Ita/340/2015 Of The Commissioner Of Income Tax v. M/S. Canara Bank

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 1/ DAY OF NOVEMBER 2070.PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASADLT.A. NCO.340 OF 2O15 BETWEEN: 1.|THE COMMISSIONER OF INCOME-TA® LTU, JSS TOWERS, BSK III STAGE BANGALORE-560085. 2.|THE ADDITIONAL COMMISSIONER OF INCOME-TAX LTU, JSS TOWERS, BSK III STAGE. BANGALORE-560085. .., APPELLANTS~ (BY SRI. K.V. ARAVIND, ADV.,) AND* M/S. CANARA BANKBALANCE SHEET ANDCENTRAL ACCOUNTS SECTIONHEAD OFFICE, 112, J.C. ROAD|BANGALORE-560002.PAN: AAACC 6106G. (BY SRI. T. SURYANARAYANA, ADV.) .., RESPONDENT THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,|1961L ARISING OUT OF ORDER DATED 30.12.2014 PASSED IN ITANO.516/BANG/2014 FOR THE ASSESSMENT YEAR 2009-10,PRAYING TQ: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE. (11) ALLOW THE APPEAL AND SET ASIDE THE ORDERS.PASSED BY THE ITAT, BANGALORE IN ITA NO.516/BANG/2014DATED 30-12-2014 AND CONFIRMING THE ORDER PASSED BY.THE COMMISSIONER OF INCOME TAX (LTU) ORDER U/S 263 OF.THE ACT.| THIS|ITACOMING|ONFOR.HEARING,|THISDAY, |ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)has been preferred by the revenue. The subject matter|of the appeal pertains to the Assessment year 2009-10. The appeal was admitted by a bench of this Court videorder dated 22.01.2016 on the following substantialquestion of law: Whether the Tribunel is correct In'setting aside the order U/s. 263 without.appreciatingtnat,OUTofprovisionofRs.407,35,36,368/- made for depreciationon Investment and the assessee had addedback only Rs.2,32,66,62,40/7/- relating toInvestmentsIn|India|and|excluded|Rs.1,74,68,/73,96/7/- relating to investment outside India when the CIT directed the AOto add back Rs.1/4,68,73,96/7/- on thisaccount. 2.|Facts leading to filing of this appeal brieflystated are that the assessee is a banking company. The)assessee filed its return of income for the Assessment.Year 2009-10 on 30.09.2009 in which total income of.Rs.1691,78,60,322/- was declared. The return was.processedunder|Section|143(1)oftheAct ON)25.06.2010 and subsequently, the case of the assesseewas selected for scrutiny and notices under Section143(2) and 142(1) of the Act were issued to the.assessee on 13.09.2010. The Assessing Officer by an)order dated 11.11.2011 inter alla made certain additions./ disallowances. The Commissioner of Income Tax.invoked the powers under Section 263 of the Act interalia on the ground that the order passed by theAssessing Officer is perverse and is prejudicial to the)interest of revenue inasmuch as out of provision of Rs.407,35,36,368/-made.for.depreciationoninvestment by the assessee, the Assessing Officer hasadded only Rs.2,32,66,62,407/- relating to investments.in India and excluded a sum of Rs.1,/4,68,73,96/7/-pertaining to investments outside India. It was further|held that audit report in Form 3D sated that expenditureof capital nature were charged to profit and lossaccount. However, the Assessing Officer did not take)into account the aforesaid aspect of the matter. TheCommissioner of Income Tax directed the Assessing|Officer to add a sum of Rs.1,/74,68,/73,967/- 3The assessee thereupon approached theIncome Tax Appellate Tribunal (hereinafter referred to.as the tribunal for short). The tribunal by an orderdated 30.12.2014 by placing reliance on decisionrendered by the tribunal in Income Tax AppealsNo.567/Bang/99 and 591/Bang/2000 passed in relation.tO.AssessmentYear|1996-97heldthat|theCommissioner of Income Tax erred in holding that the order passed by the Assessing Officer was erroneous|and was prejudicial to the interest of the revenue andsince, the tribunal has already decided this issue infavour of the assessee, the same is binding on both the)parties. In the aforesaid factual background, the|revenue has filed this appeal. 3The assessee thereupon approached theIncome Tax Appellate Tribunal (hereinafter referred to.as the tribunal for short). The tribunal by an orderdated 30.12.2014 by placing reliance on decisionrendered by the tribunal in Income Tax AppealsNo.567/Bang/99 and 591/Bang/2000 passed in relation.tO.AssessmentYear|1996-97heldthat|theCommissioner of Income Tax erred in holding that the order passed by the Assessing Officer was erroneous|and was prejudicial to the interest of the revenue andsince, the tribunal has already decided this issue infavour of the assessee, the same is binding on both the)parties. In the aforesaid factual background, the|revenue has filed this appeal. 4Learned counsel for the revenue submittedthat the sole foundation of the order passed by thetribunal is the decision passed by the tribunal in theappeals. It is pointed out that against the decision relied upon by the tribunal, the revenue had preferred anappeal viz., I.T.A.No.2300/2005 before this court, whnicnwas decided vide judgment dated 03.03.2010 and theOrder passed by the tridDunal was set aside and thematter was remanded to the Assessing Officer to.consider the matter afresh in accordance with law. It Is.submitted that in view of the order passed by this court,the order passed by the tribunal deserves to be set aside and the matter be remitted to the AssessingOfficer for decision afresh in accordance with law. 5.|On the other hand, learned counsel for theassessee submitted that merely because a decision onwhich reliance is placed is subsequently set aside,cannot furnish a ground to treat an order as erroneous.It is further submitted that the Commissioner of Income.Tax has to exercise the power on the basis of thematerial, which was available to him at the time ofpassing of the order. Insupport of aforesaid submission,reliance has been placed on decision of the SupremeCourt In‘COMMISSIONER OF INCOME TAX VS.|G.M.Mittail Stainiess Steel (P) Ltd., (2003)130TAXMAN 67 (SC). 6.|We have considered the submissions made§by learned counsel for the parties and have perused therecord. The tribunal by placing reliance on the orderpassed py it in the case of assessee for Assessment Year. 1996-97 and 1997-98 inter alia held that the revenue as/well aS assessee are bound by the decision rendered bythe tribunal and therefore, in the light of decisionrendered by tribunal, the Commissioner of Income Tax.committed an error in holding that the order passed bythe Assessing Officer was erroneous and prejudicial to)the interest of the revenue. Accordingly, the orderpassed by the Commissioner of Income Tax was setaside. The Supreme Court in G.M.Mittal Stainless Steel(P.) Ltd. supra has held that power under Section 263.of the Act has to be exercised on the basis of thematerial, which was available at the time when theCommissioner of Income Tax passed an order, the orderpassed by the tribunal was operative and therefore, theAssessing Officers order could not nave been termed aserroneous. Merely because the order of the AssessingOfficer was passed relying which was subsequentlyreversed by this court cannot justify the order passed by the Commissioner of Income Tax under Section 2763 ofthe Act. 7In view of preceding analysis, the substantialquestion of law framed by a bench of this court isanswered against the revenue and in favour of theassessee. In the result, we do not find any merit in thisappeal, the same fails and is hereby dismissed. SS| Sd/-—JUDGE.Sd/-JUDGE.