Oriental Bank of Commerce, Gurgaon V. ACIT, New Delhi

ITA 1020/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7509 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPIKA MITTAL
• Keywords: Depreciation; Question of law; Cost of acquisition; Wrong claim
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADI N. MISHRA, ACCOUNTANT MEMBER I.T.A. NO. 1020/DEL/2013 A.Y. : 2007-08 ORIENTAL BANK OF COMMERCE, CENTRAL ACCOUNT OFFICE, PLOT NO. 5, SECTOR-32, INSTITUTIONAL AREA, GURGAON 122001 (PAN: AAAC0191M) VS. ACIT, CIRCLE 13(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K.V.S.R. KRISHNA, CA DEPARTMENT BY : MS. DEEPIKA MITTAL, CIT(DR) DATE OF HEARING : 02-08-2016 DATE OF ORDER : 04-08-2016 ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER D ATED 27.12.2012 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI , DELHI PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUND:- ITA NO.1020/DEL/2013 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE PENALTY OF RS. 69,14,77,380/- ULS 271(1)(C) LEVIED BY AO, ON DISALLOWANCE OF LOSS ON FALL IN VALUE OF INVESTMENT S HELD AS STOCK-IN- TRADE OF RS.205.43 CRORES, ALLEGING FURNISHING OF I NACCURATE PARTICULARS OF INCOME. THE PENALTY LEVIED IS WRONG AND BAD IN LAW AND HENCE DESERVES TO BE DELETED. 2. THE LD. CIT(A) AS WELL AS AO HAS FAILED TO APPRE CIATE THAT THE CLAIM MADE BY THE BANK IS IN ACCORDANCE WITH ACCEPTED ACC OUNTING PRINCIPLES OF VALUATION OF STOCK IN TRADE AT COST O R MARKET VALUE. THE RBI CIRCULAR PERMITTED BANKS TO SHIFT FROM AFS (AVA ILABLE FOR SALE) I.E. STOCK IN TRADE TO HTM (HELD TO MATURITY) AT CO ST OR MARKET VALUE WHICHEVER IS LESS AS ON THE DATE OF SHIFTING AFTER PROVIDING FOR THE LOSS DUE TO FALL IN VALUE OF THE SECURITIES. THIS I S AN ACTUAL DEBIT TO THE PROFIT & LOSS ACCOUNT AND NOT A NOTIONAL ENTRY. THEREFORE, THERE IS NO CONCEALMENT OF INCOME. THE PENALTY SHOULD BE CANCELLED. 3. APPELLANT HAS FILED ALL THE DETAILS JUSTIFYING T HE CLAIM IN THE RETURN, BASED ON THE ACCEPTED ACCOUNTING PRINCIPLES, RBI CI RCULAR, THE SCRIPT WISE VALUATION OF STOCK IN TRADE AS ON DATE OF SHIF TING BASED ON FIMMDA RATES, THE INVESTMENT COMMITTEE APPROVAL DAT ED 20 TH APRIL 2006 ETC AND THE CASE LAWS. THEREFORE, THE CIT(A) I S FACTUALLY INCORRECT WHILE ALLEGING IN HIS ORDER THAT THE ASSE SSEE HAS FAILED TO OFFER ANY EXPLANATION ON WRONG CLAIM OF EXPENSES WA S BONAFIDE. HENCE, THE PENALTY SHOULD BE DELETED. 4. THE CIT(A) HAS FAILED TO APPRECIATE THAT, ON ME RITS ALSO, THE ASSESSEE'S CASE IS FULLY COVERED BY THE DECISION OF BANGALORE BENCH OF ITAT IN THE CASE OF STATE BANK OF MYSORE VS. DCIT REPORTED IN [2009] 33 SOT 7 (BANG.) WHEREIN THE ITAT AFTER CON SIDERING THE FACTS OF THE CASE ALLOWED THE CLAIM OF THE BANK . THEREFORE ALSO THERE ITA NO.1020/DEL/2013 3 IS NO CASE OF LEVYING PENALTY AS THE CLAIM OF THE A SSESSEE ON QUANTUM IS DULY SUPPORTED BY JUDICIAL DECISIONS. 