Research › Search › Judgment

Karnataka High Court · body

2008 DIGILAW 25 (KAR)

Commissioner of Income Tax v. Vysya Bank Ltd.

2008-01-09

DEEPAK VERMA, K.L.MANJUNATH

body2008
JUDGMENT Deepak Verma, J.— This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter shall be referred to in short as "the Act"), has been preferred by the Revenue against the order passed by the Income Tax Appellate Tribunal, Bangalore Bench, in I. T. A. No. 408/Bang/1996, dated March 28, 2002, raising the following substantial question of law: Whether the Tribunal was correct in holding that the payment of Rs. 5,00,000 to SEBI towards authorisation fee as per the Securities and Exchange Board of India Act, 1992, should be treated as a revenue expenditure and not as a capital expenditure as held by the Commissioner exercising the jurisdiction under Section 263 of the Act. 2. The short facts, material for deciding the said matter, are as under: The respondent-assesses is a company carrying on the business of banking. In respect of the assessment year 1991-92, the assessee filed a return of income on December 27, 1991, showing an income of Rs. 10,01,37,310. The Assessing Officer took up the matter for scrutinizing the assessment. The assessment was completed by making certain additions under an assessment order dated March 31, 1994. The Commissioner of Income Tax on perusal of the records of the assessee, found that the claim of Rs. 5,00,000 being paid to SEBI during the assessment year as authorisation fee, had wrongly been allowed as revenue expenditure. Hence, proceeding under Section 263 of the Act was initiated by the Commissioner. The assessee submitted its reply to the said notice. However, the Commissioner was pleased to hold that the sum of Rs. 5,00,000 deposited by the assessee as authorisation fee to SEBI was capital expenditure. This payment was made in order to meet the requirements of the Securities of Exchange Board of India Act, 1992. According to the appellate authority, payment was made only once. Hence, the expenditure incurred by the assessee rendered the assessee with a benefit of enduring nature and, therefore, treated it as capital expenditure. Against the order of the Commissioner of Income Tax, the assessee feeling aggrieved preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal on appreciation of facts and law, placed reliance on the judgment of the Supreme Court reported in Bikaner Gypsums Ltd. Vs. Commissioner of Income Tax, Rajasthan, AIR 1991 SC 227 , was pleased to hold that the payment of Rs. 5,00,000 was a revenue expenditure. The Tribunal on appreciation of facts and law, placed reliance on the judgment of the Supreme Court reported in Bikaner Gypsums Ltd. Vs. Commissioner of Income Tax, Rajasthan, AIR 1991 SC 227 , was pleased to hold that the payment of Rs. 5,00,000 was a revenue expenditure. As a necessary consequence thereof the Tribunal allowed the appeal preferred by the assessee and the order of the Commissioner of Income Tax was set aside. The Revenue being aggrieved against the order passed by the Tribunal, as mentioned hereinabove, has preferred this appeal under Section 260A of the Act. 3. We have accordingly heard learned Counsel for the parties. 4. At the outset, learned Counsel Sri S. Parthasarathi, appearing for the assessee made a statement at the Bar that on enquiries being made by him, it has been found that the aforesaid sum of Rs. 5,00,000 deposited by other banking companies with SEBI has throughout been treated as revenue expenditure. It has also been contended that this would go to show that the assessee has not been accorded the same treatment, which has been accorded to other similarly situated assessees. Thus, a case of discrimination was tried to be put forth before us. 5. Even though we had granted time to learned Counsel for the appellants to ascertain this statement of fact made by learned Counsel for the assessee, but he was not able to gather necessary information nor was in a position to controvert the statement made by learned Counsel for the assessee. 6. In the light of the statement made at the Bar by learned Counsel for the respondent, we find that there is no merit or substance in this appeal. If the Revenue had been treating the amount of Rs. 5,00,000 deposited by the similarly situated assessees with SEBI as revenue expenditure, then there is no reason why a different treatment should be meted out to the present assessee. In the light of the foregoing discussion, we are of the opinion that there is no substance in this appeal. 7. However, it may be clarified that in case, statement made by learned Counsel for the respondent is found to be incorrect, then the appellant would be at liberty to move an appropriate application either for recalling the present order or for review of the order. 8. 7. However, it may be clarified that in case, statement made by learned Counsel for the respondent is found to be incorrect, then the appellant would be at liberty to move an appropriate application either for recalling the present order or for review of the order. 8. The appeal stands dismissed, without specifically answering the question of law as framed by the Revenue in this appeal.