Madras High Court
The Commissioner Of Income Tax vs M/S.Indian Overseas Bank on 23 August, 2021
T.C.A.Nos.80 and 81 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.08.2021
CORAM :
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
T.C.A. Nos.80 and 81 of 2016
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
in both appeals
Tax Case Appeals preferred under Section 260A of the Income Tax
Act, 1961, against the common order, dated 30.08.2011, passed by the
Income Tax Appellate Tribunal, Chennai, “A” Bench, in
I.T.A.Nos.780/Mds/2001 and 781/Mds/2001, for the Assessment Years
1990-91 and 1991-92 respectively.
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T.C.A.Nos.80 and 81 of 2016
For Appellant : Mrs.R.Hemalatha
Senior Standing Counsel
in both appeals
For Respondent : Mr.R.Vijayaraghavan
for M/s.Subbaraya Aiyar Padmanabhan
in both appeals
COMMON JUDGMENT
(Judgment was delivered by T.S. SIVAGNANAM, J.)
These Tax Case Appeals filed by the Revenue under Section 260-A of
the Income Tax Act, 1961 (“the Act” for brevity) are directed against the
common order, dated 30.08.2011, passed by the Income Tax Appellate
Tribunal, Chennai, “A” Bench, in I.T.A.Nos.780/Mds/2001 and
781/Mds/2001, for the Assessment Years 1990-91 and 1991-92 respectively.
2.The appeals were admitted on 02.02.2016 to decide 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 holding
that the addition on interest on securities for the assessment
year 1990-91 amounting to Rs.29,89,48,379/- was not liable to
tax?
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T.C.A.Nos.80 and 81 of 2016
2.Whether on the facts and in the circumstances of the
case, the Income Tax Appellate Tribunal was right in holding
that loss on revaluation of securities amounting to
Rs.14,89,42,190/- was held as trading assets in order to claim
the deduction?”
3.We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel
for the appellant/Revenue and Mr.R.Vijayaraghavan for M/s.Subbaraya
Aiyar Padmanabhan, learned counsel for the respondent/assessee.
4.It is not in dispute before us that in the assessee's own case in
T.C.A.Nos.906 and 907 of 2015, dated 18.08.2021, the substantial questions
of law have been answered in favour of the assessee and against the
Revenue. The judgment reads as follows :
“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
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T.C.A.Nos.80 and 81 of 2016
I.T.A.No.1991/Mds/2002 for the assessment year 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 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?”
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T.C.A.Nos.80 and 81 of 2016
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 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
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T.C.A.Nos.80 and 81 of 2016
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
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
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T.C.A.Nos.80 and 81 of 2016
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 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:
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T.C.A.Nos.80 and 81 of 2016
“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
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.”
5.Thus, following the above decision, these 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.)
23.08.2021
mkn
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T.C.A.Nos.80 and 81 of 2016
Internet : Yes
Index : Yes / No
Speaking order / Nonspeaking order
To
The Income Tax Appellate Tribunal,
Chennai, “A” Bench.
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T.C.A.Nos.80 and 81 of 2016
T.S. SIVAGNANAM, J.
and
SATHI KUMAR SUKUMARA KURUP, J.
mkn
T.C.A. Nos.80 and 81 of 2016
23.08.2021
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