Ita/508/2009 Of The Commissioner Of Income Tax, Trichur v. The South Indian Bank Ltd., Trichur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 6TH OCTOBER 2010 / 14TH ASWINA 1932 ITA.No. 508 of 2009() --------------------- ITA.283/COCH/2006 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT --------------------------------------- THE COMMISSIONER OF INCOME TAX, THRISSUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): RESPONDENT ------------------------- M/S.THE SOUTH INDIAN BANK LTD., THRISSUR. ADV. SRI.P.BALAKRISHNAN (E) FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06/10/2010, ALONG WITH ITA NOS. 553, 565, & 1708 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR, &K. SURENDRA MOHAN, JJ. ------------------------------------------------- I.T.A. Nos. 508, 553, 565 & 1708 of 2009 -------------------------------------------------- Dated this the 6th day of October, 2010 JUDGMENT Ramachandran Nair, J. The questions raised in the four connected appeals, two filed bythe assessee, and two filed by the revenue, relate to revision ofassessments issued by the Commissioner of Income Tax under Section263 of the Income Tax Act and consequential orders issued by theassessing officer revising the assessments. Original assessment for1998-99 was completed without making disallowance under Section14A of the I.T. Act, though the assessee had incurred interest liabilityand administrative charges on capital borrowed for making investmentin tax free bonds and securities. Since the assessing officer committedomission, the Commissioner issued suo motu proceedings underSection 263 of the Act ordering revision of assessment and againordered revision of revised assessment for making disallowance underSection 14A. In the first round, the Tribunal dismissed the appealagainst Section 263 order, against which assessee has filed appeals. ITA 508/2009 and connected cases However, the appeal filed against Section 263 order issued againstrevised order was allowed by the Tribunal against which revenue hasfiled appeals. The challenge in I.T.A.No. 1708 of 2009 filed by theassessee pertains to levy of interest in the revised assessment underSection 234B of the Act. After hearing both sides, we find thatjurisdictional issue, that is the authority of the Commissioner to orderrevision of assessment under Section 263 for making disallowanceunder Section 14A of the Act is covered by our decision in I.T.A.No.587 of 2009 dated 14.1.2010 wherein we held that the proviso toSection 14A applies even to suo motu revisional power of theCommissioner conferred under Section 263 of the Act. So much so,both the orders issued under Section 263 for the assessment year 1998-99 are not tenable. The balance issues raised are only againstconsequential orders issued demanding tax and interest. Following ourjudgment above referred, we declare that Section 263 order issued bythe Commissioner revising the original assessment and the secondround order issued under Section 263 directing revision of revisedassessment are unsustainable. Consequently we dismiss the ITA 508/2009 and connected cases 3 departmental appeals sustaining the orders impugned therein andallow the assessee's appeals by reversing the impugned orders of theTribunal. (C.N.RAMACHANDRAN NAIR)Judge. (K. SURENDRA MOHAN) Judge. kk