Case Law Details
PCIT-2 Vs Central Bank of India (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeal for Assessment Year 2008-09, declining to admit the matter on the ground that no substantial question of law arose. The appeal proposed two questions: first, whether separate provisions for rural and non-rural advances are permissible under Section 36(1)(viia) for the purpose of set-off of bad debts under Section 36(1)(vii); and second, whether interest income on securities accrues on the due date of payment rather than on a day-to-day basis, particularly where broken period interest is claimed as expenditure.
Read SC Judgment in this case: SC Dismisses Revenue SLP Because No Substantial Question of Law Arose on Interest Accrual
On the first issue, the Court noted that the Income Tax Appellate Tribunal (ITAT) had relied on its earlier decisions in the assessee’s own case for several prior assessment years. The Court had adjourned the matter to ascertain whether any appeals were filed against those decisions. As nothing on record indicated that appeals had been filed, the Court held that no substantial question of law arose. It further observed that the Tribunal had also followed the Supreme Court’s decision in Catholic Syrian Bank Ltd. v. Commissioner of Income-tax.
On the second issue, the Court found that the Tribunal had followed its earlier decision in Director of Income-tax (International Taxation) v. Credit Suisse First Boston (Cyprus) Ltd., which covered the issue. Accordingly, it held that no substantial question of law arose and declined to admit the appeal, dismissing it without costs. The Supreme Court subsequently declined to interfere with this ruling.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. This appeal concerns the assessment year 2008-09.
3. Ms Kanani, learned counsel for the Appellant, urges the formulation of the following substantial questions of law.
“(i) On the facts and circumstances of the case and in law, whether the ITAT is correct in holding that two separate provisions for rural and non-rural advances are permissible u/s 36(1)(viia), for the purpose of set off of bad debts incurred u/s 26(1) (vii) of the Income Tax Act, 1961?
(ii) On the facts and circumstances of the case and in law, whether the Hon’ble ITAT is correct in holding that the interest income on securities held by the assessee accrues on the due date of payment of interest and not on every day basis, given that the assessee claims broken period interest as expenditure, thus violating matching principle of accounting?”
4. So far as the first question is concerned, we find that the Income Tax Appellate Tribunal, in its impugned order, has relied upon the decisions of the Coordinate Benches in the case of this very assessee for assessment years 1989-90 to 1992-93 and 1994-95, 1999-2000. We had adjourned this matter to enable the learned counsel for the appellant to apprise us of whether appeals had been filed and admitted concerning the decisions of the Coordinate Benches for the said assessment years.
5. Nothing on record indicates that any appeals were filed against the decisions of the Tribunal’s coordinate benches regarding the above assessment years.
6. In light of this position, we do not believe that the first substantial question of law arises in this matter. The learned counsel now indicates that no appeals may have been filed, possibly due to the tax implications involved. We previously adjourned this matter to allow the learned counsel to obtain appropriate instructions. However, we are not being provided with a clear picture.
7. In any event, learned counsel for the respondent points out that the Tribunal has not only gone by the decisions of its Coordinate Benches for the above assessment years but further, the Tribunal has also followed the decision of the Hon’ble Supreme Court in Catholic Syrian Bank Ltd. v. Commissioner of Income-tax 1
8. So far as the second substantial question of law as proposed is concerned, again, we find that the Income Tax Appellate Tribunal has followed the decision of this Court in Director of Income-tax (International Taxation) v. Credit Suisse First Boston (Cyprus) Ltd.2 Since the decision of our Coordinate Bench covers the issue, no substantial question of law arises. In any event, such a question cannot be answered favouring the revenue.
9. For the above reasons, we decline to admit this appeal.
10. This Appeal is accordingly dismissed with no costs order.
1 [2012] 18 taxmann.com 282 (SC).
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