The DCIT, Circle-1(2), Ahmedabad V. The Gujarat State Co.Op.Bank Ltd., Ahmedabad

ITA 701/AHD/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1213 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 21-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARIMAL B PARMAR RESPONDEN
• Keywords: Depreciation; Question of law
• Section: 143(3)

Judgement Text

ITA NO. 701/AHD/2018 DCI T VS. GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2014-15 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH B, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO. 701/AHD/2018 ASSESSMENT YEAR: 2014-15 THE DEPUTY COMMISSIONER OF INCOME-TAX .......... ....APPELLANT CIRCLE -1 (2), AHMEDABAD VS THE GUJARAT STATE CO-OP. BANK LIMITED ........ .........RESPONDENT SHAHKAR BHAVAN, RELIEF ROAD, AHMEDABAD [PAN : AAAAT 9774 F] APPEARANCES BY MUDIT NAGPAL, FOR THE APPELLANT TUSHAR HEMANI & PARIMAL B PARMAR, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 04.06.2019 DATE OF PRONOUNCEMENT : 04.06.2019 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 24 TH JANUARY 2018 PASSED BY THE BY THE CIT(A)-10, AHMED ABAD IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF TH E INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2014-15, ON THE FOLLOWING GROUNDS:- 1) THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.2,74 27,223/- ON ACCOUNT OF DISALLOWANCE OF AMOR TIZATION OF PREMIUM. 2) THAT THE LD. CIT(A) HAS SUBSTANTIALLY ERRED BY NOT CONSIDERING THE FACT THAT THE INVESTMENT IN GOVERNMENT SECURITIES MADE WAS IN CAPITAL NATURE AS THE SAME IS HELD FOR MATURITY UNDER THE CATEGORY HTM. 3) THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S BY DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE BANK ITSELF HAS CATEGORIZED THE GOVERNMENT SECURITY AS INVESTMENT AND NOT STOCK IN TRADE OF BANK. 2. WHEN THE APPEAL WAS CALLED OUT FOR HEARING, LEAR NED REPRESENTATIVES FAIRLY AGREED THAT THE ABOVE ISSUE IS FULLY COVERED, IN FA VOUR OF THE ASSESSEE, BY THE DECISION DATED 27.09.2018 OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE ITA NO. 701/AHD/2018 DCI T VS. GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2014-15 PAGE 2 OF 3 IMMEDIATELY PRECEDING ASSESSMENT YEAR. VIDE THE AFO RESAID ORDER, THE CO-ORDINATE BENCH HAS, INTER ALIA, OBSERVED AS FOLLOWS:- 3. LEARNED REPRESENTATIVE FAIRLY AGREE THAT THE AB OVE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY HONBLE JURI SDICTIONAL HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. RAJKOT DIST. CO-OPE RATIVE BANK LTD (TAX APPEAL NO.56 OF 2013; JUDGMENT DATED 10.02.2014) WH EREIN THEIR LORDSHIPS HAVE, INTER ALIA, OBSERVED AS FOLLOWS:- 5. THE LEARNED COUNSEL SHRI P.G. DESAI FOR THE APPELLANT VEHEMENTLY CONTENDED THAT THE TRIBUNAL CO MMITTED SERIOUS ERROR IN OVERRULING THE DECISION OF THE CIT (APPEALS), WHO HAD GIVEN DETAILED REASONS. HE SUBMITTED THAT T HE INVESTMENT WAS IN THE NATURE OF CAPITAL INVESTMENT IN THE HANDS OF THE ASSESSEE AS HELD BY THE CIT (APPEALS). THE CBDT CIRCULAR DATED NOVEMBER 26, 2008 WOULD NOT APPLY. THERE WERE FUR THER INSTRUCTIONS WHICH WOULD GOVERN THE SITUATION. 6. ON THE OTHER HAND, THE LEARNED COUNSEL SHRI TU SHAR HEMANI FOR THE RESPONDENT PLACED HEAVY RELIANCE ON THE SAID CBDT CIRCULAR DATED NOVEMBER 26, 2008 AND CONTENDED THAT TH E BENEFIT OF AMORTISATION HAD TO BE GRANTED.THE ASSESSEE AS A CO OPERATIVE BANK WAS BOUND BY THE RBI DIRECTIVES. AS PER SUCH DI RECTIVES, THE ASSESSEE HAD TO INVEST CERTAIN AMOUNTS IN GOVERNMEN T SECURITIES AND TO HOLD THE SAME TILL MATURITY. IN THE PROCESS OF ACQUISITION, IF THERE WAS ANY PREMIUM PAID ON THE FACE VALUE OF THE SECURITY, THE LOSS HAD TO BE AMORTISED. PARAGRAPH (VII) OF THE CBDT CIRCULAR NO.17 OF 2008 DATED NOVEMBER 26, 2008 WOULD APPLY. S UCH INSTRUCTION READS AS UNDER : (VII) AS PER RBI GUIDELINES DATED 16TH OCTOBER, 2 000, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SAL E (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NE ED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION COS T UNLESS THESE ARE MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMORTISED OVER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF HFT AND AFT SECURITIES FORMING STOCK-- IN-TRADE OF THE BANK, THE DEPRECIATION / APPREC IATION IS TO BE AGGREGATED SCRIP-WISE AND ONLY NET DEPRECIATION , IF ANY, IS REQUIRED TO BE PROVIDED FOR IN THE ACCOUNTS. THE LA TEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWING ANY SUCH CLAIMS. 7. THE INSTRUCTIONS CLEARLY PROVIDE FOR AMORTISATIO N OF PREMIUM PAID ON ACQUISITION OF SECURITIES WHEN THE SAME ARE ACQU IRED AT THE RATE HIGHER THAN THE FACE VALUE. SUCH AMORTISATION WOU LD HAVE TO BE FOR THE ITA NO. 701/AHD/2018 DCI T VS. GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2014-15 PAGE 3 OF 3 REMAINING PERIOD OF MATURITY. THIS PRECISELY THE TRIBUNAL HAD DIRECTED IN THE IMPUGNED ORDER. THOUGH CONTEN DED, NO CONTRARY INSTRUCTIONS OF CBDT ARE BROUGHT TO OUR NOTICE. THE INSTRUCTION IN QUESTION HAVING BEEN ISSUED UNDER SECTION 119 (2) OF THE INCOME- TAX ACT, 1961, WOULD BIND THE REVENUE. NO QUESTION OF LAW, THEREFORE, ARISES. 4. RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE J URISDICTIONAL HIGH COURT (SUPRA), WE APPROVE THE CONCLUSIONS ARRIVED AT BY T HE LEARNED CIT(A) AND DECLINED TO INTERFERE IN THE MATTER. 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH. RESPECTFULLY FOLLOW ING THE CO-ORDINATE BENCH DECISION IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED C IT(A) AND DECLINE TO INTERFERE IN THE MATTER. 4. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 4 TH DAY OF JUNE, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KU MAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED THE 4 TH DAY OF JUNE, 2019 BT COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ETC TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ...ORDER PREPARED AS PER THE TWO PAGES MANUSCRIPTS OF HONBLE VP WHICH ARE ATTACHED HEREWITH.....04.06.2019............. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 04.06.2019........ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: ... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ...... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......