ACIT, Aurangabad V. Poornavadi Nagri Sahakari Bank Ltd, Beed

ITA 1422/PUN/2013

• Counselvise Citation: 142224514 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.1422 & 1423/PN/2013 (ASSESSMENT YEARS : 2009-10 & 2010-11) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 2, AURANGABAD. . APPELLANT VS. POORNAVADI NAGRI SAHAKARI BANK LTD., SUBHASH ROAD, BEED 431 122. PAN : AAAAP4233B . RESPONDENT DEPARTMENT BY : SMT. SHAILJA RAI ASSESSEE BY : SHRI SUNIL GANOO DATE OF HEARING : 04-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER G. S. PANNU, AM BOTH THE CAPTIONED APPEALS BY THE REVENUE RELATE TO THE SAME ASSESSEE AND INVOLVE A COMMON ISSUE, THEREFORE, THE Y HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PA SSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE AP PEALS ARE SIMILAR, ITA NO.1422/PN/2013 PERTAINING TO THE ASSESSMENT YEAR 2 009-10 IS TAKEN AS THE LEAD CASE. THIS APPEAL IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD DATED 08.04.2013 W HICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.09.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 3. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD IS CORRECT IN ALLOWING THE CLAIM OF ASSESSEE ON ACCOUNT OF DEPRECIATION ON INV ESTMENT IN GOVERNMENT SECURITIES IN THE CATEGORY OF HELD TO MATURITY (HTM ) AT RS.7,16,02,408/-. ITA NOS.1422 & 1423/PN/2013 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) IS CORRECT IN HOLDING THAT BROUGHT FORWARD LOSSES ARE NOT TO BE REDUCED WHILE CALCULATING DEDUCTION U/S 36(1)(VIIA) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE ASSESSING OFFICER BE RESTORED AND THAT OF THE COMMI SSIONER OF INCOME TAX (APPEALS), AURANGABAD BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 4. IN THIS APPEAL, THE FIRST ISSUE RAISED BY THE RE VENUE IS WITH REGARD TO A DISALLOWANCE OF RS.7,16,02,408/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF DEPRECIATION ON DIMINUTION IN THE VALUE OF GOVERNME NT SECURITIES CATEGORIZED AS HELD TO MATURITY (HTM), WHICH HAS SINCE BEEN DEL ETED BY THE CIT(A). 5. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS A CO-OPERATIVE BANK REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIE TIES ACT, 1960 AND IS CARRYING ON THE BUSINESS OF BANKING IN TERMS OF A L ICENSE ISSUED BY THE RESERVE BANK OF INDIA (RBI). ASSESSEE CLAIMED DEDU CTION FOR AMORTIZATION OF PREMIUM PAID ON ACQUISITION OF SECURITIES CATEGORIZ ED AS HTM, WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT SUCH SECURITIES ARE CAPITAL IN NATURE. THE CIT(A) HAS DELETED THE ADDI TION OF RS.7,16,02,408/- FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF LATUR URBAN CO-OPERATIVE BANK VS. DCIT VIDE ITA NO.778/PN /2011 DATED 31.08.2012 WHEREIN THE SIMILAR ISSUE HAS BEEN DECID ED IN FAVOUR OF THE ASSESSEE. AGAINST SUCH A DECISION OF THE CIT(A), R EVENUE IS IN APPEAL BEFORE US. 6. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PAR TIES THAT SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD., (2014) 366 ITR 505 (BOM.). THE HON BLE BOMBAY HIGH COURT IN CASE OF HDFC BANK LTD. (SUPRA) IN INCOME T AX APPEAL NO.330 OF 2012 VIDE ORDER DATED 23.07.2014, ON A SIMILAR ISSU E ON ACCOUNT OF DEDUCTION WITH RESPECT TO DIMINUTION IN THE VALUE OF INVESTME NT IN GOVERNMENT SECURITIES ITA NOS.1422 & 1423/PN/2013 CATEGORIZED AS HELD TO MATURITY (HTM) AFTER REFERRI NG TO THE MANDATE OF THE RBI GUIDELINES, AND THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES VS. JCIT, (2010) 320 ITR 577 (SC) HAD DISMISSED THE APPEAL FILED BY THE REVENUE. 7. FOLLOWING THE AFORESAID PRECEDENT, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF RS.7,16,02,408/- BEING DEPRECIA TION ON INVESTMENT IN GOVERNMENT SECURITIES CATEGORIZED AS HTM. ACCORDIN GLY, WE HEREBY AFFIRM THE ACTION OF CIT(A) IN DELETING THE DISALLOWANCE O F RS.7,16,02,408/- REPRESENTING DEPRECIATION ON INVESTMENT IN GOVERNME NT SECURITIES UNDER THE HTM CATEGORY. THUS ON THIS ASPECT, REVENUE FAILS. 8. THE SECOND ISSUE IN THIS APPEAL RELATES TO THE M ANNER OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 36(1)(VIIA) OF THE ACT. THE ASSESSEE HAD FILED A RETURN OF INCOME AT A LOSS WHEREAS THE ASSESSING OFFICER AFTER MAKING CERTAIN DISALLOWANCES HAD ASSESSED A POSITIV E INCOME AND THEREFORE HE COMPUTED DEDUCTION ALLOWABLE TO THE ASSESSEE IN TERMS OF SECTION 36(1)(VIIA) OF THE ACT. WHILE COMPUTING SUCH DEDUC TION, THE ASSESSING OFFICER REDUCED THE BROUGHT FORWARD LOSSES OF EARLIER YEARS . THIS ASPECT OF THE CONTROVERSY WAS CARRIED BY THE ASSESSEE IN APPEAL B EFORE THE CIT(A) WHO DISAGREED WITH THE ACTION OF THE ASSESSING OFFICER. BY WAY OF GROUND OF APPEAL NO.2, REVENUE HAS ASSAILED THE STAND OF THE CIT(A). 9. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT THE SAID ISSUE BECOME REDUNDANT BECAUSE AFTER ASSES SEE HAS SUCCEEDED ON ACCOUNT OF DEDUCTION FOR DEPRECIATION ON INVESTMENT IN GOVERNMENT SECURITIES CATEGORIZED AS HTM OF RS.7,16,02,408/-, THE ASSESSE D INCOME IS A FIGURE OF LOSS THEREBY OBVIATING THE NECESSITY OF COMPUTING D EDUCTION U/S 36(1)(VIIA) OF THE ACT. SINCE ASSESSEE HAS SUCCEEDED ON THE ASPEC T OF ALLOWABILITY OF DEPRECIATION ON INVESTMENT IN GOVERNMENT SECURITIES CATEGORIZED AS HTM IN ITA NOS.1422 & 1423/PN/2013 THE EARLIER PARAS, THE AFORESAID GROUND OF APPEAL N O.2 IS RENDERED INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 2009-10 IS DISMISSED. 11. IN SO FAR AS, THE APPEAL OF THE REVENUE FOR ASS ESSMENT YEAR 2010-11 IS CONCERNED, IT WAS A COMMON POINT BETWEEN THE PARTIE S THAT THE FACTS AND CIRCUMSTANCES OF THE DISPUTE ARE SIMILAR TO ASSESSM ENT YEAR 2009-10, SO OUR DECISION IN ASSESSMENT YEAR 2009-10 SHALL APPLY MUTATIS-MUTANDIS IN ASSESSMENT YEAR 2010-11 ALSO. 12. IN THE RESULT, BOTH THE CAPTIONED APPEALS OF TH E REVENUE ARE DISMISSED, AS ABOVE. ORDER PRONOUNCED ON 31 ST MARCH, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 31 ST MARCH, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE