COMMISSIONER OF INCOME TAX vs M/S. SYNDICATE BANK

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7TH DAY OF SEPTEMBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.587/2013

BETWEEN:

COMMISSIONER OF INCOME TAX

MANGALORE.

DEPUTY COMMISSIONER OF INCOME TAX

CIRCLE-1, UDUPI-576101. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.)

AND:

M/S. SYNDICATE BANK CENTRAL ACCOUNTS DEPARTMENT TAX CELL, HEAD OFFICE MANIPAL – 576 104. ... 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 19-06-2013 PASSED IN ITA NO.709/B/2010 AND 669/B/2010, FOR THE ASSESSMENT YEAR 2007-08, PRAYING TO:

I. DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT. II. SET ASIDE THE APPELLATE ORDER DATED 19-06-2013 PASSED IN ITA NO.669/B/2010 AND I.T.A NO.709/B/2010 BY THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, BANGALORE.

THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr.E.I.Sanmathi, learned counsel for the revenue. Mr.T.Suryanarayana, learned counsel for the assessee.

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue which was admitted by a Bench of this Court on 01.12.2014 to consider the following substantial questions of law: 1. “Whether on the facts and circumstances of the case, the Tribunal is right in law in allowing assessee’s claim on the issue of accrued interest on securities amounting to Rs.295,47,10,034/- on the

cash basis even though the assessee is following mercantile system of accounting in respect of interest from securities for the purpose of final accounts as per annual report under the Companies Act but had deviated and sought to reduce a sum of Rs.295,47,10,034/- as interest accrued but not fallen due for the purpose of taxation under the Act”? 2. “Whether on the facts and circumstances of the case, the Tribunal is right in law in allowing assessee’s claim of write off bad debts relating to urban branches amounting to Rs.351,72,91,439/- without first setting off the bad debts against the credit balance in the provision of Bad and Doubtful Debts and without considering the ingredients of section 36(1)(vii) of the Act”? 3. “Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that depreciation on valuation of investment portfolio is allowable by treating the investments held by the assessee bank as stock-in-trade

once the RBI Master Circular read with CBDT Circular No.665 came into force”? 4.

“Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that expenditure incurred by assessee towards issue of bonds is allowable under section 35D of the Act eventhough the nature of said expenditure is a capital expenditure and is not as revenue expenditure and moreover when deduction under section 35D is not available to Banks w.e.f.1/4/2009”? 5. “Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that provisions of section 115JB of the Act are not applicable to the assessee which is a banking company without taking into consideration that provisions of section 115JB Explanation (3) to section 115JB of the Act and as such recorded a perverse finding”?

When the matter was taken up today, learned counsel for the parties submitted that the substantial question of law No.1 has already been answered against

the revenue by a Bench of this Court in ‘THE COMMISSIONER OF INCOME TAX & ANR. Vs. THE KARNATAKA BANK LTD.’ decided on 12.09.2012 in ITA No.433/2006 and connected matters. For the reasons assigned in the aforesaid order, the substantial question of law No.1 is answered against the revenue and in favour of the assessee.

It is also urged that the substantial question of law No.2 has already been answered against the revenue by a Bench of this Court in ‘THE COMMISSIONER OF INCOME TAX & ANR. Vs. M/s. VIJAYA BANK’ decided on 21.10.2014 in ITA No.1066/2008. For the reasons assigned in the aforesaid order, the substantial question of law No.2 is answered against the revenue and in favour of the assessee.

It is also pointed out that the substantial question of law No.3 has already been answered against

the revenue by a Bench of this Court in ‘KARNATAKA BANK LTD. Vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)’ (2013) 34 TAXMANN.COM 150 (KAR). For the reasons assigned in the aforesaid order, the substantial question of law No.3 is answered against the revenue and in favour of the assessee.

It is also urged that the substantial question of law No.4 is covered by a decision of this Court in ‘COMMISSIONER OF INCOME-TAX Vs. ITC HOTELS LTD.’ (2010) 190 TAXMAN 430 (KAR). For the reasons assigned in the aforesaid order, the substantial question of law No.4 is answered against the revenue and in favour of the assessee.

It is also pointed out that the substantial question of law No.5 is covered by a decision of this Court in ‘THE COMMISSIONER OF INCOME TAX Vs.

ING VYSYA BANK LIMITED’ in ITA No.18/2014 and connected matters decided on 16.01.2020. In the result, the appeal is dismissed.

Sd/- JUDGE

COMMISSIONER OF INCOME TAX vs. M/S. SYNDICATE BANK