ACIT, Circle-2, Aurangabad V. Mahatma Phule Urban Co-operative Bank Ltd., Beed

ITA 267/PUN/2013

• Counselvise Citation: 26724514 RSA 2013
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.267/PN/2013 (A.Y. 2007-08) ACIT, CIRCLE-2, AURANGABAD APPELLANT VS. MAHATMA PHULE URBAN COOPERATIVE BANK LTD., A/P PATODA, DIST. BEED 414204 PAN: AAAAM6948C RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : NONE DATE OF HEARING: 26.02.2014 DATE OF ORDER : 27.02.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [SHORT CIT( A)] AURANGABAD, DATED 26.11.2012 FOR A.Y. 2007-08 ON TH E FOLLOWING GROUNDS. 1. WHETHER, CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS), AURANGABAD IS CORRECT IN ALLOWING DEDUCTION ON ACCO UNT OF LOSS ON GOVERNMENT SECURITIES AT RS.15,24,030/- WHI CH ARE OF HTM CATEGORY ? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE ASSESSING OFFICER BE RESTORED AND THAT OF THE COMMISSIONER OF INCOME-TAX (APPEALS), AURANGABAD BE VACATED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APP ELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 2 2. THE ASSESSEE IS A COOPERATIVE BANK REGISTERED U/ S.9(1) OF MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960. THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF ASSESSEE AT 28,75,316/- BY MAKING ADDITION OF 22,22,256/-. THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF PREMIUM CLAI MED AS DEDUCTION ON GOVERNMENT SECURITIES IN CATEGORY OF HELD TO MATURITY AT 15,24,030/-. THE ASSESSING OFFICER HAS ALSO MADE OTHER DISALLOWANCES / ADDITIONS WHICH ARE NOT SUBJE CT MATTER BEFORE US. REGARDING THE ADDITION ON ACCOUNT OF DI SALLOWANCE OF PREMIUM CLAIMED AS DEDUCTION ON GOVERNMENT SECURITI ES IN CATEGORY OF HELD TO MATURITY WAS TAKEN BEFORE CIT (A) AND VARIOUS CONTENTIONS WERE RAISED IN THIS REGARD. TH E CIT(A) HAVING CONSIDERED THE SAME, HAS GRANTED RELIEF TO THE ASSE SSEE AND THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENU E. 3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS INCURRED LOSS OF 15,24,030/- ON SALE OF GOVERNMENT SECURITIES IN CAT EGORY OF HELD TO MATURITY AND CLAIMED THE SAME AS EXPENDITURE BY DEBITING THE AMOUNT TO PROFIT & LOSS ACCOUNT. THE ASSESSING OFF ICER HAS DISALLOWED THE LOSS ON SALE OF SAID GOVERNMENT SECU RITIES OF HELD TO MATURITY CATEGORY STATING THAT THE SAID EXPENDI TURE / LOSS IS CAPITAL IN NATURE. IN APPEAL, THE CIT(A) FOUND THA T THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF IT AT, PUNE IN THE CASE OF LATUR URBAN COOPERATIVE BANK LTD., LATUR VS . DCIT, CIRCLE-3, NANDED IN ITA NOS. 778 & 792/PN/2011, WHE REIN, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSE E BY OBSERVING AS UNDER: 15. IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA) , EVEN THE ISSUE OF VALUATION OF THE STOCK IN TRADE OF THE INVESTMENT WAS BEFORE THE HONBLE SUPREME COURT. IN THE CASE OF THE ASSESSEE, THE ISSUE IS REGARDING ALLOWABILITY OF TH E LOSS ON THE SALE OF THE SECURITIES. MERELY BECAUSE THE SEC URITIES ARE KEPT UNDER THE HEAD TILL THE MATURITY, THE SAID SECURITY CANNOT BE TREATED AS A PURELY INVESTMENT. LAW IS WELL SETTLED THAT THE SECURITIES HELD BY THE BANK ARE IN THE 3 NATURE OF STOCK-IN-TRADE. WE MAY LIKE TO QUOTE HER E THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. NEDUNGADI BANK LTD., 264 ITR 545. IN THE S AID CASE, THE HONBLE HIGH COURT HAS HELD THAT THE SECU RITIES HELD BY THE BANK ARE IN THE NATURE OF STOCK-IN-TRAD E. BOTH THE AUTHORITIES BELOW HAS MERELY GONE ON THE NOMENC LATURE OF THE HEAD UNDER WHICH THE SECURITIES ARE HELD. IN OUR CONSIDERED VIEW, NOMENCLATURE CANNOT BE DECISIVE FO R THE ASSESSEE BANK. WE, THEREFORE, HOLD THAT THE LOSS O N THE SALE OF THE SECURITIES IS REVENUE IN NATURE AND SAME IS ALLOWABLE. ACCORDINGLY, GROUND NO. 2 IS ALLOWED. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF REVENUE. MOREOVER, THE SAID ORDER HAS BEEN FORTIFI ED BY THE DECISION OF LATUR URBAN COOPERATIVE BANK LTD. (SUPR A). ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) WHO HAS DELETED THE ADDITION OF 15,24,030/- ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE ON LOSS OF THE GOVERNMENT S ECURITIES OF HELD TO MATURITY. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF FEBRUARY, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH FEBRUARY, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 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// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE