THE COMMISSIONER OF vs. M/S CORPORATION BANK

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ITA/52/2015HC KarnatakaKAHC01018181201531 January 2020Bench: ALOK ARADHE,RAVI V HOSMANI4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered the second and third substantial questions of law in favor of the assessee, as they were covered by previous judgments. The first question was answered in favor of the assessee because the Assessing Officer did not provide a basis for the expenditure related to exempt income when invoking Section 14A.

What were the facts?

The Revenue appealed against an ITAT order concerning the deletion of additions related to expenditure on exempt income, excess bad debt claims, and depreciation on investment portfolios. The High Court considered three substantial questions of law.

What were the issues?

Whether expenditure related to exempt income was correctly disallowed under Section 14A, whether excess bad debts were allowable, and whether depreciation on investment portfolios as stock-in-trade was permissible.

Which sections of the Income-tax Act were involved?

Section 14A,Section 36(1)(vii),Section 36(1)(viia)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 31ST DAY OF JANUARY 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND

THE HON’BLE MR. JUSTICE RAVI V. HOSMANI

ITA NO. 52 OF 2015

BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX, ATVARA, MANGALORE

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2 (1), MANGALORE ...APPELLANTS (BY SRI.E I SANMATHI, ADVOCATE)

AND: M/S CORPORATION BANK HEAD OFFICE, P.B.NO.88, MANGALADEVI TEMPLE ROAD, PANDESHWAR, MANGALORE-575 001 PAN:AAACC7245E …RESPONDENT (BY SRI.BALRAM R RAO, ADVOCATE)

2 THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961 PRAYING TO 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 AND SET ASIDE THE APPELLATE ORDER DATED 19.09.2014 PASSED BY THE ITAT, ‘B’ BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN ITA NO.1310 AND 1393/BANG/2012 FOR A.Y.2010-11.

THIS APPEAL COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal has been filed by the Revenue which has been admitted by a Bench of this Court vide order dated 31.03.2015 on the following substantial question of law. 1. “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition representing expenditure relating to earning of exempt income ignoring the provisions of section 14A(1) of the Act r.w.Rule 8D?” 2. “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition representing excess claim of bad debts

3 written off under Section 36(1)(vii) of the Act, exceeding the credit balance of the provision made under section 36 (1)(viia) of the Act when the provisions of this section did not permit such an action?” 3. “Whether on the facts and in the circumstances of the case, the Tribunal was correct 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?”

2.

When the matter was taken up today, learned counsel for the parties jointly submitted that the substantial question of law No.2 is covered by the judgment dated 24.01.2020 passed in ITA No.256/2011 by a Division Bench of this Court. Accordingly, the aforesaid substantial question of law is answered in favour of the assessee.

3.

Similarly, 3rd substantial question of law is answered by a Bench of this Court in judgment dated 16.01.2020 in ITA No.18/2014.

4 4. Insofar as the substantial question of law No.1 is concerned, from perusal of the order passed by the Assessing Officer, we find that the Assessing Authority while invoking the provisions of Rule 14(A) (1) read with Rule 8(D) of the Income Tax Act has not disclosed any basis for expenditure in relation to exempt income while invoking the aforesaid provision. Therefore, the aforesaid substantial question of law is answered in negative and in favour of the assessee.

Accordingly, the appeal is disposed of.

Sd/-

JUDGE

Sd/-

JUDGE

BVK

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