DHANALAKSHMI BANK Vs. CIT

JUDGEMENT

(1.) The first four Appeals are filed by the Dhanalakshmi Bank Ltd. in respect of the assessment years 1986-87, 1987-88, 1988-89 and 1992-93. The next seven appeals are filed by the South Indian Bank Ltd. in respect of the assessment years 1987-88 to 1992-1993 and the remaining seven Appeals are filed by the Nedungadi Bank Ltd. in respect of the assessment years 1985-86 to 1991-92. The appellants are all Scheduled Banks which are assessees under the Income Tax Act, 1961 (for short, the Act).

(2.) The sole question arising for consideration in all these Appeals is regarding the scope and ambit of the proviso to clause (vii) of sub-s. (1) of S.36 of the Act. Since the aforesaid question is a purely legal issue, it is not necessary to state the factual situation of each of these Appeals. Suffice it to say that the Appellants in all these Appeals are Scheduled Banks and that the appellants in their assessments under the Act for the concerned assessment years had claimed deductions both under the provisions of S.36(1)(vii) and under the provisions of S.36(1)(viia) of the Act. There is no dispute with regard to the computation of the benefit available under clause (viia) of sub-s. (i) of S.37 of the Act. However, the dispute is only with regard to the computation of the benefit available under clause (vii) of the said sub-section. As already noted, the scope of the proviso to clause (vii) of S.36(1) of the Act is the issue involved in these appeals. It is therefore necessary to refer to the relevant provisions of S.36 of the Act. Here, it must be noted that S.36(1)(vii) in terms refers to the provisions of S.36(2) and also 36(1)(viia) of the Act. It is also necessary to note that the proviso to clause (vii) of S.36(1) and clause (v) of S.36(2) were inserted simultaneously with effect from 1.4.1985 by the Finance Act of 1985. Clause (viia) of S.36(1) of the Act, it must be noted, was inserted by Act 21/1979 with effect from 1.4.1988 and first substituted by Act 32/1985 with effect from 1.4.1985 and later by Act 26/1986 with effect from 1.4.1987. There were certain other changes also which are not relevant for these Appeals and hence those details are not given. In the circumstances, it will be advantageous to refer to the provisions of clause (vii) and (viia) as they stood prior to their amendment by the Finance Act, 1985 as also the said provisions as it stood after the amendment of 1985. S.36(1)(vii) and (viia) as it stood prior to the amendment made by the Finance Act, 1985 reads as follows:

(3.) S.36(1)(vii) and (viia) as it stood after the amendment made by the Finance Act, 1985 read as follows: