ACIT, CIRCLE-1(1)(1), VEJALPUR V. THE GUJARAT STATE CO-OP. BANK LTD., AHMEDABAD CITY

ITA 124/AHD/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5805 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 22-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEAPPELLANTVEHEMENTLY
• Assessee Lawyers: THEDECISIONDATED..OFTHECOORDINATEBENCH
• Keywords: Depreciation

Judgement Text

xplanation INTHEINCOMETAXAPPELLATETRIBUNAL AHMEDABAD“B”BENCH Before:Smt.AnnapurnaGupta,AccountantMember AndShriT.R.SenthilKumar,JudicialMember TheA.C.I.T, Circle-1(1)(1), Vejalpur. (Appellant) Vs TheGujaratStateCo-operative BankLtd., SardarVallabhBhaiPatel, NearShastringarBRTSBusStop, NaranpuraVistarS.O, Ahmedabad-380013. PAN:AAAAT9774F (Respondent) RevenueRepresented:ShriPrateekSharma, Sr-DR AssesseeRepresented:ShriTusharHemani,Sr.Advocatewith ShriParimalsinhBParmar,AR Dateofhearing:04-07-2024 Dateofpronouncement:15-07-2024 आदेश/ORDER PERT.R.SENTHILKUMAR,JUDICIALMEMBER ThisappealisfiledbytheRevenueasagainsttheappellate orderdated13.11.2024passedbytheNationalFacelessAppeal Centre,Delhi,arisingoutoftheassessmentorderpassedunder section143(3)oftheIncome-taxAct,1961[hereinafterreferredtoas ‘theAct’]relatingtotheAsst.Year2017-18. 2.ThesolitaryissueraisedbytheRevenueisthatLd.CIT(A)erred indeletingthedisallowanceofpremiumpaidonGovernment securitiesofRs.3,76,31,284/-madebytheAO. ITANo.124/Ahd/2024 AssessmentYear:2017-18 ITANo.124/Ahd/2024 ACITvsGujaratStateCo-operativeBank Asst.Year2017-18PageNo. 2 3.Attheoutset,itwasstatedbyboththepartiesthatthisissue iscoveredinfavouroftheassesseeinitsowncaseforthe AssessmentYear2014-15bytheCo-ordinateBenchofthisTribunal videitsdecisiondated04.06.2019inITANo.701/Ahd/2018which wasfollowedbyLd.CIT(A)inhisorder. 4.TheSr.DRcouldnotplaceonrecordanycontraryviewtaken bytheHigherForumontheaboveorderoftheCo-ordinateBenchof thisTribunal. 5.Wehaveheardtherespectivesubmissionandperusedthe materialsavailableonrecord.ThebrieffactisappellantisCo- operativeBankfileditsReturnofIncomeforAsst.Year2017-18 declaringtotalincomeofRs.72,85,72,000/-.TheReturnwastaken forscrutinyassessmentandAOmadethedisallowanceofpremium amortizationofGovernmentsecuritiesofRs.3,76,31,284/-asthe incomeoftheassessee.AspertheprudentialnormsoftheReserve BankofIndia,everybankisrequiredtomakeinvestmentsinthe GovernmentSecuritiesbasedondefinitepercentageofthedeposits andrequiredtomaintainStatutoryLiquidityRatio(SLR).The assessehadamortizationpremiumofRs.3,76,31,284/-asperthe prudentialnormsoftheRBIandsustainedregularmethodof accountingadoptedbytheassessee’sbank.However,theAO disallowedtheamortizationpremiumandheldthattheinvestment underHeldToMaturity(HTM)categoryiscapitalinvestmentofthe bankandhenceexpenditureofthepremiumamortizationof Rs.3,76,31,284/-isacapitalexpenditurewhichisadisallowable expenditureu/s.37oftheAct.WhereastheCo-ordinateBenchof thisTribunalinassessee’sowncasefortheearlierAsstt.Year2014- ITANo.124/Ahd/2024 ACITvsGujaratStateCo-operativeBank Asst.Year2017-18PageNo. 3 15followingthejudgementoftheJurisdictionalHighCourtinthe caseCITvs.RajkotDist.Co-operativeBankLtd.dismissedthe Revenueappealbyobservingasfollows: “...Whentheappealwascalledoutforhearing,learned representativefairlyagreedthattheaboveissueisfullycovered,infavour oftheassessee,bythedecisiondated27.09.2018oftheco-ordinatebench isassessee’sowncasefortheimmediatelyprecedingassessmentyear. Videtheaforesaidorder,theco-ordinatebenchhas,interalia,observedas follows:- 3.Learnedrepresentativefairlyagreethattheaboveissueisnow covered,infavouroftheassessee,byHon'blejurisdictionalHigh Court'sjudgmentinthecaseofCITvs.RajkotDist.Co-operative BankLtd(TaxAppealNo.56of2013:judgmentdated10.02.2014) whereinTheirLordshipshave,interalia,observedasfollows:- 5.ThelearnedcounselShriP.G.Desaifortheappellantvehemently contendedthattheTribunalcommittedseriouserrorinoverrulingthe decisionoftheCIT(Appeals),whohadgivendetailedreasons.Hesubmitted thattheinvestmentwasInthenatureofcapitalinvestmentinthehandsof theassesseeasheldbytheCIT(Appeals).TheCBDTCirculardated November26,2008wouldnotapply.Therewerefurtherinstructionswhich wouldgovernthesituation. 6.Ontheotherhand,thelearnedcounselShriTusharHemaniforthe respondentplacedheavyrelianceonthesaidCBDTCirculardated November26,2008andcontendedthatthebenefitofamortisation hadtobegranted.TheassesseeasacooperativebankbytheRBI directives.Aspersuchdirectives,theAssesseehadtoinvestcertain amountsinGovernmentsecuritiesandtoholdthesametillmaturity. Intheprocessofacquisition,iftherewasanypremiumpaidonthe facevalueofthesecurity,thelosshadtobeamortised.Paragraph (vii)oftheCBDTCircularNo.17of2008doledNovember26,2008 wouldapply.Suchinstructionreadsunder: (vii)AsperRBIguidelinesdated16thOctober,2000,the investmentportfolioofthebanksisrequiredtobeclassified underthreecategoriesviz.HeldtoMaturity(HTM),Heldfor Trading(HFT)andAvailableforSale(AFS).Investments classifiedunderHTMcategoryneednotbemarkedtomarket andarecarriedatacquisitioncostunlessthesearemorethan thefacevalue,inwhichcasethepremiumshouldbe amortisedovertheperiodremainingtomaturity.Inthecaseof HFTandAFTsecuritiesformingstock-in-tradeofthebank, thedepreciation/appreciationistobeaggregatedscrip-wise andonlynetdepreciation,ifany,isrequiredtobeprovidedfor ITANo.124/Ahd/2024 ACITvsGujaratStateCo-operativeBank Asst.Year2017-18PageNo. 4 intheaccounts.ThelatestguidelinesoftheRBImaybe referredtoforallowinganysuchclaims." 7.Theinstructionsclearlyprovideforamortisationofpremiumpaid onacquisitionofsecuritieswhenthesameareacquiredattherate higherthanthefacevalue.Suchamortisationwouldhavetobefor theremainingperiodofmaturity.ThispreciselytheTribunalhad directedintheImpugnedorderThoughcontended,nocontrary InstructionsofCBDTarebroughttoournotice.Theinstructionin questionhavingbeenissuedundersection119(2)oftheIncome-tax Act,1961,wouldbindtheRevenue.Noquestionoflaw.therefore, arises." 4RespectfullyfollowingthejudgmentofHon'blejurisdictionalHigh Court(supra),weapprovetheconclusionsarrivedatbythelearned CIT(A)anddeclinedtointerfereinthematter 3.Weseenoreasonstotakeanyotherviewofthematterthantheviewso takenbytheco-ordinatebench.Respectfullyfollowingtheco-ordinatebench decisioninassessee'sowncasefortheimmediatelyprecedingassessment year,weapprovetheconclusionsarrivedatbythelearnedCIT(A)and declinetointerfereinthematter...” 6.Respectfullyfollowingtheabovejudicialprecedent,theground raisedbytheRevenueisdevoidofmeritsandliabletobedismissed. 7.Intheresult,theappealfiledbytheRevenueishereby dismissed. Orderpronouncedintheopencourton15/07/2024 Sd/-Sd/- (ANNAPURNAGUPTA)(T.R.SENTHILKUMAR) ACCOUNTANTMEMBERJUDICIALMEMBER (TrueCopy) Ahmedabad:Dated15/07/2024 Manish