State Bank of India Vs ACIT (ITAT Mumbai)
Consistency Over Technicalities – ITAT Allows Actuarial Pension Provision & Rejects Mechanical Disallowances
Mumbai ITAT dealt with extensive cross-appeals involving multiple disallowances and claims of a banking entity, while laying down important principles on consistency, allowability of claims, and interpretation of tax provisions.
The Tribunal clarified that:
- Though res judicata does not strictly apply, the principle of consistency must be followed where facts and law remain unchanged
- Revenue cannot deviate from earlier accepted positions without demonstrating a change in facts or law
- RBI guidelines, while not overriding the Act, are relevant in determining real income and accounting treatment
- Claims made through notes or not made in return can still be entertained by appellate authorities if facts are on record
On CBDT instructions, it held:
- Instructions like 17/2008 are only administrative and cannot override the Act
- Disallowance cannot be made solely based on such instructions without statutory backing
On provision for pension (₹1972 crore):
- Based on actuarial valuation under AS-15, the liability was held to be ascertained and not contingent
- It is not a contribution to a fund, hence not hit by sections 36, 40A(7), or 40A(9)
- Allowable as business expenditure u/s 37(1) under mercantile system
The Tribunal also relied heavily on earlier years’ decisions in assessee’s own case, reinforcing that:
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