THE COMMISSIONER vs. M/S CANARA BANK

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

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

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

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

At the outset, learned counsel for the revenue submitted that he is confining his submissions in respect of only four substantial questions of law, which are reproduced below:- ‘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

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?

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside that the

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that addition to book profits under Section 115 JB towards expenditure on exempt income is purely academic in nature as the Tribunal has held that no disallowance can be made under the provisions of Section 14A in respect of Exempt Income, the question of adding back the amount of disallowances to the book profits does not arise even though bank earned exempt income from tax and as such assessing authority rightly estimated 5% of exempt income as expenditure and disallowed the same under provisions of Section 14A of the Act?’

Learned counsel for the assessee submitted that the substantial questions of law No.1 and 4 are answered against the revenue by judgment dated 17.01.2020 passed by a Bench of this Court in ITA No.97/2010 and connected matter. It is further submitted that the substantial question of law No.2 is answered against the revenue by a Bench of this Court in ‘KARNATAKA BANK LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)’, [2013] 34 TAXMANN.COM 150 (KARNATAKA). It is further submitted that substantial question of law No.3 is covered by the judgment dated 16.01.2020 passed by a Bench of this Court in ITA No.18/2014 and connected matters. The aforesaid submission could not be disputed by learned counsel for the revenue.

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