DCIT, Jaipur V. STATE BANK OF BIKANER & JAIPUR, Jaipur

ITA 245/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5281 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: VARUN BANSAL C A DHK
• Keywords: Depreciation; Rectification of order; Cost of acquisition; Condonation of delay
• Section: 143(3); 54; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 245/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2005-06 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S STATE BANK OF BIKANER & JAIPUR, TILAK MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADCS 4750 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VARUN BANSAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/05/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/05/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30/03/2009 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR A .Y. 2005-06 U/S 154 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS CASE, THE LD CIT(A) HAD DECIDED THE APPEA L FOR A.Y. 2005- 06 ON 26/3/2009 WHEREIN IN PARAGRAPH NO. 6.3 HAS CO NFIRMED THE 2 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ ADDITION ON ACCOUNT OF DISALLOWANCE OF AMORTIZATION CLAIMED ON SECURITIES HELD UNDER HELD TO MATURITY (HTM) BY OB SERVING AS UNDER:- 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND ARG UMENT TAKEN BY SH. JHANWAR AND SH. PARWAL QUITE CAREFULLY. IT IS UNDISPUTED FACT THAT THE SAID CLAIM WAS IN RESPEC T OF SUCH SECURITIES WHICH ARE NOT TRADABLE AND HAD TO B E RETAINED TILL THE DATE OF THE MATURITY. THE APPELLAN T BANKER HAS KEPT AND SHOWN THE SAID SECURITIES AS PAR T OF THE INVESTMENT. IF ON YEAR TO YEAR BASIS THERE I S ANY DIMINUTION IN THE VALUE OF THE INVESTMENT THEN HOW I T COULD BE CONSIDERED AS PART OF THE REVENUE LOSS. IT MAY BE THAT APPELLANT IS REQUIRED TO ACCOUNT FOR THE SA ID AMORTIZATION AS PER RBI GUIDELINES BUT COMPUTATION OF THE TOTAL INCOME HAS TO BE MADE WITH REFERENCE TO PROVISIONS OF THE IT ACT AND IN THE IT ACT THERE IS NO SUCH PROVISION TO ALLOW SAID AMORTIZATION ON ACCOUN T OF DIMINUTION IN THE VALUE OF THE INVESTMENT HELD BY B ANK TILL IT IS MATURED. IN MY CONSIDERED VIEW THE DECISI ONS RELIED UPON BY AUTHORIZED REPRESENTATIVE IN THE CAS E OF SATLAJ COTTON MILLS IS NOT APPLICABLE BECAUSE IN TH AT CASE THE ISSUE WAS PROFIT OR LOSS ARISING BETWEEN ASSESSEE ON ACCOUNT OF APPRECIATION OR DEPRECIATION IN THE VALU E OF FOREIGN CURRENCY HELD BY IT AND CERTAINLY THE FOREI GN CURRENCY WAS NOT HELD AS INVESTMENT. FURTHER THE HONBLE RAJASTHAN HIGH COURT JUDGMENT RELIED UPON I N THE CASE OF RAJASTHAN FINANCIAL CORPORATION IS ALSO 3 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ DIFFERENT AND DISTINGUISHABLE ON FACTS BECAUSE IN T HAT CASE THE LOSS HAS ARISEN ON THE SAID OF SUCH SECURI TIES. FURTHER THE DECISION OF THE MADRAS INDUSTRIAL CORPORATION IS ALSO NOT APPLICABLE BECAUSE IN THAT CASE THERE WAS AVAILABILITY WHICH HAS ALREADY ACCRUED THOU GH IT WAS PAYABLE ON SUBSEQUENT DATES. WITH THIS DISCUSSION IN MY CONSIDERED VIEW, THE A.O. WAS FULLY JUSTIFIED WHILE MAKING ADDITION OF RS. 47,52,13,802/ - WHICH IS HEREBY CONFIRMED BY REJECTING THE RELEVANT GROUNDS OF APPEAL. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALREADY OBSERVED THAT ONLY IT SHOULD BE CONSIDERED ON SALE OF THIS INVESTMENT WHIC H MAY RESULT INTO CAPITAL GAIN OR LOSS. THEREAFTER, VIDE ORDER 30/09/2009 U/S 154 OF THE ACT AND ALLOWED THE ASSESSEES CLAIM BY OBSERVING AS UNDER:- 2. I HAVE CONSIDERED THE FACTS OF THE CASE, CONTEN TION REFERRED IN THE PETITION FILED U/S 154 OF THE IT ACT AND ARGUMENTS TAKEN BY SHRI PARWAL IN SUPPORT OF HIS PETITION QUITE CAREFULLY. AFTER GOING THROUGH THE A PPEAL FOLDER FOR A.Y. 2005-06 AND APPEAL ORDER PASSED IN THIS CASE ON 26/3/2009 IT IS SEEN THAT WHILE TAKING UP TH E GROUND OF APPEAL THAT WHETHER A.O. WAS JUSTIFIED IN MAKING DISALLOWANCE OF AMORTIZATION AMOUNTING TO RS. 47,52,13,802/- IN RESPECT OF PERMANENT DIMINUTION I N THE VALUE OF SECURITIES HELD BY BANK WITH HELD TO 4 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ MATURITY CATEGORY, IN PARA 6.3 OF THE APPELLATE OR DER CBDT INSTRUCTION NO. 17/2008, DATED 26/11/2008 WHICH WAS ISSUED ON THIS SUBJECT SPECIFICALLY COULD NOT HA VE BEEN CONSIDERED THOUGH THE SAME CIRCULAR HAS BEEN CONSIDERED WHILE DECIDING THE ISSUE OF VALUATION OF INVESTMENT FOR CATEGORY WISE METHOD OF VALUATION IN PARA 5.3 OF THE APPELLATE ORDER FOR A.Y. 2005-06. S INCE IN THE AFORESAID INSTRUCTION IN PARA 2(VII) IT IS SPECIFICALLY MENTIONED THAT IN RESPECT OF INVESTMEN T PORTFOLIO OF THE BANK IN THE CATEGORY HELD TO MATU RITY IF ACQUISITION COST IS MORE THAN FACE VALUE THEN IN SU CH CASE THE PREMIUM SHOULD BE AMORTIZED IOVER THE PERI OD REMAINING TO MATURITY AND THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED FOR ALLOWING IN SUCH CLAIM. CONSIDERING THE FACT THAT WHILE MAKING THE SAID CLAI M FOR AMORTIZATION THE BANKER HAS FOLLOWED RBI GUIDELI NES AND AFORESAID CBDT INSTRUCTION IN CLEAR TERMS SPECI FY TO ALLOW THE SUCH PREMIUM FOR AMORTIZATION, THEREFORE, THE APPELLANT BANKER WAS ENTITLED TO CLAIM THE SAID AMORTIZATION OF RS. 47,52,13,802/- WHICH IS CLAIM IN THE GROUND NO. 7 FILED WITH THE APPEAL. IN MY CONSIDERED VIEW WHILE REJECTING THIS GROUND OF APPEAL SINCE THE AFORESAID CBDT INSTRUCTION HAS NOT BEEN CONSIDERED I N PARA 6.3 OF THE APPELLATE ORDER, THEREFORE, A MISTA KE APPARENT FROM THE RECORD HAS TAKEN PLACE IN PARA 6. 3 OF THE APPELLATE ORDER WHICH IS HEREBY RECTIFIED AND A. O. IS 5 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ DIRECTED TO DELETE THE SAID ADDITION OF RS. 47,52,13,802/-. 3. NOW THE REVENUE HAS CHALLENGED THE RECTIFICATION ORDER PASSED BY THE LD CIT(A) BY RAISING THE FOLLOWING GROUND AS UNDE R:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 47,52,13,802/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OR AMORTIZATION EXPENSES ON THE BASIS OF DIMINUTION IN THE VALUE OF SECURITI ES HELD UNDER HELD TO MATURITY CATEGORY. 4. THE LD DR HAS SUBMITTED THAT THE ASSESSEE IS ENGA GED IN THE BANKING BUSINESS. THE ASSESSEES CASE WAS ASSESSED U/ S 143(3) OF THE ACT ON 28/12/2007. AFTER MAKING ADDITION OF RS. 47, 53,13,802/- ON ACCOUNT OF DISALLOWANCE OF AMORTIZATION EXPENSES CLA IMED ON SECURITY HELD IN HTM. THE LD CIT(A) HAD RECTIFIED HIS ORDER VID E ORDER DATED 30/3/2009. THE HONBLE ITAT VIDE ORDER DATED 12/09/20 14 PASSED IN ITA NO. 437/JP/2009 HAD CONFIRMED THE DECISION OF L D CIT(A) AND DISMISSED THE REVENUES APPEAL BY HOLDING THAT TH E REVENUE HAS NOT AGGRIEVED WITH THE ORDER OF THE CIT(A) DATED 30/03/20 09. THE HONBLE ITAT HAS DISMISSED THE APPEAL OF THE DEPARTMENT ON T HIS ISSUE HOLDING IT AS NON-MAINTAINABLE AS DEPARTMENT HAS NOT FILED ANY SEPARATE APPEAL AGAINST THE ORDER U/S 154 OF THE LD CIT(A). IN THIS CASE, ORIGINAL APPEAL 6 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ ORDER WAS PASSED BY THE LD CIT(A) ON 26/3/2009 AND SA ME WAS RECTIFIED U/S 154 ON 30/3/2009. THIS ORDER WAS COVER ED BY FILING APPEAL AGAINST THE ORIGINAL APPEAL ORDER DATED 26/3/2009, THEREFORE, NO SEPARATE APPEAL WAS FILED AGAINST THE ORDER U/S 154 DATED 30/3/2009 OF LD CIT-II, JAIPUR. WHILE PASSING THE APPEAL ORDER I N ITA NO. 437/JP/2009 DATED 12/9/2014, THE HONBLE ITAT HAD NO T TAKEN COGNIZANCE AND NOT CONSIDERED THE APPEAL ORDER OF L D CIT(A)-II, JAIPUR PASSED U/S 154 OF THE ACT IN APPEAL NO. 777/2007-08 DATED 30/3/2009. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DEL AYED BY 2109 DAYS. THEREFORE, THE SAME MAY BE CONDONED. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS ARG UED THAT THE LD AR HAS NOT OBJECTED THE CONDONATION OF DELAY BUT OR DER PASSED BY THE LD CIT(A) U/S 154 IS ON THE BASIS OF CBDT CIRCULAR O N THIS DISALLOWANCE. THE ASSESSEE REFERRED INSTRUCTION NO. 17/08 DATED 26 /11/2008 (FILE NO. 228/3/2008-ITA-III) ISSUED BY THE CBDT ON DISALLOWANC E OF AMORTIZATION OF PREMIUM PAID ON SECURITY HELD UNDE R HTM CATEGORY BUT SAME HAS BEEN LEFT TO CONSIDER BY THE LD CIT(A). THER EFORE, THIS WAS MISTAKE OF APPARENT ON RECORD AND THE ISSUE IS SETT LED BY THIS INSTRUCTION OF THE CBDT AND CANNOT BE TERMED AS DEBA TABLE. THEREFORE, HE PRAYED TO APPEAL FILED BY THE REVENUE MAY PLEASE BE DISMISSED. 7 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD, ARE O F THE CONSIDERED VIEW THAT THERE IS A JUSTIFICATION IN FILING THE APP EAL BY THE DEPARTMENT AS A SEPARATE APPEAL WAS REQUIRED TO FILE AGAINST TH E ORDER U/S 154 OF THE ACT PASSED BY THE LD CIT(A), WHICH COULD NOT BE FILED AS THE DEPARTMENT HAS CONTESTED THIS ISSUE WITH ORIGINAL OR DER PASSED BY THE LD CIT(A) DATED 26/3/2009 BUT THE COORDINATE BENCH H AS DISMISSED THE REVENUES APPEAL ON THE GROUND THAT THIS GROUND OF APPEAL DID NOT ARISE FROM THE ORDER OF THE LD CIT(A) DATED 26/3/2009, THE REFORE, A SEPARATE APPEAL HAS BEEN FILED BY THE DEPARTMENT. ACCORDINGL Y, WE CONDONE THE DELAY. 7. ON MERIT, THE REVENUES ARGUMENT AS THAT IT IS A DEBATABLE ISSUE AND CANNOT BE RECTIFIED U/S 154 BUT WHEN CBDT HAS IS SUED A CIRCULAR ON THIS ISSUE BY FOLLOWING THE RBI GUIDELINES DATED 26/ 10/2008 AND DIRECTED TO THE ASSESSING OFFICER TO ALLOW THE EXPEN SES. THE CBDT INSTRUCTIONS ARE BINDING ON THE REVENUE, ACCORDINGL Y, THE DIRECTION HAS TO BE FOLLOWED BY THEM. WHEN THIS CIRCULAR WAS AGAIN BROUGHT TO THE NOTICE OF THE LD CIT(A) AFTER PASSING THE ORDER IN ASSESSEES CASE ON 26/3/2009 THROUGH A RECTIFICATION APPLICATION U/S 1 54 OF THE ACT, THE LD CIT(A) CONSIDERED THE RECTIFICATION APPLICATION WITH REFERENCE TO CBDT 8 ITA NO. 245/JP/2015 DCIT VS M/S SBBJ INSTRUCTION ON THIS ISSUE AND ALLOWED THE ASSESSEES GROUND IN HIS FAVOUR. THEREFORE, WE DISMISS THE REVENUES APPEAL ON THIS GROUND. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30/05/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH MAY, 2016. RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S SBBJ, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.245/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR