Bombay High Court
Mercantile Bank Ltd. vs Commissioner Of Income Tax on 18 February, 1999
Equivalent citations: [2001]252ITR225(BOM)
Author: S.H. Kapadia
Bench: S.H. Kapadia
JUDGMENT
1. By this reference under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions of law for the opinion of this court at the instance of the Department.
Department's questions :
"1. Whether, on the facts and in the circumstances of the case, the expenditure incurred on the repairs and maintenance of the premises given rent-free to the employee cannot be considered as perquisite for the purpose of Section 40A(5) ?
2. Whether, on the facts and in the circumstances of the case, the assessee is not liable to be taxed in respect of the amount credited to the interest suspense account representing interest on sticky loans and advances and which is not taken to the profit and loss account for the relevant accounting year ?
5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the restriction of deduction of expenses at 5 per cent, laid down in Section 44C of the Act was not applicable in respect of the expenditure incurred up to June 1, 1976 ?
Company's question :
4. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that income by way of discounting charges of treasury bills was chargeable as 'profits and gains of business or profession' and not as 'interest on securities' ?"
2. At the outset, it may be mentioned that learned counsel for the parties stated that all the above questions stand covered by the various judgments of this court and the Supreme Court.
3. Question No. 1 stands covered by the judgment of the Bombay High Court in Lubrizol India Ltd. v. CIT [1991] 187 ITR 25. Accordingly, question No. 1 is answered in the negative, i.e., against the assessee and in favour of the Revenue.
4. The controversy in question No. 2 is squarely covered by the judgments of the Supreme Court in State Bank of Travancore v. CIT and in Kerala Financial Corporation v. CIT and the judgment rendered today by us in Income-tax Reference No. 83 of 1986-- Banque Nationals de Paris v. CIT [1999] 237 ITR 518 (Bom). Accordingly, question No. 2 is answered in the negative, i.e., against the assessee and in favour of the Revenue.
5. As regards question No. 3 is concerned, Section 44C of the Act came into force from June 1, 1976. In the circumstances, the answer to question No. 3 is self-evident. Accordingly, question No. 3 is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
6. As regards question No. 4 is concerned, the issue is squarely covered by the judgment of the Bombay High Court in British Bank of the Middle East v. CIT [1998] 233 ITR 251. Hence, question No. 4 is answered in the negative, i.e., against the Revenue and in favour of the assessee.
7. Reference stands disposed of accordingly with no order as to costs.