1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 7TH DAY OF SEPTEMBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.585/2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX MANGALORE. 2. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, UDUPI-576101. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.) AND: M/S. SYNDICATE BANK CENTRAL ACCOUNTS DEPARTMENT TAX CELL, HEAD OFFICE MANIPAL 576 104. ... RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) --- THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 19-06-2013 PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010, FOR ASSESSMENT YEAR 2006-07, PRAYING TO: 2 I. DECIDE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY HON BLE COURT AS DEEMED FIT. II. SET ASIDE APPELLATE ORDER DATED 19-06-2013 PASSED IN ITA NO.668/BANG/2010 AND 708/BANG/2010 BY INCOME TAX APPELLATE TRIBUNAL BENCH, BANGALORE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT Mr.E.I.Sanmathi, learned counsel for revenue. Mr.T.Suryanarayana, learned counsel for assessee. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) has been preferred by revenue which was admitted by Bench of this Court on 02.06.2014 to consider following substantial questions of law: 1. Whether on facts and in circumstances of case, Tribunal is justified in law in allowing assessee s claim of write off of bad debts relating to urban branches amounting to 3 Rs.1,70,62,86,484/- without first setting off bad debts against credit balance in Provision for Bad and Doubtful Debts A/c? 2. Whether on facts and in circumstances of case, Tribunal is right in law in allowing reduction from provision for Bad and Doubtful debts, only of bad debts relating to rural branches, by not properly interpreting proviso to Sec.36(1)(vii) of IT Act which stipulates that amount of deduction relating to any such debt or part thereof shall be limited to amount by which such debt or part thereof exceeds credit balance in provision for Bad and Doubtful Debts A/c? 3. Whether on facts and in circumstances of case, Tribunal is justified in law in not taking cognizance of fact that orders of Tribunal on this issue has not been accepted by Department in earlier assessment years and appeal to High Court has been filed? 4 4. Whether on facts and in circumstances of case, Tribunal is correct in law in holding that depreciation on valuation of investment portfolio is allowable by treating investments held by assessee bank as stock-in-trade once RBI Master Circular read with CBDT Circular No.665 came into force ?. 5. Whether on facts and in circumstances of case, Tribunal is correct in law in accepting assessee s claim that assessee has traded in securities, shown as investments in Balance Sheet and that assessee has incurred loss of Rs.374,97,43,513/- on account of revaluing investments as on 31-03-2006 at cost or market value whichever is less ? 6. Whether on facts and in circumstances of case, Tribunal is justified in law in not considering fact that during year assessee has made profit of Rs.71,85,54,022/- on sale of investments, which is credited to P & L A/c as against loss of Rs.374,97,43,513/- claimed? 5 7. Whether on facts and in circumstances of case, Tribunal is right in law in not considering fact that amount incurred for issue of bonds is in fact incurred for expansion of capital and has to be considered as capital expenditure and not admissible revenue expenditure ? 8. Whether on facts and in circumstances of case, Tribunal is justified in law in holding that accumulated credit card reward points is ascertained liability and not contingent liability ? 9. Whether on facts and in circumstances of case, Tribunal is correct in law in holding that provisions of section 115JB of Act are not applicable to assessee which is banking company in contrary to its own decision in previous years wherein it has directed assessing officer to decide issue afresh on basis of P & L account and Balance Sheet redrawn by assessee in 6 accordance with provisions of Companies Act 1956 ? 10. Whether on facts and in circumstances of case, Tribunal is correct in law in holding that provisions of section 115JB of Act are not applicable to assessee which is banking company without taking into consideration that provisions of section 115JB r/w Explanation (3) to section 115JB of Act and recorded perverse finding ? 3. When matter was taken up today, learned counsel for parties jointly submitted that substantial question of law Nos.1 to 3 have already been answered by Bench of this Court in COMMISSIONER OF INCOME TAX & ANR. Vs. M/s. VIJAYA BANK vide order dated 21.10.2014 in ITA No.1066/2008 against revenue. 7 For reasons assigned in aforesaid order, substantial questions of law Nos.1 to 3 are answered against revenue and in favour of assessee. 4. It is also pointed out that substantial question of law Nos.4 to 6 are covered by decision of this Court in KARNATAKA BANK LTD. Vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1) (2013) 34 TAXMANN.COM 150 (KAR). For reasons assigned in aforesaid order, substantial question of law Nos.4 to 6 are answered against revenue and in favour of assessee. 5. It is also urged that substantial question of law No.7 has already been answered by Bench of this Court in COMMISSIONER OF INCOME-TAX Vs. ITC HOTELS LTD. (2010) 190 TAXMAN 430 (KAR). For reasons assigned in aforesaid order, substantial question of law No.7 is answered against revenue and in favour of assessee. 8 6. It is also urged that substantial question of law No.8 is covered by decision of Supreme Court in BHARAT EARTH MOVERS Vs. COMMISSIONER OF INCOME-TAX (2000) 112 TAXMAN 61 (SC). For reasons assigned in aforesaid order, substantial question of law No.8 is answered against revenue and in favour of assessee. 7. It is also pointed out that substantial question of law Nos.9 and 10 are covered by decision of this Court in COMMISSIONER OF INCOME TAX Vs. ING VYSYA BANK LIMITED in ITA No.18/2014 and connected matters decided on 16.01.2020. For reasons assigned in aforesaid order, substantial question of law Nos.9 and 10 are 9 answered against revenue and in favour of assessee. In result, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE RV Commissioner of Income-tax, Mangalore / Deputy Commissioner of Income-tax Circle-1, Udupi v. Syndicate Bank