Asst. CIT, Circle-2, Aurangabad V. Shri Gajanan Nagari Sahakari Bank Ltd., Beed

ITA 695/PUN/2013

• Counselvise Citation: 69524514 RSA 2013
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Capital asset; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 695 / P N/ 20 13 ASSESSMENT YEAR : 2009 - 10 THE ASSTT. COMMISSIONER OF INCOME - TA X, CIRCLE - 2, JEEVAN SUMAN, 2 ND FLOOR, LIC BUILDING, N - 5, CIDCO, AURANGABAD - 431003 VS. SHRI GAJANAN NAGARI SAHAKARI BANK LTD., SAGAR HEIGHTS, OPP. S.T. STAND, BEED (APPELLANT) (RESPONDENT) PAN NO. AABAS7243K APPELLANT BY: SHRI P.L. PATHADE RESPONDEN T BY: SHRI SUNIL GANOO DATE OF HEARING : 26 - 11 - 2013 DATE OF PRONOUNCEMENT : 29 - 11 - 2013 ORDER P ER R.S. PADVEKAR , JM : - THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A), AURANGABAD DATED 21 - 01 - 2013 FOR THE A.Y . 2009 - 10. THE REVENUE HAS TAKEN FOLLOWING GROUND IN THE APPEAL: 1. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, WHETHER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD HAS ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF AMORTIZATION OF DEPREC IATION CLAIMED ON INVESTMENT IN GOVT. SECURITIES IN THE CATEGORY OF HELD TO MATURITY (HTM) AT RS.81,67,500/ - 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A CO - OPERATIVE BANK, REGISTERED U/S. 9(1) OF MAHARASHTRA CO - OPERATIVE SOCIETIES ACT, 19 60. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 DECLARING TOTAL LOSS OF RS. ( - )27,51,096/ - . IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.81,67,500/ - TOWARDS THE DEPRECIATION ON INVESTMENT ON THE GOVERNM ENT SECURITIES HELD UNDER THE CATEGORY OF HELD TO MATURITY (HTM). IN THE OPINION OF 2 ITA NO. 695/PN/2013, SHRI GAJANAN NAGARI SAHAKARI BANK LTD., BEED THE ASSESSING OFFICER , THE SECURITIES HELD UNDER THE HTM CATEGORY ARE IN THE NATURE OF CAPITAL ASSET AND SECURITIES HELD UNDER THE AVAILABLE FOR SALE (AFS) AND HELD F OR TRADING (HFT) ARE IN THE NATURE OF STOCK - IN - TRADE. 3. THE ASSESSING OFFICER, THEREFORE, MADE THE DISALLOWANCE OF THE ENTIRE AMOUNT OF RS.81,67,500/ - WHICH WAS CLAIMED BY THE ASSESSEE AS A DIMINUTION IN THE VALUE OF SECURITIES AND MADE ADDITION TO TH E TOTAL INCOME. THE ASSESSE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT(A) AND LD. CIT(A) DELETED THE ADDITION BY FOLLOWING DECISION OF THE ITAT, PUNE IN THE CASE OF LATUR URBAN CO - OPERATIVE BANK LTD . VS. DCIT, CIRCLE - 3, NANDED BEING ITA NOS. 778 & 79 2/PN/2011 ORDER DATED 31 - 08 - 2012. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ISSUE STAND COVERED IN FAVOUR OF THE ASSESSEE, THE DECISION IN THE CASE OF LATUR URBAN CO - OPERATIVE BANK LTD. (SUPRA). IN THE SAID CASE THE TRIBUNAL HAS HELD THAT ALL THE SECURITIES HELD BY THE BANK FROM PART OF THE STOCK - IN - TRADE. THE OPERATIVE PART OF THE TRIBUNAL DECISION IS AS UNDER: 14. WE HAVE HEARD THE PARTIES. THE LD . COUNSEL PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BANK OF BARODA AND IN THE CASE OF UCO BANK VS. CIT, 240 ITR 355 (SC). IN THE CASE OF BANK OF BARODA (SUPRA), THE ISSUE BEFORE THEIR LORDSHIP WAS WHETHER THE ASSESSEE WAS ENTITLED FOR DEDUCTION ON ACCOUNT OF DEPRECIATION IN THE VALUE OF INVESTMENTS. THE METHOD OF VALUATION FOLLOWED BY THE ASSESSEE BANK WAS TO VALUE INVESTMENTS AT COST OR MARKET VALUE WHICHEVER WAS LOWER. THE ASSESSEE HAD CLAIMED THE DEPRECIATION TO THE TUNE OF RS. 11,82,35,007/ - AND THE SAID DEPRECIATION WAS CLAIMED AS A DEDUCTION WHICH WAS DISALLOWED BY THE A.O, BUT THE ASSESSEE BANK SUCCEEDED BEFORE THE CIT(A). THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A). THE REVENUE CARRIED THE ISSUE BEFORE THE HONBLE HIGH COURT. THE CORE ISSUE WAS THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE BANK FOR VALUING THE STOCK OF THE SECURITIES. THE HONBLE HIGH COURT FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA). 15. IN THE CASE OF UNITED COMMERCIAL BA NK (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 3 ITA NO. 695/PN/2013, SHRI GAJANAN NAGARI SAHAKARI BANK LTD., BEED REGARDING ALLOWABILITY OF THE LOSS ON THE SALE OF THE SECURITIES. MERELY BECAUSE THE SECURITIE S 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 NATURE OF STOCK - IN - TRADE. WE MAY LIKE TO QUOTE HERE THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. NEDUNGADI BANK LTD., 264 ITR 545. IN THE SAID CASE, THE HONBLE HIGH COURT HAS HELD THAT THE SECURITIES HELD BY THE BANK ARE IN THE NATURE OF STOCK - IN - TRADE. BOTH THE AUTHORITIES BELOW HAS MERELY GONE ON THE NO MENCLATURE OF THE HEAD UNDER WHICH THE SECURITIES ARE HELD. IN OUR CONSIDERED VIEW, NOMENCLATURE CANNOT BE DECISIVE FOR THE ASSESSEE BANK. WE, THEREFORE, HOLD THAT THE LOSS ON THE SALE OF THE SECURITIES IS REVENUE IN NATURE AND SAME IS ALLOWABLE. ACCORD INGLY, GROUND NO. 2 IS ALLOWED. 5. WE ALSO FIND THAT THE ISSUE STAND COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT, PUNE IN THE CASE OF THE SANGLI BANK LTD. VS. ACIT, CIRCLE - 2, SANGLI BEING ITA NO. 846/PN/2006 ORDER DATED 30 - 05 - 2013. IN OUR OPINION, N O INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, SAME IS CONFIR M ED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 - 11 - 20 1 3 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 TH NOVEMBER, 20 1 3 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY/ / BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE