THE COMMISSIONER OF INCOME-TAX vs. THE VYSYA BANK LTD.,

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF MARCH 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE ASHOK S. KINAGI I.T.A. NO.5 OF 2015 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX

C.R. BUILDING, QUEENS ROAD

BANGALORE. 2. THE ASST. COMMISSIONER OF INCOME-TAX

CIRCLE-11(4), RASHTROTHANA BHAVAN

NRUPATHUNGA ROAD

BANGALORE-560001. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: THE VYSYA BANK LTD., (NOW ING VYSYA BANK LTD.,) ING VYSYA HOUSE NO.25, M.G. ROAD BANGALORE-560001 PAN:AABCT0529M. ... RESPONDENT (BY SRI. A. SHANKAR, SR. COUNSEL FOR SRI. M. LAVA, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28.08.2014 PASSED IN ITA NO.733/BANG/2011 FOR THE ASSESSMENT YEAR 2001-02, PRAYING TO:

2 (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO.733/BANG/2011 DATED 28.08.2014 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(4), BANGALORE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2001-02. The appeal was admitted by a bench of this Court vide order dated 03.08.2015 on the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the assessee is eligible for claim of Rs.23,05,49,466/- as revenue expenditure without appreciating that the assessee has spent the same on networking of 125 branches with a

3 centralized processing solution and the activity has a long term benefit, warranting capitalization of the expenditure spent for the same? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing deduction of Rs.1,00,000/- under Section 36(1)(vii) even though the assessee did not receive any income during the year and is not eligible for the deduction? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the amortization of cost over face value of investment "held to maturity" of Rs.3,19,37,457/- without appreciating that such securities have characteristic of capital asset rather than stock in trade and the investment done as per RBI Guidelines is not an allowable revenue expenditure in terms of Section 37(1) of the Act?

4 (iv) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provisions of Section 115JB are not applicable to the assessee, it being a banking company, even though there is no such provision/exclusion under the IT Act?" For the reasons assigned by us in the judgment passed today in I.T.A.No.4/2015, this appeal is disposed also of in same terms and with similar directions. Sd/- JUDGE Sd/- JUDGE ss