THE COMMISSIONER OF INCOME TAX vs. M/S CANARA BANK

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ITA/29/2017HC KarnatakaKAHC01018656201730 November 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law were covered by previous judgments of the same court. These judgments were in favour of the assessee, addressing both the Section 14A disallowance and the depreciation on investments.

What were the facts?

The appeals by the revenue concerned the assessment year 2005-06. The revenue raised substantial questions of law regarding disallowance of expenditure for earning exempt income under Section 14A and disallowance of depreciation on certain investments.

What were the issues?

The key issues were whether expenditure incurred for earning exempt income was disallowable under Section 14A and whether depreciation on investments made for SLR requirements could be allowed as a deduction.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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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.29 OF 2017 c/w I.T.A. NO.26 OF 2017

IN I.T.A. NO.29 OF 2017

BETWEEN:

1.

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

2.

THE JOINT 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.601/BANG/2010, FOR THE ASSESSMENT YEAR 2005-2006.

IN I.T.A. NO.26 OF 2017

BETWEEN:

1.

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

2.

THE JOINT 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/2010, FOR THE ASSESSMENT YEAR 2005-2006.

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 2005-06.

2.

At the outset, when the matters were taken up, learned counsel for the revenue submitted that he

is confining his submissions only in respect of substantial question of law No.1 in ITA No.29/2017 and substantial question of law No.2 in ITA No.26/2017, which are reproduced below respectively:-

‘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 the 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.

Learned counsel for the assessee submitted that the first substantial question of law is covered by the decision of this Court in ITA No.97/2010 and connected matter dated 17.01.2020 and the second substantial question of law is covered by the judgment of this Court in ‘KARNATAKA BANK LTD. V.

ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)’, [2013] 34 TAXMANN.COM 150 (KARNATAKA). The aforesaid submission made by learned counsel for the assessee could not be disputed by learned counsel for the revenue.

4.

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

In the result, the appeals are dismissed.

Sd/- JUDGE

Sd/- JUDGE

dn/- CT-HR

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