KARNATAKA BANK LTD,MANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, MANGALORE

ITA 877/BANG/2023Status: DisposedITAT Bangalore19 February 2024AY 2017-1838 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no disallowance under Section 14A can be made in the case of banks, following the jurisdictional High Court's decision which was based on Supreme Court pronouncements. The disallowance sustained by the CIT(Appeals) was therefore directed to be deleted.

What were the facts?

The assessee, a private sector bank, filed appeals against the CIT(Appeals)'s order which partly allowed its appeal against the Assessing Officer's disallowances. The primary issue concerns the disallowance made under Section 14A of the Income Tax Act.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D is applicable to banks, especially when investments are considered stock-in-trade or when no expenditure is demonstrably incurred.

Which sections of the Income-tax Act were involved?

Section 14A

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Cases cited in this judgment(4)Show list

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Cause title — parties, addresses and appearances
ITA Nos.876 & 877/Bang/2023 & 963 & 964/Bang/2023

Per Bench These appeals are filed by the assessee & revenue against the separate orders 27.09.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the assessment years 2016-17 & 2017-18. 2. The assessee is a private sector bank carrying on the business of banking. The assessee filed return of income on 14.10.2016 for AY 2016-17 of Rs.280.37 crores and on 31.10.2017 for Rs.721.28 crores under the normal provisions of the Act. The AO made several disallowances/additions under regular provisions as well as u/s. 115JB of the Act and completed the assessments u/s. 143(3) of the Act. The CIT(Appeals), NFAC partly allowed the appeals of the assessee. Hence the assessee and revenue are in appeal for both the years. Certain common grounds are raised in all the appeals.

3.

We are taking first the assessee's appeals

4.

Ground No.1 is general in both the appeals.

5.

Common ground No.2 in both the appeals is regarding disallowance u/s. 14A of the Act. The assessee bank in AY 2016-17 had earned a tax free income of Rs. 1,83,91,995/-. It had a total investment portfolio of Rs. 16,256.65 Crores. The Tax exempt investme

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