5. THE APPELLANT FURTHER CONTENDS THAT THE CLAIM IS BONAFIDE AND NO INFORMATION / EXPLANATION / PARTICULARS FURNISH ED BY THE ASSESSEE WERE FOUND TO BE WRONG / INCORRECT BY THE AO AS WE LL AS CIT(A). THE CASE OF THE APPELLANT IS NOT HIT BY THE EXP LANATION TO SECTION 271 (1 )(C). THEREFORE, THE PENALTY LEVIED ON THE ABOVE BASIS IS NOT JUSTIFIABLE AS PER LAW AND DESERVES TO BE DELETED. 6. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PR EJUDICE TO ONE AND OTHER. 7. THE APPELLANT MAY BE ALLOWED TO ADD, AMEND AND F ORGO ANY OF THE GROUND AT THE TIME OF HEARING. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, THEREFORE, THE SAME ARE NOT REPEATED H ERE FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE, SH. KVSR KRISHNA, CA STATED THAT THE QUANTUM ON WH ICH THE PENALTY HAS BEEN IMPOSED, HAS ALREADY BEEN DELETED BY THE ITAT IN IT A NO. 1937/DEL/2011 (AY 2007-08) VIDE ORDER DATED 4.11.2015. HE FURTHER ST ATED THAT AGAINST THE TRIBUNALS ORDER DATED 4.11.2015, AS AFORESAID, THE DEPARTMENT WENT IN APPEAL BEFORE THE HONBLE HIGH COURT OF DELHI AND THE HON BLE HIGH COURT OF DELHI IN ITA NO. 306/2016 VIDE ORDER DATED 11.5.2016 HAS DIS MISSED THE APPEAL OF THE REVENUE TITLE AS PRINCIPAL COMMISSIONER OF INCOME TAX-7 VS. M/S ORIENTAL BANK OF COMMERCE. IN THIS BEHALF HE FILED THE COPI ES OF THE TRIBUNALS ORDER ITA NO.1020/DEL/2013 4 DATED 4.11.2015 AND HONBLE HIGH COURT OF DELHI ORD ER DATED 11.5.2016 IN ASSESSEES OWN CASE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT IN ASSESSEES OWN CASE IN ITA NO. 1937 /DEL/2011 FOR A.Y. 2007-08 VIDE ORDER DATED 4.11.2015, THE TRIBUNAL HA D ADJUDICATED THE ISSUE VIDE PARA NO. 13 TO 14 AT PAGES 8 TO 11 AND DELETED THE QUANTUM ADDITION IN THIS REGARD. FOR THE SAKE OF CONVENIENCE, WE ARE REPR ODUCING THE RELEVANT PORTION OF THE TRIBUNAL ORDER DATED 4.11.2015 AS UNDER:- 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS. DURING THE YEAR, ASSESSEE HAS DEBITED THE LOSS OF R S. 205.43 CRORES ARISING OF ON ACCOUNT OF TRANSFER OF SECURIT IES OF RS. 1664.32 CRORES FROM AVAILABLE FOR SALE CATEGORY T O HELD TO MATURITY CATEGORY IN TERMS OF RESOLUTION OF THE BO ARD OF DIRECTORS OF THE APPELLANT. CLAIM HAS ARISEN BECAUS E OF THE CIRCULAR ISSUED BY RESERVE BANK OF INDIA ON PRUDENT IAL NORMS FOR CLASSIFICATION, VALUATION AND OPERATION O F INVESTMENT PORTFOLIO BANK DATED 1ST JULY, 2006. ACC ORDING TO THAT CIRCULAR THE BANKS ARE ALLOWED TO TRANSFER SEC URITIES FROM ONE CATEGORY TO ANOTHER CATEGORY ONCE EVERY YE AR AT THE LEAST VALUE OF FOLLOWING :- ITA NO.1020/DEL/2013 5 (A) ACQUISITION COST (B) BOOK VALUE AND (C) MARKET VALUE. IT IS FURTHER PROVIDED THAT IF BECAUSE OF SUCH TRAN SFER ANY DEPRECIATION ARISES, IT SHOULD BE FULLY PROVIDED FO R. THE CLAIM OF THE ASSESSEE IS THAT THIS LOSS SHOULD BE A LLOWED AS DEDUCTION BECAUSE OF TRANSFER OF SECURITIES FROM ON E CATEGORY TO ANOTHER CATEGORY. THEREFORE, THE ISSUE IN APPEAL IS THAT WHETHER A BANKING COMPANY CLAIMS THE LOSS, BASED ON CIRCULARS AND INSTRUCTIONS OF RESERVE BANK OF INDIA , IS ALLOWABLE BECAUSE OF TRANSFER OF SECURITY FROM CATE GORY OF AVAILABLE FOR SALE TO HELD TO MATURITY. THIS IS SUE NOW NO LONGER SURVIVES IN VIEW OF TWO DECISIONS OF HONBLE KARNATAKA HIGH COURT IN CASE OF KARNATAKA BANK LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX 356 ITR 549 AN D CIT VS. BANK OF BARODA 262 ITR 334 AND A DECISION OF HONOURABLE BOMBAY HIGH COURT IN CASE OF CIT VS. HDF C BANK LTD. REPORTED AT 368 ITR 377 CONSIDERING DECIS ION OF HONOURABLE SUPREME COURT IN CASE OF UNITED COMMERCI AL BANK V CIT 240 ITR 355 AND SOUTHERN TECHNOLOGIES LI MITED ITA NO.1020/DEL/2013 6 V JT CIT 320 ITR 577, WHEREIN HONBLE HIGH COURT HA S HELD AS UNDER:- 9. IN THE PRESENT CASE, WE FIND THAT THE FACTS AND ISSUES THAT ARE COVERED BY THE AFORESAID JUDGMENT SQUARELY APPLY TO THE FACTS AND ISSUES RAISED IN TH E PRESENT APPEAL. NOT ONLY ARE WE IN FULL AGREEMENT W ITH THE JUDGMENT OF THIS COURT IN THE CASE OF BANK OF BARODA (SUPRA) BUT WE ARE BOUND BY THE SAME. WE THEREFORE RESPECTFULLY FOLLOW THE RATIO LAID DOWN I N THE SAID JUDGMENT. 10. WE FIND THAT EVEN THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA BANK LTD. (SUPRA), RELIANCE ON WHICH WAS PLACED BY MR MISTRY, SQUARELY COVERS THE ISSUE RAISED IN THIS APPEAL. TH E FACTS IN THE CASE BEFORE THE KARNATAKA HIGH COURT WERE THAT THE ASSESSEE WAS HOLDING SECURITIES IN DIFFERENT CATEGORIES AS MANDATED BY THE RBI MASTER CIRCULAR DATED 1ST SEPTEMBER 2003. THE ASSESSEE TREATED SUCH SECURITIES AS STOCK-IN-TRADE AND CLAIM ED DEPRECIATION ON THE BOOK VALUE AFTER VALUING THE SECURITIES AT COST OR MARKET VALUE WHICHEVER WAS ITA NO.1020/DEL/2013 7 LOWER. THE REVENUE REFUSED TO ACCEPT THE ASSESSEE'S PLEA FOR THE DEDUCTION AND DISALLOWED THE SAME AND ADDED BACK TO THE TOTAL INCOME THE SAID AMOUNT. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (APPEALS). THE SAME WAS DISMISSED UPHOLDING THE CONTENTION OF THE ASSESSING AUTHORITY. AGGRIEVED THEREBY, THE ASSESSEE PREFERRE D AN APPEAL TO THE TRIBUNAL. THE TRIBUNAL INTER ALIA HELD THAT SINCE THE SECURITIES ON WHICH THE DEPRECIATION HAD BEEN CLAIMED ON THE EARLIER YEARS HAD NOT BEEN IDENTIFIED, THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFR ESH AND PARTLY ALLOWED THE APPEAL. BEING AGGRIEVED BY T HE SAID ORDER, KARNATAKA BANK LTD. PREFERRED AN APPEAL TO THE KARNATAKA HIGH COURT UNDER SECTION 260A OF THE ACT. AFTER DISCUSSING VARIOUS JUDGMENTS OF THE SUPREME COURT, THE KARNATAKA HIGH COURT HELD AS UNDER : 'FROM THE AFORESAID JUDGMENTS OF THE APEX COURT, NOW IT IS CLEAR THAT A METHOD OF ACCOUNTING ADOPTED BY THE TAXPAYER CONSISTENTLY ITA NO.1020/DEL/2013 8 AND REGULARLY CANNOT BE DISCARDED BY THE DEPARTMENTAL AUTHORITIES ON THE VIEW THAT HE SHOULD HAVE ADOPTED A DIFFERENT METHOD OF KEEPING THE ACCOUNTS OR ON VALUATION. FINANCIAL INSTITUTIONS LIKE BANK, ARE EXPECTED TO MAINTAIN ACCOUNTS IN TERMS OF THE RBI ACT AND ITS REGULATIONS. THE FORM IN WHICH, ACCOUNTS HAVE TO BE MAINTAINED IS PRESCRIBED UNDER THE AFORESAID LEGISLATION. THEREFORE, THE ACCOUNT HAD TO BE IN CONFORMITY WITH THE SAID REQUIREMENTS. THE RBI ACT OR THE COMPANIES ACT DO NOT DEAL WITH THE PERMISSIBLE DEDUCTIONS OR EXCLUSION UNDER THE INCOME TAX ACT. FOR THE PURPOSE OF THE INCOME TAX ACT, IF THE ASSESSEE HAS CONSISTENTLY BEEN TREATING THE VALUE OF INVESTMENT FOR MORE THAN TWO DECADES THE INVESTMENTS AS STOCK-IN-TRADE AND CLAIMED DEPRECIATION, IT IS NOT OPEN TO THE AUTHORITIES TO DISALLOW THE SAID DEPRECIATION ON THE GROUND THAT IN THE BALANCE-SHEET IT IS SHOWN AS INVESTMENT IN TERMS OF THE RBI REGULATIONS. THE RBI REGULATIONS, THE COMPANIES ACT AND THE ITA NO.1020/DEL/2013 9 INCOME TAX ACT OPERATE ALTOGETHER IN DIFFERENT FIELDS. THE QUESTION WHETHER THE ASSESSEE IS ENTITLED TO PARTICULAR DEDUCTION OR NOT WILL DEPEND UPON THE PROVISION OF LAW RELATING THERETO AND NOT THE WAY, IN WHICH THE ENTRIES ARE MADE IN THE BOOKS OF ACCOUNT. IT IS NOT DECISIVE OR CONCLUSIVE IN THE MATTER. FOR THE PURPOSE OF THE INCOME TAX ACT WHICHEVER METHOD IS ADOPTED BY THE ASSESSEE, A TRUE PICTURE OF THE PROFITS AND GAINS, I.E. REAL INCOME IS TO BE DISCLOSED. FOR DETERMINING THE REAL INCOME, THE ENTRIES IN THE BALANCE SHEET IS REQUIRED TO BE MAINTAINED IN THE STATUTORY FORM MAY NOT BE DECISIVE OR CONCLUSIVE. IT IS OPEN TO THE INCOME TAX OFFICER AS WELL AS THE ASSESSEE TO POINT OUT TRUE AND PROPER INCOME WHILE SUBMITTING THE INCOME TAX RETURNS. EVEN IF THE ASSESSEE UNDER SOME MISREPRESENTATION OR MISTAKE FAILS TO MAKE AN ENTRY IN THE BOOKS OF ACCOUNT, ALTHOUGH UNDER LAW, A DEDUCTION MUST BE ALLOWED BY THE INCOME TAX OFFICER, THE ASSESSEE WILL NOT LOSE ANY RIGHT ON CLAIMING OR WILL BE DEBARRED FROM ITA NO.1020/DEL/2013 10 BEING ALLOWED THE DEDUCTION. THEREFORE, THE APPROACH OF THE AUTHORITIES IN THIS REGARD IS CONTRARY TO THE WELL SETTLED LEGAL POSITION AS DECLARED BY THE APEX COURT. IN THE INSTANT CASE, THE ASSESSEE HAS MAINTAINED THE ACCOUNTS IN TERMS OF THE RBI REGULATIONS AND HE HAS SHOWN IT AS INVESTMENT. BUT CONSISTENTLY FOR MORE THAN TWO DECADES IT HAS BEEN SHOWN AS STOCK-IN-TRADE AND DEPRECIATION IS CLAIMED AND ALLOWED. THEREFORE, NOTWITHSTANDING THAT IN THE BALANCE- SHEET, IT IS SHOWN AS INVESTMENT, FOR THE PURPOSE OF INCOME TAX ACT, IT IS SHOWN AS STOCK-IN-TRADE. THEREFORE, THE VALUE OF THE STOCKS BEING CLOSELY CONNECTED WITH THE STOCK MARKET, AT THE END OF THE FINANCIAL YEAR, WHILE VALUING THE ASSETS, NECESSARILY THE BANK HAS TO TAKE INTO CONSIDERATION THE MARKET VALUE OF THE SHARES. IF THE MARKET VALUE IS LESS THAN THE COST PRICE, IN LAW, THEY ARE ENTITLED TO DEDUCTIONS AND IT CANNOT BE DENIED BY THE AUTHORITIES UNDER THE ITA NO.1020/DEL/2013 11 PRETEXT THAT IT IS SHOWN AS INVESTMENT IN THE BALANCE-SHEET.' (EMPHASIS SUPPLIED) 11. WE THEREFORE FIND THAT THE ISSUE RAISED IN THIS APPEAL IS ALSO SQUARELY COVERED BY THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA BANK LTD. (SUPRA). 12. IN VIEW THEREOF, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE ITAT. THE PRESENT APPEAL DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW AS PROJECTED BY THE LEARNED COUNSEL APPEARING FOR THE APPELLANT. THE APPEAL IS THEREFORE DISMISSED. 14. THEREFORE, WE FIND THAT THE ISSUE RAISED IN THI S APPEAL SQUARELY COVERED BY THE DECISION OF HONBLE KARNATA KA HIGH COURT AS WELL AS MUMBAI HIGH COURT IN FAVOUR OF ASS SESSEE. THEREFORE, RESPECTFULLY FOLLOWING THOSE JUDICIAL PR ECEDENTS, WE REVERSE THE ORDER OF CIT (A) AND DELETE THE DISA LLOWANCE OF RS. 205.43 CRORES ON ACCOUNT OF CLAIM OF LOSS OF TRANSFER OF SECURITY FROM AVAILABLE FOR SALE CATEGORY TO HELD TO MATURITY CATEGORY BY THE APPELLANT BANK IN ACCORDA NCE WITH DIRECTION/ CIRCULAR OF RESERVE BANK OF INDIA. ITA NO.1020/DEL/2013 12 5.1 WE FURTHER FIND CONSIDERABLE COGENCY IN THE ASS ESSEES A.R. CONTENTION THAT AGAINST THE TRIBUNAL ORDER DATED 4.11.2015, TH E DEPARTMENT WENT IN APPEAL BEFORE THE HONBLE HIGH COURT OF DELHI IN ITA NO. 306/2016 AND THE HONBLE HIGH COURT OF DELHI VIDE ORDER DATED 11.5.2016 HAS DISMISSED THE APPEAL OF THE REVENUE VIDE PARA NO. 2 TO 5 AT PAGES 2 TO 4 TITLE AS PRINCIPAL COMMISSIONER OF INCOME TAX-7 VS. M/S ORIENTAL BANK OF COMMERCE. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE RELEVANT PORTIO N OF THE ORDER DATED 11.5.2016 PASSED BY THE HONBLE HIGH COURT OF DELH I AS UNDER:- 2. THE FIRST GROUND URGED IN THE APPEAL IS THAT IT AT HAS ERRED IN LAW IN DELETING THE ADDITION PERTAINING TO THE CLAIM OF LOSS ON ACCOUNT OF FALL IN VALUE OF THE INVESTMENT HELD AS STOCK IN TRADE TO THE EXTENT OF RS. 205.10 CRORES. 3. THE ITAT FOUND THAT THE ASSESSEE HAS BEEN CONSISTENTLY REFLECTING THE INVESTMENT AS STOCK-IN- TRADE IN ITS BALANCE SHEET. THE ITAT HAS NOTED THAT THE ASSESSEE HAD IN COMPLIANCE WITH THE DIRECTION OF TH E RESERVE BANK OF INDIA (RBI) TRANSFERRED SLR SECURITIES APPRECIATING TO RS. 1664.32 CRORES FROM THE 'AVAILABLE FOR SALE' CATEGORY TO THE 'HELD TO MATUR ITY' CATEGORY DURING THE AY IN QUESTION. THIS RESULTED I N MARK TO MARKET DEVALUATION OF RS. 205.43 CRORES WHICH WAS DEBITED TO THE P&L ACCOUNT. REGARDING ITA NO.1020/DEL/2013 13 MAINTAINING A MINIMUM AMOUNT OF STOCK AS RESERVE. THE AO DISALLOWED THIS BY TERMING IT AS A NOTIONAL AND NOT A REAL LOSS. THE IT AT DISAGREED AND REVERSED T HE AO IN LIGHT OF THE LEGAL POSITION EXPLAINED IN THE DECISION OF THE HIGH COURT OF KARNATAKA IN KARNATAK A BANK LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX [2013] 356 ITR 549 (KAR.) AND THE DECISIONS HIGH COURT OF BOMBAY IN COMMISSIONER OF INCOME TAX V. BANK OF BARODA [2003] 262 ITR 334 (BOM) AND COMMISSIONER OF INCOME TAX V. HDFC BANK LTD. [2014] 368 ITR 377 (BOM). THE ITAT HAS NOTED THAT THE ABOVE DECISIONS REFERRED TO THE DECISIONS OF TH E SUPREME COURT IN UNITED COMMERCIAL BANK V. COMMISSIONER OF INCOME TAX [1999] 240 ITR 355 (SC) AND SOUTHERN TECHNOLOGIES LTD V. THE JOINT COMMISSIONER OF INCOME TAX [2010] 320 ITR 577 (SC). 4. HOWEVER, MR. SHIVPURI, LEARNED SENIOR STANDING COUNSEL APPEARING FOR THE REVENUE, SEEKS TO PLACE RELIANCE ON ANOTHER DECISION OF HIGH COURT OF KARNATAKA IN COMMISSIONER OF INCOME TAX V. ING ITA NO.1020/DEL/2013 14 VYSYA BANK LTD. [2013] 356 ITR 532 (KAR.) WHERE, IN THE FACTS OF THAT CASE IT WAS HELD THAT WHERE THE ASSESSEE INVESTED IN SECURITIES FOR THE PURPOSE OF COMPLYING WITH RBI INSTRUCTIONS, SUCH INVESTMENTS COULD NOT BE TERMED AS INVESTMENT IN THE FORM OF SECURITY READY FOR SALE. 5. THE COURT IS NOT PERSUADED TO CONCUR WITH THE VIEW EXPRESSED IN ING VYSYA BANK LTD. (SUPRA) WHICH APPEARS TO HAVE BEEN DECIDED IN THE PECULIAR FACTS OF THAT CASE. THE COURT PREFERS TO ADOPT THE REASONING IN THE DECISION THE KARNATAKA HIGH COURT IN KARNATAKA BANK LTD. (SUPRA) AND THE BOMBAY HIGH COURT IN HDFC BANK LTD. (SUPRA). THE COURT ACCORDINGLY DECLINES TO FRAME A QUESTION OF THIS ISSUE. 5.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE, WE FIND THAT THE ADDITION ON WHICH THE PENALTY IN DISPUTE WAS LE VIED, HAS ALREADY BEEN DELETED BY THE ITAT VIDE ORDER DATED 4.11..2015 IN ITA NO. 1937/DEL/2011 & ORS. (AY 2007-08) IN ASSESSEES OWN CASE AND THE OR DER OF THE TRIBUNAL WAS AFFIRMED BY THE HONBLE HIGH COURT VIDE ITS ORDER D ATED 11.5.2016 BY DISMISSED THE ITA 306/2016 FILED BY THE REVENUE, A S AFORESAID, HENCE, THE PENALTY IN DISPUTE WILL NOT SURVIVE. ACCORDINGLY , WE CANCEL THE ORDERS OF THE ITA NO.1020/DEL/2013 15 AUTHORITIES BELOW AND DELETE THE PENALTY IN DISPUTE AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/08/2016. SD/- SD/- [ANADI N. MISHRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04/08/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO.1020/DEL/2013 16