For the reasons assigned in the aforesaid order, the substantial question of law No.8 is answered against the revenue and in favour of the assessee.

It is also pointed out that the substantial question of law Nos.9 and 10 are covered by a decision of this Court in ‘THE COMMISSIONER OF INCOME TAX Vs. ING VYSYA BANK LIMITED’ in ITA No.18/2014 and connected matters decided on 16.01.2020. For the reasons assigned in the aforesaid order, the substantial question of law Nos.9 and 10 are

answered against the revenue and in favour of the assessee. In the result, the appeal is dismissed.

Sd/- JUDGE

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