ACIT CIR-3, THANE V. THANE BHARAT SAHAKARI BANK LTD, THANE

ITA 6705/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75376 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: G G SATHE
• Keywords: Depreciation; Capital expenditure
• Section: 143(3)

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , !' #'' ' , $ % BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 6705 / / 2012 A.Y. 2009-10 ITA NO. : 6705/MUM/2012 (ASSESSMENT YEAR: 2009-10) DY. COMMISSIONER OF INCOME TAX CIRCLE 3, VARDAAN, LOWER GROUND FLOOR, MIDC, WAGLE INDL. ESTATE, THANE VS M/S THANE BHARAT SAHAKARI BANK LTD., SHATANTRAKA, BAJI PRABHU DESHPANDE MARG, NAUPADA, THANE (2), PAN: AAAJT 1230 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M L PERUMAL RESPONDENT BY : SHRI G G SATHE /DATE OF HEARING : 07-01-2014 / DATE OF PRONOUNCEMENT : 15-01-2014 ( O R D E R #'' ' , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) I, THANE, DATED 09.08.2012, WHEREIN, THE FOLLOWING GROUND S HAVE BEEN TAKEN: 1. ON THE FACTS ARID IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A)-I, THANE ERRED IN APPRECIATING THE FACT THAT THE LOSS AT THE TIME OF RECLASSIFICATION OF HTM SECURITIES IS A CAPITAL LOSS AND NOT A REVENUE LOSS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A)-I, THANE HAS ALSO ERRED IN APPRECIATING THE FACT THAT THE EXPENDITUR E OF RS. 2,25,70,770/- ALSO REPRESENTS CAPITAL EXPENDITURE AND NOT REVENUE EXPEN DITURE AND THE SAME CANNOT BE ALLOWED AS DEDUCTION AS SUCH. M/S THANE BHARA T SAHAKARI BANK LTD. ITA NO. 6705/MUM/2012 2 3. THE APPELLANT PRAYS THE ORDER OF THE CIT(A)-I, THA NE, MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. AT THE TIME OF HEARING, THE AR SUBMITTED THAT IN THE PRECEDING YEAR, COORDINATE BENCH AT MUMBAI IN ITA NO. 7559/MUM/201 1 IN ASSESSEES OWN CASE GAVE A FINDING, ON THE ISSUE IMPUGNED BEFORE US. THE DECISION OF THE COORDINATE BENCH IS AS FOLLOWS, 2. ASSESSEE, A CO-OPERATIVE SOCIETY ENGAGED IN THE BU SINESS OF BANKING FILED ITS RETURN OF INCOME ON 29-09-2008 DECLARING TOTAL INCOME O F RS. 5.89 CRORES. CASE WAS SELECTED UNDER CASS AND ASSESSMENT WAS FINALIZED ON 30-12-2010 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT) DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 8.62 CRORES. 2.1 DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFI CER (AO) FOUND THAT ASSESSEE HAD DEBITED AN AMOUNT OF RS. 2.92 CRORES UNDER THE HEAD AMORTISATION OF PREMIUM AND DEPRECIATION ON GOVT. SECURITIES AND HAD SHI FTED THE SAME TO HTM (HELD TO MATURITY). OUT OF RS. 2.92 CRORES, RS. 2.22 CRORES WAS ON ACCOUNT OF LOSS INCURRED DUE TO SHIFTING OF CLASSIFIED SECURITY AND RS. 70.63 LAKHS WAS DUE TO AMORTISATION OF PREMIUM (@20%) RELATING TO THE ASSESSM ENT YEAR (AY) UNDER CONSIDERATION. AO DISALLOWED BOTH THE AMOUNTS. 2.2 ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ASSESSM ENT ORDER, HE HELD THAT THE RESERVE BANK OF INDIA (RBI) VIDE THEIR GUIDELINE S DT. 16-10-2008 HAD PERMITTED WRITE OFF OF LOSS ARISING FROM SHIFTING FROM SECURITIES FROM ONE CATEGORY TO ANOTHER CATEGORY IN RESPECT OF INVESTMENT IN GOVER NMENT SECURITIES, THAT EXPENSES HAD RIGHTLY BEEN WRITTEN OFF BY THE ASSESSE E - CO-OPERATIVE SOCIETY. ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE AO AMO UNTING TO RS. 2.22 CRORES. WITH REGARD TO DISALLOWANCE OF RS. 70.63 LAKHS, BEING PROPORTIONATE RIGHTS OF PREMIUM PAID ON SECURITIES HELD ON MATURITY, HE HELD THAT THE CLAIM OF WRITE OFF WAS WITHIN THE FOUR CORNERS OF LAW, THAT AS SESSEE WAS ENTITLED TO WRITE OFF THE SAME. HE ALSO DELETED THE ADDITION AMOUNTING TO RS. 7.63 LAKHS MADE BY THE AO. 3. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) RELIED U PON THE ORDERS OF THE AO. AUTHORISED REPRESENTATIVE (AR) RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED A COPY OF THE ORDER DELIVERED BY A BENCH OF PUNE IN THE CASE OF LATUR URBAN CO-OP. BANK LTD., (ITA NO. 7781PN/201 1 AY2007-08 DT. 31-08-2012). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUG H THE MATERIAL PLACED BEFORE US. FROM THE CIRCULAR ISSUED BY THE RBI DT. 28-03-2005 AND THE GUIDE LINES OF 16-10-2008, IT IS CLEAR THAT ASSESSEE WAS FOLLOWING MANDATORY DIRECTIVE S OF RBI AND THE LOSS SUFFERED BY IT WAS A RESULT OF TRADING IN GOVERNMENT SECURITIES. WE ARE OF THE OPINION THAT THE ORDER PASSED BY THE FAA DOES NOT SUFFER FROM ANY LEG AL INFIRMITY OR ILLEGALITY. THEREFORE, UPHOLDING THE ORDER OF THE FAA, WE REJECT GROUND NOS . 1 TO 4 FILED BY THE AO. APPEAL FILED BY THE AO STANDS DISMISSED. 3. SINCE THE ISSUE RAISED IN THE INSTANT APPEAL IS IDENTICAL IN THE CASE OF THE ASSESSEE IN THE IMMEDIATE PRECEDING YEAR, RES PECTFULLY FOLLOWING THE SAME, WE REJECT THE GROUNDS AS RAISED BY THE DEPARTME NT. M/S THANE BHARA T SAHAKARI BANK LTD. ITA NO. 6705/MUM/2012 3 4. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2014. SD/- SD/- ( . . ) ( #'' ' ) (R. C. SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 15 TH JANUARY, 2014 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-I, THANE. 4) THE CIT-II, THANE, 5) !'# $ , % $ , &'( / THE D.R. E BENCH, MUMBAI. 6) #) * COPY TO GUARD FILE. %+,- / BY ORDER / / TRUE COPY / / . / / '0 % $ , &'( DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *23/ . . * CHAVAN, SR. PS