Agroha Co-op Urban Bank Ltd., Hyderabad V. ACIT, Range-8, Hyderabad

ITA 1411/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77850 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Business expenditure; Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1411/HYD/13 : ASSESSMENT YEAR 2010 - 11 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD ( PAN - AGHFB 9433 H) V/S. ADDL. COMMISSIONER OF INCOME - TAX RANGE 8, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LAXMI NIWAS SHARMA RESPONDENT BY : SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 03.03.2014 DATE OF PRONOUNCEMENT 16.4.20 14 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD DATED 10.9.2013 FOR THE ASSESSMENT YEAR 20 1 0 - 1 1. 2. GROUNDS OF APPEAL NO.1 AND 5 ARE GENERAL AND DO NOT CALL FOR SEPARATE ADJUDICATION. GROUNDS NO.2 TO 4 READ AS FOLLOWS - 2. THE CIT(A) ERRED IN ADDING AN UNREASONABLE AMOUNT O F RS.1,00,000 AS EXPENDITURE INCURRED AS ATTRIBUTED TO THE DIVIDEND INCOME EARNED UNDER SECTION 14A. HOWEVER, NO EXPENDITURE WAS INCURRED FOR E A RNIN G SUCH EXEMPT INCOME. 3. THE CIT(A) ERRED IN DISALLOWING THE PROVISION FOR CONTINGENCIES (NPA) U/S. 36(2)(VIIA) AMOUNTING TO RS.8,90,207. 4. THE CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF APPRECIATION IN THE FACE VALUE BY ADOPTING THE MARKET VALUE O F INVESTMENTS AMOUNTING TO RS.342,198. ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 2 3. AS FOR THE FIRST GRIEVANCE OF THE ASSESSEE RELATING TO DISALLOWANCE OF EXPENDITURE ATTRIBUTABLE TO THE DIVIDEND INCOME WHICH IS EXEMPT FROM TAX, FACTS, IN BRIEF, ARE THAT IN TERMS OF S.14A OF THE ACT, THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT NOTED THAT THE ASSESSE E HAS CERTAIN IN T ERE S T BEARING LOANS FROM VARIOUS RELATED (SHARE HOL D ERS) PERSON S AND INTEREST IS PAID ON THESE BORROWINGS. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE FURNISHED THE DETAILS OF EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING THE DIVID E N D INCOME. IN RESPONSE, ASSESSEE SUBMI T TED THAT NO EXPENDITURE WAS INCURRED FOR THE PU R PO S E OF EARNING THE DIVIDEND INCOME, AND NO SP E CIALISED STAFF WAS EXCLUSIVELY CREATED FOR THE PU R POSE OF MA K ING INV E STMENTS, AND THE EXPENDITURE THAT IS NORMALLY IN C URRE D FOR ITS REGULAR BUSINESS ACTIVITIES, IS CONSIDERED EVEN FOR EARNING DIVIDEND INCOME. NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE , CON S I D ERING THE VOLUME OF INVESTMENTS IN THE SHARES / MUTUAL FUNDS, WHICH IS VERY HIGH, AND OBSERVING THAT CERTAIN AMOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE EVEN IN THE NORMAL COURSE OF BUSINESS IS DEFINITELY ATTRIBUTABLE TO THE EARNING OF DIVIDEND INCOME, WHICH IS CL A IM E D AS EXEMPT F R OM TAX, THE ASSESSI NG OFFICER MADE AN ESTIMATED DISALLOWANCE OF RS.10,69,818 AND MADE ADDITION IN TH A T BEHALF UNDER S.14A OF THE ACT. 4. ON APPEAL, THE CIT(A) TOO OBSERVED THAT SOME AMOUNT OF INFRAST R UCTURE AND SALARY COSTS HAVE TO BE ATTRIBUTED TO THE MAKING OF THE INVE STMENTS, AND JUST B E CAU S E THE ASSESSEE HAS NO T DISCLO S ED ANY COSTS, IT DOES NO T M E AN THAT INVESTMENTS IN SHARES AND MUTUAL FUNDS ARE WITHOUT ANY TRAN S AC T IONS COSTS. HE FURTHER OBSERVED THAT THERE ARE ALSO CO M MISSION AND UPFRON T COSTS OF MUTUAL FUNDS WHICH ARE TO B E PAID AT THE TIME OF INVE S TMENTS. HENCE, HE WAS OF THE VIEW THAT CERTAIN AMOUNT OF DISALLO W ANCE OF EXPENDITURE IN TERMS OF S.14A IS WARRANTED. HOWEVER, FINDING THE ESTIMATED DISALLOWANCE MADE BY THE ASSESSING OFFICER TO BE ON THE HIGHER SIDE, T HE CIT(A) RESTRICTED THE SAME TO RS.1 LAKH, DELETING TH E BALAN C E ADDITION MADE BY THE ASSESSING OFFICER. ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 3 5 STILL AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, REIT E RATIN G TH E CON T ENTIONS URG ED BEFORE THE REVENUE AUTHORITIES SUBMITTED T HAT THE ASSESSEES MAIN BUSINESS IS BANKING AND HAS MERELY INVESTED THE IDLE FUNDS AND EARNED DIVIDEND INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WITH REGARD TO RULE 8D(2)(I) THE ASSESSEE HAS N OT INCURRED ANY DIRECT EXPENDITURE TOWARDS EARNING OF DIVIDEND INCOME AND THE ASSESSING OFFICER HAS ALSO ACCEPTED THIS CONTENTION OF THE ASSESSEE, AND REFLECTED THE AMOUNT AS NIL VIDE PAGE 4 OF THE ASSESSMENT ORDER. WITH REGARD TO RULE 8D(2)(II), HE SU BMITTED THAT THE ASSESSEE HAS NOT BORROWED ANY AMOUNTS FOR THE PURPOSES OF INVESTMENT AND HENCE DID NOT INCUR ANY INTEREST EXPENDITURE. THE ASSESSING OFFICER HAS WRONGLY CLASSIFIED THE INTEREST AMOUNTING TO RS.3 , 88 , 09 , 384, PAGE 19 OF THE ANNUAL REPORT, W HICH IS A BUSINESS EXPENDITURE. THE SAID INTEREST IS EXPENDED ON THE DEPOSITS MADE BY THE CUSTOMERS IN THE NORMAL COURSE OF BANKING BUSINESS. HENCE, SUCH EXPENDITURE CANNOT BE CONSIDERED FOR THE PURPOSE OF CALCULATION OF INTEREST TO BE MADE UNDER RULE 8D( II). THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF TRIBUNAL IN THE CASE OF WIMCO SEEDLINGS LTD. V/S. DCIT (ASSTS) (293 ITR (AT) 216) - DEL - TM, WHEREIN IT WAS HELD THAT ONLY EXPENDITURE WHICH HAS BEEN PROVIDE TO HAVE BEEN INCURRED IN RELATIO N TO EARNING OF TAX FREE INCOME CAN BE DISALLOWED UNDER S.14A. THE WORD INCURRED REFERS TO THE FACTUAL SPENDING OF EXPENDITURE IN RELATION TO THE EXEMPT INCOME AND DOES NOT REFER TO A DEEMED OR ASSUMED SPENDING FOR THE PURPOSE. THE SECTION CANNOT BE TA KEN BEYOND THIS TO ATTRIBUTE BY SOME YARDSTICK, EVERY ITEM OF EXPENDITURE WHICH HAS NO APPARENT CONNECTION OR EARNING OF THE TAX FREE INCOME. HE ALSO RELIED ON BALARAMPUR CHINI MILLS VS/ DY. CIT(ITA 504/KOL/2011, WHEREIN IT HAS BEEN