Madras High Court
The Commissioner Of Income Tax vs M/S.Indian Overseas Bank on 18 August, 2021
T.C.A.Nos.906 & 907 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 18.08.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Mr.Justice SATHI KUMAR SUKUMARA KURUP
T.C.A.Nos.906 & 907 of 2015
The Commissioner of Income Tax,
Chennai. ...Appellant in both appeals
Vs
M/s.Indian Overseas Bank,
Funds and Accounts Department,
762, Anna Salai,
Chennai – 600 002. ...Respondent
APPEALS under Section 260A of the Income Tax Act against the
common order dated 30.08.2011 made in ITA.No.782/Mds/2001 and
ITA.No.1991/Mds/2002 on the file of the Income Tax Appellate Tribunal,
'A' Bench, Chennai for the assessment year 1992-93 and 1993-94
respectively.
For Appellant
in both T.C.As : M/s.R.Hemalatha
Senior Standing Counsel
For Respondent
in both T.C.As : Mr.Venkatanarayanan
for M/s.Subbaraya Aiyar Padmanabhan
https://www.mhc.tn.gov.in/judis/
T.C.A.Nos.906 & 907 of 2015
COMMON JUDGMENT
(Delivered by T.S.Sivagnanam,J)
These appeals have been filed by the revenue under Section 260A
of the Income Tax Act, 1961 ['the Act' for brevity] challenging the common
order dated 30.08.2011 passed by the Income Tax Appellate Tribunal
[hereinafter referred to as “the Tribunal”], 'A' Bench in
I.T.A.No.782/Mds/2001 for the assessment year 1992-93 and
I.T.A.No.1991/Mds/2002 for the assessment y ear 1993-94.
2.T.C.A.No.906 of 2015 was admitted on 23.11.2015 on the
following substantial questions of law:
“1.Whether, on the facts and in the
circumstances of the case, the Income Tax Appellate
Tribunal was right in deleting the additions made on
interest on securities?
2.Is not the finding of the Tribunal bad by
deleting the additions made on interest on securities
especially when the assessee has credited interest on day
to day basis in its books of accounts as per mercantile
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T.C.A.Nos.906 & 907 of 2015
system of accounting being followed whereby the entire
interest income had accrued during the year?
3.Whether the Tribunal was right in law in
holding that the loss on revaluation of securities is to be
allowed irrespective of the fact that the assessee had
valued the investment at cost price in its book but however
for the Income Tax purposes valuation was made as cost
price or market price whichever is lower?
4.Whether the assessee bank could follow one
method of accounting and different method for tax
purposes while claiming deduction of loss which was
entirely notional in nature which had accrued and had not
been written off in its book?”
3.T.C.A.No.907 of 2015 was admitted on 23.11.2015 on the
following substantial questions of law:
“1.Whether, on the facts and in the
circumstances of the case, the Income Tax Appellate
Tribunal was right in deleting the additions of
Rs.11,73,77,198/- made on interest on securities?
2.Is not the finding of the Tribunal bad by
deleting the additions made on interest on securities
especially when the assessee has credited interest on day
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T.C.A.Nos.906 & 907 of 2015
to day basis in its books of accounts as per mercantile
system of accounting being followed whereby the entire
interest income had accrued during the year?”
4.We have heard M/s.R.Hemalatha, learned senior standing
counsel appearing for the appellant/revenue and Mr.R.Venkatanarayanan,
learned counsel for Mr.Subbarya Aiyar Padmanaban, learned counsel
appearing for the respondent/assessee.
5.Though there are four substantial questions of law in
T.C.A.No.906 of 2015, there are only two issues and in so far as
T.C.A.No.907 of 2015 is concerned, though there are two substantial
questions of law framed, there is only one issue which is with regard to
additions made on interest on securities.
6.The above substantial questions of law framed in both the tax
case appeals have been answered in favour of the assessee by the Hon'ble
Division Bench of this Court in the case of Commissioner of Income Tax
vs. City Union Bank Ltd. [(2007) 291 ITR 0144 (Mad)] and in the case of
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T.C.A.Nos.906 & 907 of 2015
Commissioner of Income Tax vs. Karur Vysya Bank Ltd. [(2009) 77 CCH
0603 CHenHC and in The Commissioner of Income Tax, Trichy vs. The
Lakshmi Vilas Bank Ltd., in T.C.A.No.207 of 2018 dated 04.11.2020.
7.The first substantial question of law with regard to the additions
made on the interest on securities was the first substantial question of law
framed for consideration in the case of City Union Bank Ltd. and it was
held in favour of the assessee in the following terms:
“4.1. With regard to the first substantial
question of law raised in T.C.(A).No.22 of 2004 and the
first substantial question of law raised in T.C.(A).No.466
of 2004, the Division Bench of this Court by judgment dt.
23rd Jan., 2007 made in T.C.(A).Nos.15 and 24 of 2003,
CIT vs. Tamilnadu Mercantile Bank Ltd., [reported at
(2007) 209 CTR (Mad) 250-Ed.], after referring to the
decisions in CIT vs. Canara Bank (1991) 100 CTR (Kar)
207: (1992) 195 ITR 66 (Jkar), CIT vs. Shoorji Vallabhdas
& Co. (1962) 46 ITR 144 (SC), H.M.Kashiparekh & Co.
Ltd., vs. CIT (1960) 39 ITR 706 (Bom), Poona Electric
Supply Co. Ltd. vs. CIT (1965) 57 ITR 521 (SC), Morvi
Industries Ltd. vs. CIT 1974 CTR (SC 149 : (1971) 82 ITR
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T.C.A.Nos.906 & 907 of 2015
835 (SC), State Bank of Travancore vs. CIT (1986) 50
CTR (SC) 290 : (1986) 158 ITR 102 (SC), Godhra
Electricity Co. Ltd. vs. CIT (1997) 139 CTR (SC) 564 :
(1997) 225 ITR 746 (SC), held that the assessee is taxable
for interest on securities only on specified dates when it
becomes due for payment, in view of third proviso to
s.145(1) of the Act, which was in force during the relevant
assessment years.”
8.In so far as the third substantial question of law in
T.C.A.No.906 of 2015 is concerned, i.e. with regard to the loss on
revaluation on securities that was the third substantial question of law in the
case of City Union Bank Ltd. which was answered in favour of the assessee
as follows:
“6.1.Qua the third question of law in
T.C.(A).No.22 of 2004 is concerned, the Tribunal held that
when investments are made in accordance with the
requirements of the Act, wherein the market price changed
from the value shown in the opening balance and at the
end of the year, the same could be allowed as depreciation.
6.3.In view of the ratio enunciated from the
decisions referred supra, we find no infirmity in the
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T.C.A.Nos.906 & 907 of 2015
decision of the Tribunal in this regard.”
9.Thus, following the above decisions, the tax case appeals are
dismissed and the substantial questions of law are answered against the
revenue. No costs.
(T.S.S.,J.) (S.S.K,J.)
18.08.2021
Index: Yes/No
Internet:Yes/No
Speaking Judgment/Non speaking Judgment
cse
To
The Income Tax Appellate Tribunal,
'A' Bench, Chennai.
https://www.mhc.tn.gov.in/judis/
T.C.A.Nos.906 & 907 of 2015
T.S.SIVAGNANAM,J.
AND
SATHI KUMAR SUKUMARA KURUP,J.
cse
T.C.A.Nos.906 & 907 of 2015
18.08.2021
https://www.mhc.tn.gov.in/judis/
