Ita/585/2013 Of Commissioner Of Income Tax v. M/S. Syndicate Bank

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE / DAY OF SEPTEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD L.T.A. NO.585/2013 BEI|WEEN 1.COMMISSIONER OF INCOME TAX) MANGALORE. 2.DEPUTY COMMISSIONER OF INCOME TAX) CIRCLE-1, UDUPI-576101. _.. APPELLANTS (BY SRI. E.I1. SANMATHI, ADV.) AND" M/S. SYNDICATE BANKCENTRAL ACCOUNTS DEPARTMENT|TAX CELL, HEAD OFFICEMANIPAL - 5/76 104. ... RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) THIS IJ§.T.A. IS FILED UNDER SECTION 260-A OI.L.T.ACT, 1961, ARISING OUT OF ORDER DATED 19-06-201PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010,.FOR THE ASSESSMENT YEAR 2006-07, PRAYING TO: I. DECIDE THE FOREGOING QUESTION OF LAW AND/OR|SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED|THE BY THE HON’BLE COURT AS DEEMED FIT.Il. SET ASIDE THE APPELLATE ORDER DATED 19-06-2013|PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010 BY |THEINCOMETAXAPPELLAIETRIBUNAL“ASBENCH,BANGALORE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT Mr.E.I1.Sanmatni, learned counsel for the revenue. Mr.T.Suryanarayana,learnedcounsel for.the|aSSeSSAE., 2. This appeal under Section 260-A of the Income|Tax Act, 1961 (hereinafter referred to as ‘the Act’, forshort) has been preferred by the revenue which wasadmitted by a Bench of this Court on 02.06.2014 toconsider the following substantial questions of law: 1. “Whether on the facts and In the|circumstances of the case, the Tribunal Isjustified in law in allowing assessee’s claimof write off of bad debts relating to urbanbranches.amountingtO Rs.1,/70,62,86,484/- without first settingoff the bad debts against the credit balancein the Provision for Bad and Doubtful DebtsA/C? ?_|“Whether on the facts and in thecircumstances of the case, the Tribunal Isright in law tn allowing reduction fromprovision for Bad and Doubtful debts, onlyof bad debts relating to rural branches, bynotproperlyinterpretingDroviso—to.Sec. 36(1)(vii) of the IT Act which stipulatesthat “the amount of deduction relating toany such debt or part thereof shall belimited to the amount by which such debtor part thereof exceeds the credit balancein the provision for Bad and Doubtful DebtsA/C? 3.“Whether on the facts and in thecircumstances of the case, the Tribunal Isjustified in law in not taking cognizance ofthe fact that the orders of the Tribunal onthis issue has not been accepted by theDepartment in the earlier assessment yearsand appeal to High Court has been filed? q |“Whether on the facts and in thecircumstances of the case, the Tribunal Iscorrect in law in holding that depreciationon valuation of investment portfolio isallowable by treating the investments heldby the assessee bank as_ stock-in-tradeonce the RBI Mester Circular read withCBDT Circular No.665 came into force” ?. 5.|“Whether on the facts and in thecircumstances of the case, the Tribunal Iscorrect in law in accepting assessee’s claimthat the assessee has traded in securities,Shown as investments in the Balance Sheetand that the assessee has Incurred loss ofRs.374,97,43,513/- on account of revaluingthe Investments as on 31-03-7006 at costor market value whichever is less”? 6.|“Whether on the facts and in thecircumstances of the case, the Tribunal Isjustified in law in not considering the factthat during the year the assessee hasmade profit of Rs.71,85,54,022/- on sale ofinvestments, which is credited to P & L A/cas against loss of Rs.374,97,43,513/-claimed? J.|“Whether on the facts and in thecircumstances of the case, the Tribunal Isright in law in not considering the fact thatthe amount incurred for issue of bonds /[s Infact incurred for expansion of capital andhas|to.be|consideredaS|adcapital expenditure and not an admissible revenueexpenditure”? 6.|“Whether on the facts and in thecircumstances of the case, the Tribunal Isjustified in law in not considering the factthat during the year the assessee hasmade profit of Rs.71,85,54,022/- on sale ofinvestments, which is credited to P & L A/cas against loss of Rs.374,97,43,513/-claimed? J.|“Whether on the facts and in thecircumstances of the case, the Tribunal Isright in law in not considering the fact thatthe amount incurred for issue of bonds /[s Infact incurred for expansion of capital andhas|to.be|consideredaS|adcapital expenditure and not an admissible revenueexpenditure”? 8.|“Whether on the facts and in thecircumstances of the case, the Tribunal IsjustifiedInlawIn|holdingthat|theaccumulated credit card reward points is anascertained liability and not a contingentliability”? 9.“Whether on the facts and in thecircumstances of the case, the Tribunal Iscorrect in law in holding that provisions ofsection 115JB of the Act are not applicableto the assessee which is a_ bankingcompany in contrary to its own decision inprevious years wherein it has directed theassessing officer to decide the issue afreshon the basis of the P & L account andBalance Sheet redrawn by the assessee in accordancewith theProvisionsOF|Companies Act 1956”? 10. “Whether on the facts and in thecircumstances of the case, the Tribunal Iscorrect in law in holding that provisions ofsection 115JB of the Act are not applicableto the assessee which is a_ bankingcompany without taking into considerationthatprovisionsofsection115/JBr/wExplanation (3) to section 115JB of the Actand recorded a perverse finding”? — 3. When the matter was taken up today, learned|counsel for the parties jointly submitted that thesubstantial question of law Nos.1 to 3 have already beenansweredby|aBench|ofthis.Court|In‘THECOMMISSIONER OF INCOME TAX & ANR. Vs. M/s.VIJAYA BANK’vide order dated 21.10.7014 in ITANo.1066/2008 against the revenue. For the reasons assigned in the aforesaid order,|the substantial questions of law Nos.1 to 3 are answeredagainst the revenue and in favour of the assessee. 4. It is also pointed out that the substantial|question of law Nos.4 to 6 are covered by a decision ofthis|CourtIn ‘KARNATAKABANKLTD.Vs.ASSISTANTCOMMISSIONEROF|INCOME-TAX,CIRCLE 2(1)° (2013) 34 TAXMANN.COM 150 (KAR)For the reasons assigned in the aforesaid order,|the substantial question of law Nos.4 to 6 are answeredagainst the revenue and in favour of the assessee. 5. It is also urged that the substantial question of law No.7 has already been answered by a Bench of thisCourt in.‘COMMISSIONER OF INCOME-TAX Vs. ITCHOTELS LTD.’ (2010) 190 TAXMAN 430 (KAR). For the reasons assigned in the aforesaid order,|the substantial question of law No.7 is answered against.the revenue and in favour of the assessee.. 6. It is also urged that the substantial question of law No.8 is covered by a decision of the Supreme CourtIn“‘BHARAT EARTH MOVERS Vs. COMMISSIONER OFINCOME-TAX’ (2000) 112 TAXMAN 61 (SC). For the reasons assigned in the aforesaid order,|the substantial question of law No.8 is answered against.the revenue and in favour of the assessee.. 7. It is also pointed out that the substantial|question of law Nos.9 and 10 are covered by a decisionof this Court In‘THE COMMISSIONER OF INCOMETAX Vs. ING VYSYA BANK LIMITED’|in ITANo.18/2014and|connected|mattersdecidedON|16.01.7070. For the reasons assigned in the aforesaid order,|the substantial question of law Nos.9 and 10 are 01<C7/78�0D051<3�347�/7>71;7�018�51�=0>:;/�:=�347� 0<<7<<77�� �1�347�/7<;63!�347�0@@706�5<�85<25<<78�� �%� ������������ �����������