STATE BANK OF MYSORE vs. THE ADDITIONAL COMMISSIONER OF INCOME TAX

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ITA/389/2016HC KarnatakaKAHC01033895201629 June 2017Bench: K.S.MUDAGAL,H.G.RAMESH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court found that no substantial question of law arose for determination. The Tribunal's order was based on a lack of specific factual findings regarding the nature of the bad debt claims allowed in earlier years.

What were the facts?

The assessee bank had made additions in respect of recovery of bad debts. The CIT (Appeals) decided in favour of the assessee by following a previous Tribunal decision. The Tribunal, in turn, followed its earlier finding for Assessment Year 2005-06 without specific factual findings for the years under consideration.

What were the issues?

Whether the Tribunal correctly decided the issue of recovery of bad debts without specific factual findings on whether the claims were allowed under Section 36(1)(vii) or 36(1)(viia) in earlier years.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 41(4),Section 36(1)(vii),Section 36(1)(viia)

AI-generated summary — verify with the full judgment below

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ITA Nos.389/2016 & 669-670/2016

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS 29TH DAY OF JUNE 2017

PRESENT

THE HON’BLE MR. JUSTICE H.G.RAMESH

AND

THE HON’BLE MRS. JUSTICE K.S.MUDAGAL

INCOME TAX APPEAL NOS.389/2016 & 669-670/2016

BETWEEN :

STATE BANK OF MYSORE HEAD OFFICE, K.G.ROAD BANGALORE-560 009

...APPELLANT

(BY SRI P.DINESHA FOR SRI K.R.VASUDEVAN, ADVOCATES)

AND :

THE ADDITIONAL COMMISSIONER OF INCOME TAX, LTU, JSS TOWER 100 FEET RING ROAD BANASHANKARI, III STAGE BANGALORE-560 085

...RESPONDENT

(BY SRI K.V.ARAVIND, STANDING COUNSEL)

THESE INCOME TAX APPEALS ARE FILED UNDER SECTION 260-A OF I.T.ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AND TO ALLOW THE APPEALS BY SETTING ASIDE THE COMMON ORDER OF THE ITAT PASSED IN MP NO.63/BANG/2015 (ITA NO.916/BANG/2011 FOR AY 2002-03), MP NO.82 AND 83/BANG/2015 (ITA NO.1242 AND 1243/BANG/2011 FOR AY 2003-04 AND AY 2004-05).

THESE INCOME TAX APPEALS COMING ON FOR ADMISSION, THIS DAY, H.G.RAMESH J., DELIVERED THE FOLLOWING:

ITA Nos.389/2016 & 669-670/2016

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JUDGMENT

H.G.RAMESH, J. (Oral):

1.

Sri K.V.Aravind, learned standing counsel takes notice for the respondent. Heard the learned counsel appearing for the parties. In support of the appeals, learned counsel for the appellant relies on a decision of the Hon’ble Supreme Court in CIT v. Saurashtra Kutch Stock Exchange Ltd. [(2008) 14 SCC 171].

2.

The reasoning of the Tribunal in passing the impugned order dated March 5, 2016 is as follows: “4. We have considered the rival submissions as well as the relevant material on record. It is not disputed that for the assessment years under consideration, the CIT (Appeals) has decided the dispute of addition made by the Assessing Officer in respect of the recovery of the bad debts by discussing the provisions of section 41(1) and 41(4) in detail. However, the CIT (Appeals) has decided the issue in favour of the assessee by following the decision of this Tribunal for the Assessment Year 2005-06. When the appeals of the revenue were disposed off by the impugned orders, the Tribunal has simply followed the finding for the Assessment Year 2005-06 and therefore the applicability of section 41(1) in respect of the assessment years under consideration has not been considered and decided. We find that the applicability of section 41(4) or 41(1) depends upon the fact whether the recovery of the amount in respect of bad debts pertains to the claim made by the assessee and allowed in the earlier year under Section 36(1)(vii) or 36(1)(viia). For the Assessment Year 2005-06, the Tribunal has decided this issue by considering the fact that when the assessee has made a claim under Section 36(1)(vii), then the provisions of section 41(4) are not applicable which

ITA Nos.389/2016 & 669-670/2016

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pertains to section 36(1)(viia). Since there is no finding on this fact whether any part of the amount recovered by the assessee pertains to the claim allowed in the earlier year(s) under section 36(1)(vii) and therefore the same has to be considered for disallowance under Section 41(1). Therefore, as far as the finding of the Tribunal for the Assessment Year 2005-06, we do concur on principle about the applicability of the provisions of Section 41(4). However, since there is no specific finding of fact in the impugned orders regarding the claim of the assessee was earlier allowed under which of the provisions i.e. 36(1)(vii) or 36(1)(viia) of the Act and any of the amount which was allowed in the earlier year (supra)) under these provisions were recovery during these assessment years. Accordingly, we modify the impugned orders and direct the Assessing Officer to verify the facts as discussed above and then decide the issue after giving an opportunity of hearing to the assessee.”

We have examined the matter in the light of the above decision. 3. In our opinion, no substantial question of law arises for determination in these appeals. The appeals are accordingly dismissed.

Appeals dismissed. Sd/-

JUDGE

Sd/-

JUDGE HR

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