COMMISSIONER OF INCOME TAX Vs. KARNATAKA BANK LTD.

JUDGEMENT

(1.) ALL these appeals are preferred by the Revenue, challenging the order passed by the Income Tax Appellate Tribunal, Bangalore (hereinafter referred to as 'the Tribunal' for short), granting relief to the assessees. The five substantial questions of law, which arise for consideration in all these appeals, are as under:

(2.) THE substantial questions of law -1, 2, 3 and 4 arose for consideration in the assessee's case itself in I.T.A. Nos. 675 and 657/2008. By an elaborate judgment, this Court considered the said questions of law and by an order dated 1st July, 2004 has answered the first and second substantial questions of law in favour of assessee and against the Revenue. Insofar as third and fourth substantial questions of law are concerned, this Court had remanded the matter to the Assessing Authority and directed the Assessing Authority to decide the said questions of law in terms of the judgment of the Hon'ble Supreme Court in the case of Catholic Syrian Bank Ltd. v. CIT : [2012] 343 ITR 270 : 206 Taxman 182/18 taxmann.com 282. Accordingly, in these cases also, the substantial questions of law -1 and 2 are answered in favour of the assessee and the substantial questions of law -3 and 4 are not answered as the impugned order on that aspect is set aside and the matter is remanded to the Assessing Authority for fresh disposal and in accordance with law. Therefore, the only question of law that remains for consideration by this Court for the first time is the fifth substantial question of law.

(3.) THE First Appellate Authority held that the assessee claimed for deduction in respect of unrealized lease rentals on the NPAs, which is found to be in accordance with the guidelines and the instructions issued by the Reserve Bank of India, which is empowered to deal with such matters in terms of Section 43D of the Act. In fact, in the earlier years, the unrealized lease rentals were allowed. Therefore, following the said judgment, the claim of the assessee towards unrealized lease rentals was directed to be allowed. Aggrieved by the said order, the Revenue preferred an appeal to the Tribunal.