THE COMMISSIONER OF INCOME TAX, TVM vs. STATE BANK OF TRAVANCORE, TVM

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 13TH DAY OF JULY 2021 / 22ND ASHADHA, 1943 ITA NO. 118 OF 2009 AGAINST THE ORDER IN ITA 133/2000 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: STATE BANK OF TRAVANCORE, THIRUVANANTHAPURAM OTHER PRESENT: SR ADV JOSEPH MARKOS THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 13.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.118/2009 -2- J U D G M E N T S.V. Bhatti, J. Heard learned Standing Counsel Mr.Jose Joseph and learned Senior Advocate Mr.Joseph Markos for the parties. 2. Commissioner of Income Tax, Thiruvananthapuram/ Revenue is the appellant. State Bank of Travancore, Thiruvananthapuram/assessee is the respondent. The appeal is directed against the order of the Income Tax Appellate Tribunal, Cochin Bench in I.T.A 133/Coch/2000 dated 22.07.2003. The appeal deals with the issues arising from the tax returns filed by the assessee for the assessment year 1990-91. 2.1 The Assessing Officer through the assessment order in Annexure-A, disallowed the claim of the assessee under

I.T.A. No.118/2009 -3- Section 36(1)(viia). The assessee filed appeal before the Commissioner of Income Tax (Appeals) and the appeal was allowed in part. In the appeal filed by the assessee before Income Tax Appellate Tribunal, through Annexure-C order, the claim of the assessee under Section 36(1)(viia) was allowed by the Tribunal. Hence, the instant Income Tax Appeal, at the instance of the Revenue under Section 260A of the Income Tax Act (for short 'the Act'). The following substantial question of law is raised by the revenue: “1. Whether on the facts and in the circumstances of the case,"such debts or part thereof' used in the proviso to section 36(1)(vii) refer to "bad debts written off or part thereof" used in the main provisions of section 36(1)(vii) or whether the expression refer to debts or part thereof relating to rural debt and advances which is only a specialised and not general application of section 36(1) (viia)? ” 3. The question is regarding the eligible deduction under Section 36(1)(viia) of the Act. The counsel appearing for

I.T.A. No.118/2009 -4- parties state that the question concerning bad debts and provision for bad debts falling under Section 36(1)(vii) and 36(1) (viia) is covered in favour of the assessee in reported judgment of the Supreme Court in Catholic Syrian Bank v. Commissioner of Income Tax1 and had answered the point in favour of assessee and against the Revenue. We are referring to the decision by the Apex Court with a view to comprehensively advert to the outcome on all the substantial questions raised by the Revenue in the instant appeal. The operative portion in Catholic Syrian Bank Ltd judgment reads thus: “Firstly, the Full Bench ignored the significant expression appearing in both the proviso to Section 36(1) (vii) clause (v) of Section 36(2) i.e ., 'assessee to which clause (viia) sub-section(1) applies'. In other words, if the case of the assessee does not fall under Section 36(1)(viia) proviso/limitation would not come into play.” 1 (2012) 343 ITR 270 (SC)