CANARA BANK Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) All these four appeals are taken up for consideration together as common question of law is involved The assessee-Canara Bank is a Nationalized Bank carrying on banking business It filed its return of income for the asst yr 2000-01 on 29th Nov, 2000 declaring total income of Rs 1,43,56,29,680 and claiming refund of Rs 44,34,04,764 The return was processed on 26th Nov, 2001 and refund of Rs 51,46,79,254 (including 244A interest), was issued Thereafter, the case was selected for scrutiny under s 143(3) of the IT Act, 1961 (for short hereinafter referred to as 'the Act') Notices were issued under ss 143(2) and 143(1) on 26th Nov, 2001 which was received by the assessee on the same day The assessee had claimed disallowance under s 14A of the Act in a sum of Rs 16,50,00,000 The assessee had claimed the following income as exempt under s 10 of the Act:

(2.) The assessee contended that "since they have not incurred any expenditure for earning aforesaid income, the question of expenditure relating to these income being added back to the taxable income would not arise"

(3.) The assessing authority did not accept the said contention of the assessee and disallowed Rs 165 crores On calculation, the assessing authority came to the conclusion that 54 per cent of the total exempted income is the expenditure incurred for earning the said income