State Bank Of India, Mumbai vs Asst CIT Cir 2(2), Mumbai

Headnote AI-drafted · Editorially reviewed

These are cross-appeals arising out of the order of the Commissioner of Income-tax (Appeals)-5, Mumbai dated 21 March 2017 for Assessment Year 2010-11. The assessee, State Bank of India, challenged numerous disallowances and additions made by the Assessing Officer and confirmed by the CIT(A), including disallowance of provision for pension of Rs. 1972,64,00,000, depreciation on matured securities, disallowance under section 14A, depreciation on leased assets, bad debts written off under section 36(1)(vii), provision for employee benefits, and taxation of interest on non-performing assets and non-performing investments.

The Revenue also filed a cross-appeal challenging certain reliefs granted by the CIT(A) in favour of the assessee. Key issues raised by the assessee included the non-taxability of income from foreign branches under applicable double taxation avoidance agreements, the deductibility of contributions to the Retired Employees Medical Benefit Scheme, provision for incentive to meritorious students, and the non-taxability of recovery of bad debts written off in earlier years under section 41(4) where no deduction had been claimed under section 36(1)(vii).

The Tribunal was called upon to adjudicate upon a wide array of issues pertaining to computation of income of a nationalised bank including the interplay of sections 14A, 36(1)(vii), 36(1)(viia), 40A, 43B and treaty provisions under the Income-tax Act, 1961 for Assessment Year 2010-11.

Catchwords: Income Tax State Bank of India provision for pension bad debts section 36(1)(vii) section 36(1)(viia) section 14A non-performing assets non-performing investments depreciation on securities section 43B leave encashment Retired Employees Medical Benefit Scheme foreign branch income double taxation relief section 41(4) Assessment Year 2010-11 nationalised bank Income Tax Appellate Tribunal