HELD BY THE KOLKATA B ENCH OF THE TRIBUNAL THAT THE INTEREST EXPENDITURE WHICH IS DIRECTLY RELATABLE TO THE ANY PARTICULAR INCOME OR RE C EIPT IS NOT TO BE CONSIDERED UNDER RULE 8D(2)(II) THE ASSESSING OFFICER HAS TO SHOW THAT THE INTER E ST IS NOT DIRECTLY ATTRIBUTABLE TO ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 4 ANY PART ICULAR INCOME OR RECEIPT AND ALSO SINCE THE ASSESSEE HAS SUBSTANTIAL CAPITAL AND RESERVES, THE INTEREST ON LOANS CANNOT BE INCLUDED UNDER RULE 8D(2)(II). THE LEARNED COUNSEL RELIED ON THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT S.14A CANNOT BE APPLIE D WHERE INTEREST FREE FUNDS ARE AVAILABLE. ( A ) CIT V/S UTI BANK LTD. (ITA NO.2572/AHD/2006 AND ORS) - TRIB ( B ) CATHOLIC SYRIAN BANK LTD. & ORS. (2011 )237 CTR 164(KER.) ( C ) DCIT V/S. MAHARASHTRA SEAMLESS LTD. (2011) (16 TAXMAN 97) - DEL HE SUBMITTED THAT THE PROVISIONS OF S.14A CANNOT BE APPLIED IN CASE OF COMPOSITE/INDIVISIBLE ACTIVITIES RESULTING IN TAXABLE INCOME AND NON - TAXABLE INCOME. IN THIS BEHALF, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS - ( A ) BANK OF AMERICA (ITA LNO.4408/ & 5060/HYD/2002) - (MUM) ( B ) DHANBAKLAKSHMI BANK LTD. V/S. ACIT(ITA NO.93& 94/COCH/2009) - COCH. ( C ) JK INVESTORS (ITA NO.7858 & 7851/BOM/2011) - BOM. HE ALSO SUBMITTED, PLACING RELIANCE ON THE FOLLOWING DECISIONS, THAT NO ADDITION UNDER S.14A COULD BE MADE ON THE PRESUMPTION OF ASSESSING OFFICER. ( A ) CIT V/S. K. RAHEJA CORPORATION P. LTD.(ITA NO.4099/MUM/2010) - MUM ( B ) GUJARAT NARMADA VALLEY FERT. CO. LTD.. (ITA NO.2025 & 2026/AHD/2010) - AHD. ( C ) MADHU SILICA PVT. LTD. V/S. ACIT (ITA NO.3958/AHD/2008) - AHD ( D ) JAMMU & KASHMIR BANK LTD. (ITA 136/ASR/2010) - AS R. HENCE, MERELY BEC AUSE ASSESSEES INCOME CONSISTED OF DIVIDEND INCOME AS WELL, NO PART OF BUSINESS EXPENDITURE OF THE ASSESSEE SHOULD BE DISALLOWED , DEEMING THE SAME AS ATTRIBUTABLE TO EXEMPT INCOME, EVEN ON ESTIMATE BASIS. ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 5 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT THE DISALLOWANCE IN TERMS OF S.14A IS MANDATORY, AND THE CIT(A) WAS REASONABLE IN RESTRICTING DISALLOWANCE MADE BY THE ASSESSING OFFICER TO A MODEST FIGUR E OF RS.1 LAKH ONLY. 8 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. W E HAVE ALSO GONE THROUGH THE DETAILED WRITTEN SUBMISSIONS OF THE ASSESSEE ON THIS ISSUE, BESIDES THE PLETHORA OF DECISIONS DISCUSSED THEREIN. IT IS THE CASE OF THE ASSESSEE THAT IT HAS NOT INCURRED DIRECTLY OR INDIRECTLY ANY EXPENDITURE TO EARN EXEMPT INCOME, AND ON AN ESTIMATE BASIS, THE ASSESSING OFFICER CANNOT PRESUME THAT EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE. WE FIND MERIT IN THIS CONTENTIO N OF THE ASSESSEE. THE DEPARTMENT HAS NOT BROUGHT OUT ANY EVIDENCE TO PROVE THAT THE ASSESSEE HAS ENGAGED ANY SPECIALIZED STAFF EITHER FOR MAKING THE INVESTMENTS IN SHARES AND MUTUAL FUNDS OR FOR LOOKING AFTER SUCH ACTIVITIES OF THE ASSESSEE , OR TO PROVE THAT ANY EXPENDITURE HAS IN FACT BEEN SPECIFICALLY INCURRED FOR MAKING SUCH INVESTMENTS OR FOR CARRYING OUT SUCH ACTIVITIES . IN THE CIRCUMSTANCES, IN VIEW OF THE CASE - LAWS RELIED UPON BY THE ASSESSEE, NOTED ABOVE, WHICH SQUARELY APPLIES TO THE FACTS OF THE CASE ON HAND, NO DISALLOWANCE IN TERMS OF S.14A IS CALLED FOR, MERELY BASED ON THE PRESUMPTION THAT CERTAIN EXPENDITURE MUST HAVE BEEN INCURRED, BY RESORTING TO ESTIMATION OF SUCH EXPENDITURE. FOR BRINGING ANY INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE AMBIT OF RULE 8D(2)(II) THE ASSESSING OFFICER HAS TO SHOW THAT THE SAID INTEREST IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT. WE FIND THAT THE ASSESSEE IN THIS CASE, HAS SUBSTANTIAL RESERVES, AND THEREFORE, W E FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE INVESTMENTS HAVE BEEN MADE FROM OUT OF THE INTEREST - FREE FUNDS AVAILABLE WITH IT. HENCE, NO DISALLOWANCE OUT OF THE INTEREST EXPENDITURE IS CALLED FOR IN TERMS OF S.14A OF THE ACT, BY ESTIMATING SUCH INTEREST EXPENDITURE AS ATTRIBUTABLE TO THE AMOUNTS OF INVESTMENT. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY JUSTIFICATION FOR THE ADDITION SUSTAINED ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 6 BY THE CIT(A). W E ACCOR D INGLY DELETE THE ADDITION OF RS.1 LAKH SUSTAINED BY THE CIT(A) AND ALLOW TH E GROUND OF THE ASSESSEE ON THIS ISSUE. 9 . AS FOR THE NEXT GROUND RELATING TO DISALLOWANCE OF PROVISION FOR CONTINGENCIES (NPAS) U/S. 36(2)(VIIA) OF THE ACT, AMOUNTING TO RS.8,90,207, THE ASSESSING OFFICER MADE SUCH DISALLOWANCE, OBSERVING THAT SUCH A PROVISION MADE BY THE ASSESSING OFFICER IS NO T AN ALLOWABLE DEDUCTION. 10 . ON APPEAL BEFORE TH E CIT(A), IT WAS CONTENDED THAT THIS AMOUNT HAS NOT BEEN CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT AND IT ACTUALLY FIGURED BELOW THE LINE IN THE PROFIT & LOSS APPROPRIATION ACCOUNT. WITH A DIRECTION TO THE ASSESSING OFFICER TO VERIFY THIS CONTENTION OF THE ASSESSEE, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL ON THIS ASPECT. 11. LEAR NED COUNSEL FOR THE ASSESSEE, REITER A TING THE CON T ENTION S URGED BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT THE AMOUNT OF RS.8,90,207 IS CLEARLY ALLOWABLE AS DEDUCTION UNDER S.36(1)(VIIA) TAKING US THROUGH THE COMPUTATION. HE PL ACE D RELIANCE ON THE FOLL OWING DECISIONS - ( A ) URBAN COOPERATIVE BANK LTD. (ITA NO.6067/CTK/2012) - CTK. ( B ) TRICHUR DSITRICT CO - OP. BANK LTD.(ITA NO.75/COCH/2011) - COCH. ( C ) VINAYAK LOCAL AREA BANK L TD V / S. DY. CIT (ITA 456/JP/2011) - JP. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 13. WE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORDS. WE ALSO PERUSED THE WRITTEN SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. A S ALREADY NOTED ABOVE, THE CIT(A) HAS MERELY SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 7 FOR VERIFYING THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF RS.8,90,207 TOWARDS CONTINGENCIES(NPA), FIGURED ONLY BY WAY OF BELOW THE LINE ADJUSTMENTS AGAINST THE PROFIT OF THE YEAR DETERMINED, IN THE PROFIT & LOSS APPROPRIATION ACCOUNT. SINCE THE CIT(A) HIMSELF HAS DELETED THE ADDITION, SUBJECT TO VERIFICATION OF THE CLAIM OF THE ASSESSEE IN THAT BEHALF, ASSESSEE CANNOT HAVE ANY GRIEVANCE AGAINST TH E ORDER OF THE CIT(A) ON THIS ISSUE. IN THAT VIEW OF THE MATTER, WE FIND NO MERIT IN THE GRIEVANCE OF THE ASSESSEE ON THIS ISSUE. THIS GROUND IS ACCORDINGLY REJECTED. 14. AS FOR THE NEXT EFFECTIVE GROUND RELATING TO ADDITION OF RS. 3,42,198 ON AC C OUN T OF DIFFERENCE BETWEEN THE MARKET VALUE OF INVESTMENTS AS AGAINST THE BOOK VALUE. THE ASSESSING OFFICER FOUND THAT ON A TOTAL INVESTMENT IN SECURITIES AMOUNTING TO RS.6 CRORES, THE ASSESSEE WAS TO RECEIVE INTEREST OF RS.3,42,198. HE ACCORDINGLY BROUGHT TO TAX THE ACCRUED INTEREST ON THESE SECURITIES. ON APPEAL, THE CIT(A), OBSERVING THAT INTEREST HAD DEFINITELY ACCRUED ON THE SECURITIES AND AS PER THE MERCANTILE SYSTEM OF ACCOUNTING THIS INTEREST HAD TO BE BROUGHT TO TAX, AND FURTHER OBSERVING THAT HE AS SESSEE HAS NOT PROVIDED ANY EVIDENCE TO SHOW THAT NOTHING HAD ACCRUED TO IT, CONFIRMED THE ADDITION OF RS.3,42,198 MADE BY THE ASSESSING OFFICER. 15. AGGRIEVED, ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 16. THE LEARNED COUNSEL FOR THE ASSE SSEE, REITERATING THE CONTENTIONS URGED BEFORE THE REVENUE AUTHORITIES SUBMITTED THAT THE ASSESSEE HAS ALREADY ACCOUNTED FOR INTEREST ACCRUED ON IDBI BONDS AT 6.20% AMOUNTING TO RS.62,849. HOWEVER, FOR THE OTHER FUNDS, THEY HAVE TO BE VALUED AT COSTS OR N RV WHICHEVER IS LOWER. THE INVESTMENTS IN NON - FLR INVESTMENTS IN THE CATEGORY OF A VAILABLE FOR SALE INVESTMENTS VALUED AT COSTS OR NRV WHICHEVER IS LOWER BY FOLLOWING THE ACCOUNTING PRINCIPLES WHICH ARE BEING IN VOGUE FOR MANY YEARS. THESE FUNDS ARE NOT A T ANY FIXED INTEREST TO ACCRUE. THE STATUTORY COMPLIANCE THAT INVESTMENTS HAVE TO BE VALUED BY THE ASSESSEE ON RBI ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 8 GUIDELINES IS SATISFIED. AS FOR THE ACCOUNTING POLICY OF THE BANK, INVESTMENTS IN MUTUAL FUNDS IS STATED AT COST AND PROVISIONS IS MADE OF DIMINUTION IN VALUE, IF ANY, AS ON THE DATE OF BALANCE SHEET. HE ALSO PLACED RELIANCE, AMONG OTHERS, ON THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF MALABAR COOPERATIVE CENTRAL BANK LTD. VS/. CIT (101 ITR 87), WHEREIN IT WAS HELD THAT SECURITIES HELD BY THE BANK CONSTITUTE THEIR STOCK IN TRADE OR INVESTMENT. HE ALSO PLACED RELIANCE ONT EH DECISION OF TLEH BANGALORE BENCH OF THE TRIBUNAL INT EHC AE OF CORPORATION BANK, MANGALORE(ITRA NOS.794 & 795/BANG/2011), WHE REIN FOLLOWING THE DECISIONS OF THE APEX COURT IN THE CASE OF UNI T ED COMMER C IAL BANK V.S. CIT(240 ITR 355), IT WAS HELD LATH THE ASSESSEE BANK IS ENTITLED TO VALUE ALL TH E INVESTMENTS AT COST PRICES OR MARKET VALUE WHI C HE VE R IS LOWER BY TREATING SUCH I N VE S TMENT AS STOC K IN TRADE. SIMILAR RELIANCE IS PL AC ED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN TH E CA S E OF SHINHAN BANK ( E R STWHILE CHOHUNG) (126 ITD 448), WHEREIN IT WAS HELD TH A T THE EXCESS O F MARKET PRICE O V ER THE CO S T PRICE IN RE S P E CT OF CE RTAIN SCRIPS AND FU R TH E R GOING BY TH E METHOD O F VALUATION ADOPTED BY TH E ASSESSEE AS COST OR MARKET PRICE WHICHEVER IS L E SS, THE SAME CANNOT B E ADDED TO THE TOTAL INCOME. THE LEARNED COUNSEL THEREFORE, SUBMITTED THAT THE ADDITION MADE TOWARDS APPRECIATI ON IN SECURITIES/ACCRUED INTEREST IS NOT UNWARRANTED AND CANNOT BE SUSTAINED. 17. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPO R TED THE ORDER OF THE REVENUE AUTHORITIES. 1 8 . WE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORDS. WE ALSO PERUSED THE WRITTEN SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. ON GOING THROUGH THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES, WE FIN D THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAVE PROPERLY ADDRESSED TO THE ISSUE IN DISPUTE BY PASSING A SPEAKING ORDER. THEY HAVE DEALT WITH THE ISSUE IN A VAGUE AND SUMMARY MANNER, AND THE CONTENTIONS OF THE ASSESSEE, AGAINST THE ADDITION PROPOS ED HAVE NOT BEEN BROUGHT OUT, MUCH ELSS DEALT WITH, BY THEM IN THE ITA NO. 1411/ HYD/20 13 M/S. AGROHA CO - OP. URBAN BANK LTD., HYDERABAD 9 IMPUGNED ORDERS. WE ACCORDINGLY, SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHO R ITI E S AND R E STORE THE MATTER TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO RE - ADJU D I C ATE THE I SSUE, DULY CONSIDERING THE CON T ENTION S OF THE ASSESSEE IN THE LIGHT OF TH E CASE - LAW ON THE SUBJECT. THE ASSESSING OFFICER IS DIRECTED TO RE - DECIDE THIS ISSUE IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 19 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE COURT ON 16 TH APRIL, 2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 16 TH APRIL , 2014 COPY FORWARDED TO: 1. M /S. AGROHA CO - O P. URBAN BANK L TD., C/O. M/S. LAXMINIWAS NEETH & CO., 4THFLOOR, 402, MOGULS COURT, BASHEERBAGH, HYDERABAD 500 001. 2 . ADDL. COMMISSIONER OF INCOME - TAX RANGE 8, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) II I HYDERABAD 4. COMMISSIONER OF INCOME - TAX II , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S