The Supreme Court issued notice to Canara Bank in a Special Leave Petition (SLP) that arose out of the impugned final judgment and order passed by the High Court of Karnataka wherein challenged the revision order passed under section 263 of the Income Tax Act, 1961.
The assessee is a public sector bank engaged in the business of banking. It filed returns for the A.Y. 2008-09 declaring an income of Rs. 6,19,24,037/-. The AO vide order dated November 19, 2010, made certain disallowances in the total income.
The CIT, Suo-moto took up the matter under Section 263 of the Income Tax Act, 1961 and held that the order passed by AO was erroneous and prejudicial to the interest of the Revenue. On appeal, ITAT allowed the assessee’s appeal holding that the CIT(A) ought not to have exercised the jurisdiction under Section 263 of the Act.
The High Court held that “Out of the five issues taken up under Section 263 of the Act, issues no. i, iii and v are covered by decisions noted supra. The issue no. it is about the accounting standards and Assessee is following AS-15 and made remittances in respect of contribution to the gratuity fund, therefore, it is entitled to a deduction in terms of Section 43B of the Act. Concerning issue no. iv, Shri. Suryanarayana is right in his submission that a separate order is required about interest and the same cannot be computed in the order passed under Section 143(3) of the Act. Thus, in our considered view, the conclusions arrived at by the AO are neither erroneous nor prejudicial to the interest of the Revenue. Hence, no exception can be taken to the impugned order passed by the ITAT.”
A two-judge bench Justice B V Nagarathna and Justice Ujjal Bhuyan issued notice to the Canara Bank.
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