Vinod Chandran, J v. Ita 227/12

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON THURSDAY, THE 7TH DAY OF DECEMBER 2017/16TH AGRAHAYANA, 1939 ITA.No. 227 of 2012 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 406/COCH/2009 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 29-03-2012 FOR ASSESSMENT YEAR 2004-05 APPELLANT(S):/APPELLANT ------------ THE COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM. BY ADVS.SRI.P.K.RAVINDRANATHA MENON, SR. COUNSEL, GOI TAXES SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPARTMENT RESPONDENT(S):/RESPONDENT -------------- M/S.STATE BANK OF TRAVANCORE POOJAPPURA, THIRUVANANTHAPURAM 695 012. R1 BY ADV. SRI.P.BALAKRISHNAN (E) R1 BY ADV. SRI.MOHAN PULIKKAL THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 07-12-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA 227/12 APPENDIX APPELLANT'S ANNEXURES ANNEXURE-A :COPY OF ORDER UNDER SECTION 143(3) OF THE ASSESSINGOFFICER DATED 21.12.2006. ANNEXURE-B :COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 4.2.2009. ANNEXURE-C :COPY OF ORDER OF THE APPELLATE TRIBUNAL DATED 29.3.2012. //TRUE COPY// jg-11/12 PS TO JUDGE. K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- I.T.Appeal No.227 of 2012 ------------------------------------------- Dated this the 7[th] day of December, 2017 J U D G M E N T Vinod Chandran, J. The question of law raised in the aforesaid appeal for theassessment year 2004-05 is with respect to the disallowance ofadministrative expenditure claimed as deduction under Section 14A ofthe Income tax Act, 1961. The deduction and disallowance under Section14A was considered by a Division Bench of this Court in the decision inCommissioner of Income Tax v. Catholic Syrian Bank Ltd. &Ors.,reported in (2011) 237 CTR (Ker) 164. The Division Bench foundthat there could be disallowance made of expenditure incurred, inearning tax exempted income, by way of investments in bonds andsecurities, and hence, there was no rationale in contending that evenbefore the introduction of Rule 8D, no disallowance could be made. TheDivision Bench also suggested a probable ratio by which suchdisallowance could be worked out, even if separate accounts were notmaintained. However, with respect to the administrative expenditure,since there was no precise formula for proportionate disallowance tillRule 8D came into force, no disallowance was called for, forproportionate administrative cost attributable to the earning of tax free income until Rule 8D came into force. The issue raised in the appeal isonly with respect to the administrative expenditure incurred by theassessee Bank. In such circumstances, following the aforesaid dictumlaid down by the Division Bench of this Court, we reject the appealupholding the order of the Tribunal, which interfered with thedisallowance made of the administrative expenditure. K.VINOD CHANDRANJudge ASHOK MENON Judge jg