STATE BANK OF BIKANER AND JAIPUR V. COMMISSIONER OF INCOME TAX JAIPUR

CRW/65/2018

AI Insights

The case involves multiple review petitions filed by the State Bank of Bikaner and Jaipur against orders related to income tax appeals. The petitions sought to recall a previous order that allegedly misapplied the law concerning disallowances made under Section 14A of the Income Tax Act, 1961, and deductions for advances made by rural branches under Section 36(1)(viia)/B. The Supreme Court had earlier allowed the bank to file a review petition, emphasizing that the High Court's application of Rule 8D of the Income Tax Rules, 1962, was incorrect as it was not applicable retrospectively to the assessment year in question. The Rajasthan High Court, upon reviewing the petitions, found that the critical legal question regarding the tribunal's decision and the applicability of the cited sections was not addressed in the original ruling, leading to the recall of the earlier order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 756203 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 03-04-2025
• Assessment Year: misc
• Other Referred Cases: Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act 1961, Income Tax Rules, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PRAKHUL KHURANA; RAJAT SHARMA
• Assessee Lawyers: SANDEEP PATHAK
• Keywords: Disallowance; Exempted income; Income Tax; Prospective application; Review petition
• Section: 263; 14A; 36(1)(viia)(b)

Judgement Text

"[2025:RJ-JP:15125-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Misc. Review Petition No. 65/2018 In D.B. Income Tax Appeal No.172/2008 State Bank of Bikaner And Jaipur, Head Office Tilak Marg C- Scheme Through Magan Singh Rathore S/o Shri Dharam Singh Rathore Chief Manager (Taxation) Of The Bank ----Appellant-Non-Applicant Versus 1. Commissioner of Income Tax Jaipur, NCR Building Statue Circle Jaipur-2 2. The Deputy Commissioner of Income Tax, SR-I Jaipur ----Respondents-Review Applicants Connected With D.B. Misc. Review Petition No. 66/2018 In D.B. Income Tax Appeal No.142/2010 State Bank of Bikaner And Jaipur, Head Office Tilak Marg C- Scheme, Jaipur Through Magan Singh Rathore S/o Shri Dharam Singh Rathore Chief Manager (Taxation) of the Bank ----Appellant-Non-Applicant Versus 1. Commissioner of Income Tax, NCR Building Statue Circle, Jaipur 2. The Assistant Commissioner of Income Tax, Circle-6 NCR Building Statue Circle, Jaipur ----Respondents-Review Applicants D.B. Misc. Review Petition No. 67/2018 In D.B. Income Tax Appeal No.119/2010 State Bank of Bikaner And Jaipur, Head Office Tilak Marg C- Scheme, Jaipur Through Magan Singh Rathore S/o Shri Dharam Singh Rathore, Chief Manager (Taxation) of The Bank. ----Appellant-Non Applicant Versus [2025:RJ-JP:15125-DB] (2 of 4) [CRW-65/2018] 1. The Commissioner of Income Tax, NCR Building, Statue Circle, Jaipur. 2. The Assistant Commissioner Of Income Tax, Circle-6, NCR Building, Statue Circle, Jaipur. ----Respondents-Review Applicants D.B. Misc. Review Petition No. 68/2018 In D.B. Income Tax Appeal No.141/2010 State Bank of Bikaner And Jaipur, Head Office Tilak Marg C- Scheme, Jaipur Through Magan Singh Rathore S/o Shri Dharam Singh Rathore, Chief Manager (Taxation) Of The Bank. ----Appellant-Non Applicant Versus 1. The Commissioner of Income Tax, NCR Building, Statue Circle, Jaipur. 2. The Assistant Commissioner of Income Tax, Circle-6, NCR Building, Statue Circle, Jaipur. ----Respondents-Review Applicant For Petitioner(s) : Mr. Sandeep Pathak for review applicant (Income Tax Department) For Respondent(s) : Mr. Prakhul Khurana & Mr. Rajat Sharma for review non-applicant (SBBJ Bank) HON'BLE MR. JUSTICE INDERJEET SINGH HON'BLE MR. JUSTICE MUKESH RAJPUROHIT Order 03/04/2025 These review petitions have been filed by the petitioners for recalling of the order dated 19.05.2017 passed by this Court. This Court in Para Nos. 15 & 16 has observed as under:- \"15. In view of the decision of the Supreme Court in Godrej & Boyce Manufacturing Company Ltd. (supra) para no.36, 37 & 38 reproduced hereinabove, it is true that disallowance which are made by the department is required to be rejected and the [2025:RJ-JP:15125-DB] (3 of 4) [CRW-65/2018] assessee will be entitled for the benefits conferred u/s 14A. Thus, the order of the disallowance is reversed and claim which has been made 14A is required to be upheld, therefore, issue is required to be decided in favour of the assessee. 16. However, operative question regarding disallowing the claim of deduction for advances made by Rural Branches U/s 36(1) (viia)/B such order is concerned, in view of the decision of Kerala and Karnataka High Court, the issue is answered in favour of the assessee to the extent that in view of the observations made by the Supreme Court, no disallowance will be made u/s 14A.\" Being aggrieved by the order dated 19.05.2017, the review petitioner preferred Special Leave Petition (Civil) Diary No(s).6099/2018 before the Hon'ble Supreme Court along with other connected matters which were decided on 06.04.2018, with the following observations:- \"Delay condoned. It is argued by learned ASG that the High Court has wrongly applied Rule 8D of the Income Tax Rules, 1962, inasmuch as, as per the judgment of this Court in Godrej & Boyce Manufacturing Co. Ltd. [(2017) 81 Taxmann.com 111 SC], the said rule has prospective application w.e.f. 01.04.2008 and the assessment year in question is 2002-03. Having regard to the aforesaid, we permit the petitioner to approach the High Court in the first instance and point the aforesaid aspect, by filing a review petition. If the review petition is filed within a period of one month from today, the same shall be entertained on merits and shall not be dismissed on the ground of delay. In case, the order in review petition is passed against the petitioner, the petitioner shall be at liberty to challenge that order as well as the order impugned in these petitions. The Special Leave Petitions are disposed of. Pending application(s), if any, stands disposed of accordingly.” Counsel for the petitioners argued that this Court while deciding the appeals vide order dated 19.05.2017 failed to consider the question of law formulated by the appellants in the appeals which is as under:- [2025:RJ-JP:15125-DB] (4 of 4) [CRW-65/2018] \"Whether on the facts and circumstances of the case the Tribunal was justified in holding that assessment order dated 26.03.2002 was prejudicial to the interest of revenue and sustaining the action taken by the CIT u/s. 263 of the Income Tax Act 1961 while disallowing expenditure incurred in earning exempted income u/s. 14A of IT Act and disallowing the claim of deduction for advances made by Rural Branches u/s. 361(1)(viia)/B such order is legally sustainable.\" On the other side, counsel appearing on behalf of the respondents argued that this Court has rightly passed the order dated 19.05.2017 considering the judgment passed by the Hon'ble Supreme Court in the matter of Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income Tax (2017) 81 Taxmann.com 111 (SC). Heard counsel for the parties perused the material available on record. We are of the considered view that this Court while deciding the appeals vide order dated 19.05.2017 has not answered the above question framed by the review petitioner. In that view of the matter, we deem it just and proper to allow these review petitions filed by the petitioners. Accordingly, the review petitions are allowed and the order dated 19.05.2017 passed by this Court is recalled. Office is directed to list the main appeals for hearing. (MUKESH RAJPUROHIT),J (INDERJEET SINGH),J Garima/32-35 "