State Bank of India Vs DCIT (ITAT Mumbai)
Section 115JB MAT Provisions Do Not Apply to SBI; NPA Interest Not Taxable on Hypothetical Accrual Basis; AFS and HFT Securities Valuation Loss Allowed to SBI; SBI and Revenue Cross-Appeals Partly Allowed for AY 2011-12: ITAT Mumbai
Summary: The present cross-appeals for A.Y. 2011-12 arise from the order of the Commissioner of Income Tax (Appeals)-5, Mumbai dated 21/03/2017. The Tribunal records that both sides agreed that the issues were substantially covered by the assessee’s own case for A.Y. 2010-11 and proceeded ground-wise, while considering additional precedents and factual/legal distinctions where raised.
On the provision for pension, the Tribunal held that the liability arising from existing employee-benefit obligations and quantified through actuarial valuation was an ascertained liability, not a contingent liability. The Revenue’s reliance on Brooke Bond India Ltd. was distinguished because that case involved a liability sought to be created merely by a Board Resolution without an independent enforceable obligation. Relying on the principles in Bharat Earth Movers v. CIT and the earlier orders in the assessee’s own case, the Tribunal allowed Ground No. 1.
On section 14A, the Tribunal followed the assessee’s earlier-year decision but remitted the issue to the Assessing Officer only to examine investments that actually yielded exempt income during the relevant year and to recompute the disallowance, if any, after credit for the suo motu disallowance. It further held that the disallowance could not exceed exempt income. The discussion considered Maxopp Investment Ltd. v. CIT, South Indian Bank, Godrej & Boyce, CBDT Circular No. 18 of 2015 and the banking-business context.
