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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.298 OF 2014 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX
C R BUILDING, QUEENS ROAD
BENGALURU 2. THE ASSISTANT COMMISSIONER OF INCOME TAX
CIRCLE-11(3), RASHTROTHANA BHAVAN
NRUPATHUNGA ROAD
BENGALURU. ...APPELLANTS (BY SRI. K V ARAVIND, ADVOCATE) AND: M/S ING VYSYA BANK LIMITED ING VYSYA HOUSE, NO.22, M G ROAD BENGALURU 560 001. …RESPONDENT (BY SRI. A SHANKAR, SR. COUNSEL FOR SRI. M. LAVA, ADVOCATE)
2 THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28.02.2014 PASSED IN ITA No.444/BANG/2012, FOR THE ASSESSMENT YEAR 2003-2004. PRAYING TO i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA No.444/BANG/2012 DATED 28.02.2014 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-11(3), BANGALORE. THIS ITA COMING ON FOR HEARING THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr. K.V.Aravind, learned counsel for the Revenue. Mr. A.Shankar, learned Senior Counsel along with Mr. S.Annamalai, learned counsel for the assessee. 2. This appeal under Section 260A of the Income Tax Act has been filed by the Revenue against the judgment dated 28.02.2014 passed by the Income Tax Appellate Tribunal. The appeal pertains to the
3 assessment year 2003-04. This appeal was admitted on the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the claim made by the assessee in respect of amortization of investment 'held to maturity' be allowed by relying on the decision in the case of Sir. M.Vishweswaraya Co-operative Bank Ltd without appreciating that the securities held under 'held to maturity' have the characteristics of a capital asset rather than as a stock in trade and therefore, they for part of investments? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing the claim of the assessee on the issue of amortization of investment 'held to maturity' without appreciating the fact that though the amortization is done as per the RBI guidelines, the same is not an allowable expenditure under section 37(1) and the
4 decision of Madras High Court in the case of TN Power Finance and Infrastructure Development Corporation Ltd V/s, JCIT (reporte din 280 ITR page 491) supports the Revenue's stand? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to allow the claim of deduction of Rs.3,13,51,004/- of the amortization of premium paid on investments clarified under 'HTM category by relying on the decision of the Co-ordinate Bench in the assessee's ownjd case for A.Y.2002-03 in ITA No.443/Bang/2012 dated 14.08.2012 overlooking the decision of High Court in ITA No.2568 of 2005 dated 06.06.2012 in the assessee's own case for A.Y 1993-94 wherein the High Court has held the issue in favour of Revenue?. 4. Whether on the facts and in the circumstances of the case, the Tribunal is
5 right in law in deleting the disallowance of claim under section 80M of Rs.6,45,560/- by holding that no notional expenditure on estimation basis can be disallowed without appreciating that a portion of administrative and overhead expenses will be attributable to dividend income also and the assessing authority was justified in estimating 5% of the dividend income as expenditure to such income eligible for deduction under section 80M? 5. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the payments of employees contribution to PF of Rs.6,45,560/- made by the assessee- company in August, 2003 is eligible deduction by relying on the decision of the Delhi High Court in the case of P.M.Electronics on the ground that the decision rendered by the Delhi High Court is binding without appreciating that the decisions of the Division Bench of the
6 Madras and Mumbai High Courts in cases of CIT vs. Synergy Financial Exchange Ltd. (reported in 2007 Vol.288 ITR page 366) and CIT vs. Pammi Tissues Ltd. (reported in 2009 Vol.313 ITR page 137) respectively are in favour of the Revenue? 3. When the matter was taken up today, learned counsel for the assessee submitted that the first three substantial questions of law have been answered against the Revenue in view of the decision rendered by this Court in CIT VS. KARNATAKA VIKAS GRAMEEN BANK (2016) 130 DTR 26 (KAR). It is further submitted that the fourth substantial question of law is covered by a decision of this Court in MAHARASHTRA APEX CORPORATION LTD. VS. CIT (2006) 286 ITR 585 (KAR). It is further submitted that the fifth substantial question of law is covered by a decision of this Court in ESSAE TERAOKA PVT. LTD. VS. DCIT (2014) 366 ITR 408 (KAR).
7 4. Learned counsel for the Revenue was unable to dispute the aforesaid submission. 5. For the reasons assigned in the aforesaid judgments rendered by this Court, the substantial questions of law involved in this appeal are answered against the Revenue and in favour of the assessee. In the result, we do not find any merit in the appeal and the same is hereby dismissed. SD/- JUDGE SD/- JUDGE RD