VIJAYA BANK V. THE ADDIITIONAL COMMISSIONER

ITA/645/2016

AI Insights

The case involves Vijaya Bank, which appealed against the order of the Income Tax Appellate Tribunal (ITAT) concerning the assessment year 2009-10. The primary legal contention was regarding the interpretation and application of Section 36(1)(viia) of the Income Tax Act, 1961, which pertains to the deduction of provisions for bad and doubtful debts. The ITAT had previously ruled that the creation of a requisite reserve in the books of account is a condition precedent for the allowance of the claim under this section, and that the deductible amount should be restricted to the extent of the provision made during the relevant previous year. The High Court, referencing earlier judgments, affirmed the ITAT's decision, leading to the dismissal of the appeal.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 726774 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 14-12-2020
• Assessment Year: misc
• Other Referred Cases: ITA No.1066/2008, ITA No.256/2011
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: SURYANARAYANA
• Keywords: Assessment Year 2009-10; Bad and doubtful debts; Deduction; Income Tax; Provision
• Section: 36(1)(viia); 260-A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF DECEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.645 OF 2016 BETWEEN: VIJAYA BANK HEAD OFFICE CENTRAL ACCOUUNTS DEPARTMENT NO.41/2, M.G. ROAD, BANGALORE-560001 REP. HEREIN BY ITS GENERAL MANAGER (ACCOUNTS) MR. MURALI RAMASWAMY. .... APPELLANT (BY SRI. SURYANARAYANA T, ADVOCATE) AND: 1. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, LARGE TAX PAYERS UNIT (LTU), BANGALORE JSS TOWERS, 100 FEET RING ROAD BANASHANKARI 3RD STAGE BENGALURU-560085. 2. THE COMMISSIONER OF INCOME TAX LARGE TAX PAYERS UNIT (LTU) BANGALORE, JSS TOWERS 100 FEET RING ROAD BANASHANKARI 3RD STAGE BENGALURU-560085 ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE) 2 THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 22.07.2016 PASSED IN ITA NO.331/BANG/2014, FOR THE ASSESSMENT YEAR 2009- 10, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, 'B' BENCH, BENGALURU, PRONOUNCED ON 22.07.2016 IN ITA NO.331/BANG/2014 (ANNEXURE-C) TO THE EXTENT QUESTIONED HEREIN & ETC. 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. 2. 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. The subject matter of the appeal pertains to the Assessment Year 2009-10. The appeal was admitted by a Bench of this Court vide order dated 30.08.2017 on the following substantial questions of law: \"1. The Tribunal was right in holding that the creation of a requisite reserve in the books of account is a condition precedent for allowance of the claim under Section 36(1)(viia) of the Act ?. 3 2. The Tribunal was right in holding that the amount deductible under Section 36(1)(viia) of the Act should be restricted to the extent of the amount of provision for bad and doubtful debts created in its books during the relevant previous year? 3. Without prejudice and in any event, the tribunal erred in rejecting the Appellant's alternate contention that the shortfall in the present year between the upper limit allowable under Section 36(1)(viia) and the actual amount created as a provision in its books in the present year ought to nevertheless be allowed as a deduction in the present year on account of the provision created in the subsequent year that was in excess of such shortfall?\" 3. When the matter was taken up today, learned counsel for the assessee fairly submitted that the substantial questions of law framed in this appeal have already been answered against the assessee by a Bench of this Court vide judgment dated 21.10.2014 passed in ITA No.1066/2008 as well as judgment dated 24.01.2020 in ITA No.256/2011. 4 4. In view of the aforesaid submission and for the reasons assigned in the aforesaid judgments, the substantial questions of law framed in this appeal are answered against the assessee and in favour of the revenue. In the result, we do not find any merit in this appeal. The same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE RV "