Assistant Commissioner of Income tax, V. Jath Urban Co-op Bank Ltd, Sangli

ITA 2714/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9173 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Depreciation; Business expenditure
• Section: 143(3); 2

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO S . 2 713 & 2714 /P U N/201 6 / ASSESSMENT YEAR S : 200 7 - 08 & 2008 - 09 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, SANGLI . / APPELLANT VS. JATH URBAN CO - OP. BANK LTD., MANGALWAR PETH, TAL. JAT H, DIST. SANGLI . / RESPONDENT PAN: AAACJ4578M / APPELLANT BY : S HRI ANIL KUMAR CHAWARE / RESPONDENT BY : S HRI KIRAN SANMANE / DATE OF HEARING : 20 . 0 3 .201 8 / DATE OF PRONOUNCEMENT: 23 . 0 3 .201 8 / ORDER PER SUSHMA CHOWLA, J M : BOTH THE APPEALS FILED BY REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 1 , KOLHAPUR , DATED 2 0 . 0 9 .20 1 6 RELATING TO ASSESSMENT YEAR S 200 7 - 08 & 2008 - 09 AGAINST RESPECTIV E ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO S . 2713 & 2714 /P U N/20 1 6 JATH URBAN CO - OP. BANK LTD. 2 2. BOTH THE APPEALS FILED BY REVENUE RELAT ING TO SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE O F CONVENIENCE. IN ORDER TO ADJUDICATE THE ISSUES, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.2 714 /PUN/2016, RELATING TO ASSESSMENT YEAR 200 8 - 09 . 3. THE REVENUE IN ITA NO.2 714 /PUN/2016, RELATING TO ASSESSMENT YEAR 200 8 - 09 HAS RAISED THE FOLLOWING GROU ND S OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF 14,21,074/ - ON ACCOUNT OF PROVISION FOR DEPRECIATION ON SECURITIES HELD UNDER HTM CATEGORY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) HAS NOT BROUGHT ON RECORD ANY FACTS TO SHOW THE SECURITIES CATEGORIZED AS 'HELD TO MATURITY WERE SHIFTED TO THE CATEGORY OF 'AVAILABLE FOR SALE' OR HELD FOR TRADING AND VIS - A - VERSA BY GIVING EFFECT IN AUDITED ACCOUNTS AND NOTES O N ACCOUNTING POLICY. 3. THE CIT(A) WAS NOT JUSTIFIED IN IGNORING THE FACT THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND STATEMENT OF FACTS SUBMITTED THAT THE INVESTMENTS WERE OF THE NATURE OF HTM CATEGORY. THE CIT(A) WITHOUT PROVIDING OPPORTUNITIES TO THE AO AS PER RULE 46(A)(3) OF I.T. RULES, 1962 ADMITTED CHANGE OF STAND THAT INVESTMENT IN SECURITIES WERE 'AFS' AND 'HFT' CATEGORY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN ALLOWING THE DEDUCTION IN THE FORM OF PROVISION FOR DEPRECIATION WITHOUT EXAMINING THE MARKET VALUE AND ITS BASIS OF VALUATION AT THE END OF RELEVANT FINANCIAL YEAR. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PR ESENT APPEAL IS SQUARELY COVERED BY THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2009 - 10. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS A CO - OPERATIVE BANK. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUCTION ON ACCOUNT OF PREMIUM PAID ON GOVERNMENT SECURITIES AT 1,43,515/ - AND DEPRECIATION ON SECURITIES AT 14,21,074/ - . THE ASSESSEE WAS SHOW CAUSED AS ITA NO S . 