Karnataka High Court

State Bank Of India vs The Joint Commissioner Of Income ... on 26 May, 2021

Author: Alok Aradhe Chandangoudar

                           1



     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 26TH DAY OF MAY 2021

                       PRESENT

         THE HON'BLE MR. JUSTICE ALOK ARADHE

                         AND

 THE HON'BLE MR.JUSTICE HEMANT CHANDANGOUDAR

                 I.T.A. NO.756 OF 2017
BETWEEN:

STATE BANK OF INDIA
(FORMERLY STATE BANK OF MYSORE)
LOCAL HEAD OFFICE
COMPLIANCE DEPARTMENT
4TH FLOOR, 65, ST. MARKS ROAD
BENGALURU-560001
REP. HEREIN BY ITS
DEPUTY GENERAL MANAGER & CFO
LOCAL HEAD OFFICE, BENGALURU
MR. RAMESH CHANDRA GOKULAPALAN
PAN No.AACCSO155P.
                                    ... APPELLANT
(BY SRI. T. SURYANARAYANA, ADV.,)

AND:

1.     THE JOINT COMMISSIONER OF
       INCOME TAX
       LARGE TAX PAYERS UNIT
       JSS TOWERS, 100 FEET ROAD
       BANASHANKARI III STAGE
       BENGALURU-560085.

2.     THE COMMISSIONER OF
       INCOME-TAX, LARGE TAXPAYERS UNIT
                                 2



       LARGE TAX PAYERS UNIT
       JSS TOWERS, 100 FEET ROAD
       BANASHANKARI III STAGE
       BENGALURU-560085.
                                         ... RESPONDENTS
(BY SRI. K.V. ARAVIND, ADV.,)
                          ---

      THIS I.T.A. IS FILED UNDER SECTION 260-A OF
I.T.ACT, 1961 ARISING OUT OF ORDER DATED 28.04.2017
PASSED IN ITA NO.388/BANG/2013, FOR THE ASSESSMENT
YEAR 2008-09, PRAYING TO:
      I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW
STATED ABOVE.
      II. ALLOW THE APPEAL AND SET ASIDE THE
IMPUGNED ORDER PRONOUNCED ON 28.4.2017 BY THE
TRIBUNAL IN ITA NO.388/BANG/2013 (ANNEXURE-C) FOR
ASSESSMENT YEAR 2008-09, TO THE EXTENT QUESTIONED
HEREIN.
      III. PASS SUCH OTHER ORDERS OR FURTHER
ORDERS AS THIS HON'BLE COURT DEEMS FIT TO PASS ON
THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND
IN THE INTEREST OF JUSTICE AND EQUITY.

    THIS I.T.A. COMING ON FOR HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:

                           JUDGMENT

Mr.T.Suryanarayana, learned counsel for the assessee.

Mr.K.V.Aravind, learned counsel for the revenue.

This appeal under Section 260-A of the Income Tax

Act, 1961 (hereinafter referred to as 'the Act', for short) has

been filed by the assessee against the order dated

28.04.2017 passed by the Income Tax Appellate Tribunal.

The subject matter of the appeal pertains to Assessment Year

2008-09. The appeal was admitted by a Bench of this Court

vide order dated 06.12.2017 on the following substantial

questions of law:

"a) Whether on the facts, in the circumstance and on the grounds and contentions urged, the Tribunal was right in merely upholding the findings of CIT(A) without independently examining the facts and material on record which demonstrates the scientific method adopted for ascertaining the transitional liability of Home Travel Concession (HTC) and Leave Fare Concession (LFC), Silver Jubilee Awards and Re- settlement expenses?

b) Whether on the facts and circumstances of the case the Hon'ble Tribunal was correct in upholding the finding that the provision created for transitional liability for Home Travel Concession (HTC) and Leave Fare Concession (LFC), Silver Jubilee awards and Re-settlement expenses are contingent in nature and not ascertained, without appreciating the material on record and thus rendered a perverse finding?

           c)       Whether      on      the     facts,    in     the
     circumstances        and     on      the       grounds      and

contentions urged the Tribunal was justified in upholding the order of the lower authorities disregarding the actuarial certificate prepared by the actuarial valuer and actuarial calculation computed based on reliable factors?

d) Whether on facts and circumstances of the case the Hon'ble Tribunal was right in disallowing the deduction claimed in respect of transitional liability although such expenditure is incurred wholly and exclusively for the purpose of the business of the Appellant and hence should be an admissible expenditure under section 37(1) of the Act?

2. Facts leading to filing of this appeal briefly stated are

that the appellant filed its return of income for the

Assessment Year 2008-09 and declared the income of

Rs.4,46,01,43,740/-. The said return was selected for

scrutiny and an order of assessment was passed by the

Assessing Officer on 07.12.2010 by which taxable income

was determined at Rs.5,31,30,96,281/-. The Assessing

Officer disallowed the provision created by the assessee on

the ground that the same is contingent in nature. The

provision was disallowed in respect of the following:

a. Transitional liability on leave fare concession / home travel concession.

b. Transitional liability on silver jubilee awards to employees and c. Transitional liability on resettlement expenses

3. The assessee thereupon filed an appeal before the

Commissioner of Income Tax (Appeals). The Commissioner

of Income Tax (Appeals), by an order dated 27.12.2012,

affirmed the order passed by the Assessing Officer. The

assessee thereupon filed an appeal before the Income Tax

Appellate Tribunal. The Tribunal, by an order dated

28.04.2017, has upheld the order of the Commissioner of

Income Tax (Appeals). In the aforesaid factual background,

this appeal has been filed.

4. Learned counsel for the assessee submitted that the

assessee had filed written submissions before the Tribunal. A

true copy of which has also been filed before this Court. It is

further submitted that the assessee has also relied on several

case laws. However, the Tribunal, without independently

accepting the submissions made on behalf of the assessee,

has, in a cryptic and cavalier manner, affirmed the order

passed by the Commissioner of Income Tax (Appeals). It is

further submitted that in the facts and circumstances of the

case, the matter deserves to be remitted to the Tribunal for

decision afresh.

5. On the other hand, learned counsel for the revenue

has submitted that the Commissioner of Income Tax

(Appeals) has dealt with the submissions raised on behalf of

the assessee elaborately and the Tribunal has affirmed the

order passed by the Commissioner of Income Tax (Appeals).

It is also urged by the learned counsel for the revenue that

no interference is warranted with the order of the Tribunal in

the facts and circumstances of the case.

6. We have considered the submissions made on both

sides and have perused the record. The Tribunal is the final

fact finding authority. It is trite law that the Tribunal, while

deciding the appeal, has to advert to the submissions made

by the parties and record the findings independently on the

submissions made before it. In the instant case, the

Tribunal, in paragraphs 21 and 22, has held as under:

"21. In this appeal, the dispute is regarding disallowance of transitional liability on Leave Fare concession (LFC), Home Travel Concession (HTC) are Rs.3,01,77,794/-. Transitional liability towards silver jubilee awards are Rs.1,44,45,000/- and transitional liability of various resettlement expenses Rs.1,80,00,000/-. On these aspects, categorical finding has been given by the 1d CIT(A) on page No.14 of his order that the uncertainty which is introduced in these process will naturally reflect on the provision created by bank and rendered it uncertain. He has also given a finding that it may be noted that information pertaining to possible places of travel, number of employees/family members likely to avail the benefit are not an input in the actuarial valuation process. Regarding various judgments cited before him, he has given categorically finding that these judgments are in respect of mattes of gratuity or leave encashment or terminal benefit of the employees where the statistical tool of actuarial valuation based on predictable date of employees age, date of joining and scale of pay can provide

grist for prediction with reasonable certainty and thereby making the nature of liability as non contingent but same does not prevail in the present case of the assessee where multiple variable factors impinge upon the individual decisions leading to collective uncertainty at the level of the bank for the purpose of provisioning.

22. In view of these facts, it is seen that making the provision for transitional liability without uncertainty is not possible in respect of these expenses and, therefore, these transitional liabilities are rightly held as contingent liability. Hence, we find no reason to interfere with the order of the CIT(A) on these issues."

7. Thus, from perusal of the aforesaid provisions, it is

apparent that the Tribunal has not adverted to the

submissions made on behalf of the assessee which is evident

from the written submissions, a copy of which has been

produced before us. The Tribunal has affirmed the findings

of the Commissioner of Income Tax (Appeals) in a cryptic

and cavalier manner. Therefore, in the fact situation of the

case, it is not necessary for us to answer substantial question

of law Nos.2 to 4. The substantial question of law No.1 is

answered in favour of the assessee.

The order passed by the Tribunal is quashed and the

matter is remitted to the Tribunal to afford an opportunity of