Binding precedent governs salary, perquisites and sticky-loan interest, leaving the Revenue's challenge unsuccessful.

Salary and perquisites paid by a bank to employees were held, in the connected matter for the same assessment year, to be governed by the earlier binding decision, and the restriction under section 40A(5) was therefore treated as inapplicable to the extent contended by the Revenue. Interest on sticky loans was also governed by the principle laid down in UCO Bank and the CBDT circular, so the circular-based method continued to apply. Both questions were resolved in favour of the assessee and against the Revenue, and the appeal accordingly failed on the settled legal position.

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Issues: (i) Whether salary and perquisites paid by the assessee bank to its employees were to be apportioned and whether the restriction under section 40A(5) applied only to the portion treated as business expenditure under section 28 of the Income-tax Act, 1961. (ii) Whether interest on sticky loans was to be determined on the basis of the CBDT circular.

Issue (i): Whether salary and perquisites paid by the assessee bank to its employees were to be apportioned and whether the restriction under section 40A(5) applied only to the portion treated as business expenditure under section 28 of the Income-tax Act, 1961.

Analysis: The question stood concluded against the Revenue by the Court's earlier order in the connected matter for the same assessment year. The High Court had also answered the issue in favour of the assessee.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Issue (ii): Whether interest on sticky loans was to be determined on the basis of the CBDT circular.

Analysis: The issue had already been concluded by the decision in UCO Bank, which governed the question raised.

Conclusion: The issue was answered in favour of the assessee and against the Revenue.

Final Conclusion: The appeal was rejected after both substantive questions were decided against the Revenue, and the remaining question was treated as not requiring an answer.

Ratio Decidendi: Where the controlling legal issue has already been settled by an earlier binding decision, the same conclusion governs the appeal and the Revenue's challenge fails.

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