2713 & 2714 /P U N/20 1 6 JATH URBAN CO - OP. BANK LTD. 3 TO WHY THE SAME SHOULD BE ALLOWED. THE ASSESSEE EXPLAINED THAT GOVERNMENT SECURITIES AVAILABLE FOR SALE (AFS) WERE STOCK - IN - TRADE OF THE ASSESSEE AND THE SAME H AD TO BE DECLARED AT COST OR MARKET PRICE, WHICHEVER WAS LESS. SINCE THE MARKET PRICE WAS LESS, THE SAME WAS TREATED AS DEPRECIATION AND WAS DEBITED TO PROFIT AND LOSS ACCOUNT. THIS PROVISION WAS MADE AS PER RESERVE BANK OF INDIA GUIDELINES AND RESOLUTIO N PASSED BY THE BOARD. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF ASSESSEE AND REJECTED THE SAME AND MADE AN ADDITION OF 14,21,074/ - AND ALSO DISALLOWED 1,43,515/ - . 6. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE BEING DEPRECIATION IN VALUE OF SECURITIES TO THE TUNE OF 14,21,074/ - ON ACCOUNT OF SHIFTING OF SECURITIES FROM AVAILABLE FOR SALE ( AFS ) & HELD FOR TRADE ( HFT ) C ATEGORY TO HELD TO MATURITY ( HTM ) CATEGORY OF INVESTMENTS. THE CIT(A) IN THIS REGARD PLACED RELIANCE ON THE ORDERS OF TRIBUNAL ON THE SAME ISSUE. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. WE FIND THAT SIMILAR ISSUE OF AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.43/PN/2015, RELATING TO ASSESSMENT YEAR 2009 - 10. THE TRIBUNAL VIDE ORDER DATED 17.11.2016 IN TURN, RELYING ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN ACIT VS. THE AHMEDNAGAR DISTRICT CENTRAL CO - OP. BANK LTD. IN ITA NO.1983/PN/2013, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 20.02.2015 , HELD THAT PREMIUM PAID ON INVESTMENTS CLASSIFIED UNDER HTM CATEGORY WHICH HAD BEEN AMORTIZED OVER THE PERIOD TILL MATU RITY, WAS ALLOWABLE AS BUSINESS EXPENDITURE. CONSEQUENTLY, THE APPEAL OF ASSESSEE WAS ALLOWED. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY ITA NO S . 2713 & 2714 /P U N/20 1 6 JATH URBAN CO - OP. BANK LTD. 4 HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM), WHEREIN IT WAS HELD THAT AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES HELD TO MATURITY WAS ALLOWED. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN NOT ONLY ALLOWING THE CLAIM OF ASSESSEE BUT ALSO ACCEPTING THE PLEA OF ASSESSEE THAT THE INVESTMENTS WERE IN THE NATURE OF HTM CATEGORY, WHEREIN THE ASSESSEE HAD MADE CHANGE OF STAND THAT INVESTMENTS IN SECURITIES WERE AFS AND HFT CATEGORY. WE FIND NO MERIT IN THE ISSUES RAISED BY THE REVENUE IN THIS REGARD, WHEREIN SIMILAR ISSUE HAS BEEN ALLOWED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2009 - 10 AND ALSO SETTLED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. (SUPRA). FOLLOWING THE SAME PARITY OF REAS ONING, WE ALLOW THE CLAIM OF ASSESSEE SINCE IT IS AN EXPLANATION WHICH WAS FILED BEFORE THE CIT(A), WHICH HAS BEEN ELABORATELY CONSIDERED IN PARAS 8 TO 14 OF THE APPELLATE ORDER. UPHOLDING THE SAME, WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 9. THE FACTS AND ISSUES IN ITA NO.2713/PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.2714/PUN/2016 AND OUR DECISION IN ITA NO.2714/PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.2713/PUN/2016. 10 . IN THE RESULT, BOTH THE APPEALS OF REVENUE AR E DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD MARCH , 201 8 . GCVSR ITA NO S . 2713 & 2714 /P U N/20 1 6 JATH URBAN CO - OP. BANK LTD. 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , KOLHAPUR ; 4. THE CIT - 1 , KOLHAPUR ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / B Y ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE