STATE BANK OF PATIALA vs COMMISSIONER OF INCOME TAX

G.S. SINGHVI, J.

"Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the amounts set apart by the assessee during the previous year for bad and doubtful debts did not constitute ''reserve'' as contemplated under r. 1(d)(b) of the First Schedule and r. 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?

ITC No. 16 of 1996 relates to the asst. yr. 1985-86. Other cases relate to the asst. yrs. 1979-80, 1980-81, 1981-82, 1982-83, 1983- 84, 1984-85, 1986-87 and 1987-88.

Shri B.S. Gupta, Senior Advocate appearing for the petitioners, vehemently argued that the Tribunal should be directed to refer the question of law formulated by the petitioner because the same will arise for consideration of this Court in large number of cases. Learned counsel argued that the decision rendered by this Court in Commissioner of Income Tax (Central) Vs. Shiv Parshad, should be declared as not laying down correct proposition of law. He placed reliance on the decision of the Supreme Court in D.B. Madan Vs. Commissioner of Income Tax, and a decision of the Division Bench of Kerala High Court in Commissioner of Income Tax Vs. Kontiki Chemicals and Pharmaceuticals Pvt. Ltd., in support of his argument that merely because the High Court has taken a particular view on a question earlier referred by the Tribunal, subsequent reference of the similar question cannot be declined on that ground.

Shri Sawhney appearing for the Revenue relied on the decision of this Court in CIT vs. Shiv Parshad (supra) and argued that there is no justification to reconsider the decision in Shiv Parshad''s case.

In all fairness to Shri Gupta, we must mention that the learned counsel was candid and forthright in stating that the main case stands decided by the Apex Court in State Bank of Patiala, Patiala Vs. Commissioner of Income Tax, Patiala, . Learned counsel was fair enough to state that their Lordships of the Supreme Court not only decided the cases relating to the asst. yrs. 1971-72, 1972-73, 1973-74 and 1975-76, but also relating to the years 1979-80 to 1987-88 and the decision of this Court in Commissioner of Income Tax Vs. State Bank of Patiala, has been reversed.

We have carefully perused the decision of the apex Court in State Bank of Patiala vs. CIT (supra) in which their Lordships have held as under :

accordingly, on the facts, that substantial amounts were set apart by the assessee, a banking company, as reserves. No amount of bad debt was actually written off or adjusted against the amount claimed as reserves. No claim for any deduction by way of bad debts were made during the relevant assessment years. The assessee never appropriated any amount against any bad and doubtful debts. The amounts throughout remained in the account of the assessee by way of capital and the assessee treated the said amounts as .1 reserves" and not as "provisions" designed to meet any liability, contingency, commitment or diminution in the value of assets known to exist at the relevant dates of the balance-sheets. The facts had been found by the Tribunal. Hence, the amounts set apart towards bad and doubtful debts in these cases were 11 reserves" qualifying for appropriate relief under r. 1(xi)(b) of the First Schedule and r. 1(iii) of the Second Schedule to the Act."

In our opinion, once the Apex Court has made an adjudication on the merits of the orders which were under challenge before the authorities constituted under 1961 Act, there is no justification for us to make an adjudication on the point raised by Shri Gupta because the same has become an academic issue. Expression of opinion by us on the correctness of the view taken by the Division Bench in CIT vs. Shiv Parashad (supra), is not called for in the face of final adjudication of the cases of the petitioner and we are firmly of the opinion that question should be left to be examined in some other case.

For the reasons mentioned above, these nine petitions are declared as having become infructuous and the same are dismissed as such.

OPEN