Ramachandran Nair, J v. Kerala Chemicals And Proteins Ltd. Reported 323 Itr 584. Here Again, We Set

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN FRIDAY, THE 22ND OCTOBER 2010 / 30TH ASWINA 1932 ITA.No. 1758 of 2009() ---------------------- ITA.602/COCH/2006 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: -------------------- THE COMMISSIONER OF INCOME TAX, THRISSUR. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: --------------- M/S.DHANALAKSHMI BANK LTD.,THRISSUR. ADV. SRI.P.BALAKRISHNAN (E) FOR R THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22/10/2010, ALONG WITH ITA NOS.1778 & 1772 OF 2009, THE COURT ON 22/10/2010 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &K.SURENDRA MOHAN, JJ. ....................................................................I.T. Appeal Nos.1758,1772 & 1778 of 2009 ....................................................................Dated this the 22nd day of October, 2010. JUDGMENT Ramachandran Nair, J. All the three appeals are filed by the Revenue against the verysame assessee against to the orders of the Tribunal for the very sameassessment year 1999-2000. In I.T.A. No.1758/2009 the first issueraised is whether the provision for bad debt is to be added in thecomputation of book profit. Even though the issue stands decided infavour of the assessee by decision of the Supreme Court, the saidjudgment of the Supreme Court is got over by subsequent amendmentwith retrospective effect. We, therefore, set aside the order of theTribunal on this issue and direct the Assessing Officer to consider thescope of assessment and remake assessment based on the amendedprovisions. The next question pertaining to levy of interest underSection 234D of the Income Tax Act is covered by judgment inCOMMISSIONER OF INCOME-TAX VS. KERALA CHEMICALSAND PROTEINS LTD. reported 323 ITR 584. Here again, we set ITA No.1758/09 & conn. aside the order of the Tribunal on this issue and direct the AssessingOfficer to demand interest by following the above judgment. 2. In I.T.A. Nos.1778 and 1772 of 2009, one common questionraised is with regard to disallowance under Section 14A of the Act.We have in similar cases held that by virtue of the proviso to Section14A, there is no justification to make reassessment under Section 147for any assessment year prior to 2001-2002. Consequently theRevenue's appeals on this issue are dismissed. One issue arising inI.T.A. No.1778/2009 is the yield to maturity method of valuation,which is covered by our judgment in I.T.A. No.234/2009 in favour ofthe assessee. We, therefore, turn down the appeal on this issue. Thenext issue pertaining to appeal, I.T.A. No.1772/2009 is theclassification of rural branches with reference to the definitioncontained in the statute. This issue is covered by our judgment inI.T.A. No.234/2009. We, therefore, reverse the order of the Tribunalon this issue and direct the Assessing Officer to follow our judgmentabove referred and modify the assessment to the extent necessary. Thelast issue is the proportionate addition of expenditure attributable toexempted income in the computation of book profit under Section115JA of the Act. The disallowance in the computation of business ITA No.1758/09 & conn. ITA No.1758/09 & conn. income is said to be achieved by introduction of Section 14A which isintroduced by Finance Act, 2001. The contention of counsel for theassessee is that going by our decision on Section 14A in the assessee'sown case for the very same year, no disallowance under Section 115JAalso is called for i.e. in the form of addition of expenditure attributableto exempted income in the computation of book profit. We find thatnone of the authorities have considered sub-clause (f) of Explanation toSection 115JA which is an independent provision authorising additionto the book profit on the proportionate expenditure attributable toexempted income. We direct the Assessing Officer to consider theabove provision and modify the assessment without reference toSection 14A of the Act. The appeals are disposed of as above. C.N.RAMACHANDRAN NAIRJudge K.SURENDRA MOHANJudge