Case Law Details
CIT Vs Vijaya Bank (Karnataka High Court)
Learned counsel for the revenue submitted that prior to amendment with effect from 01.04.2008, benefit of Section 36(1)(viii) of the Act was not available to a Banking Company and therefore, the assessee is not entitled to claim deduction under Section 36(1)(viii) of the Act. It is further submitted that provisions of Section 36(1)(viii) of the Act were amended with effect from 01.04.2008 and are applicable to the Assessment Year 2008-09. Learned counsel for the revenue has taken us through the amended provisions of Section 36(1)(viii) of the Act and has invited our attention to the expression ‘specified entity’ which includes Banking Company. Therefore, it is submitted that the assessee is not entitled to claim the deduction under Section 36(1)(viii) of the Act. On the other hand, learned counsel for the assessee submitted that Section 36(1)(vii) of the Act, as it was in existence prior to its amendment with effect from 01.04.2008, confined the benefit of Financial Corporation and the expression ‘Financial Corporation’ included the Government Company as well as Public Company. It is further submitted that the assessee, namely, Vijaya Bank in any case, is a Public as well as Government Company as it fulfills the requirement of Sections 3 and 617 of the Companies Act, 1956. In support of the aforesaid submission, reliance has been placed on the decision of High Court of Bombay in ITA No.269/2013.
We have considered the submissions made on both sides and have perused the records. Before proceeding further, it is apposite to take note of Section 36(1)(viii) of the Act, which was in existence at the relevant point of time.
From a perusal of the Section 36(1)(viii) provision, it is evident that the benefit of deduction under Section 36(1)(viii) of the Act was available to a Financial Corporation, which included the Public Company and Government Company. The explanation appended to clause (viii) further specifies that expression ‘Public Company’ shall have the meaning assigned to it under Section 3 of the Companies Act, 1956 and the expression ‘Government Company’ shall have the meaning assigned to it under Section 617 of the Companies Act, 1956. Admittedly, Vijaya Bank is not a Private Company. Therefore, the same fulfills the requirement of Section 3 of the Companies Act, 1956 and is a Public Company. It is also pertinent to note that 51% of the shares of Vijaya Bank are held by the Government of India and therefore, the same is a Government Company within the meaning of Section 617 of the Companies Act, 1956. Therefore, the assessee is squarely covered within the meaning of expression ‘Financial Corporation’ and is entitled to benefit of deduction under Section 36(1)(viii) of the Act. For the aforementioned reasons, the fourth substantial question of law is answered against the revenue and in favour of the assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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