Asstt. Commissioner of Income Tax-I, Kanpur V. M/s United Mercantile Cooperative Bank Ltd., Kanpur

ITA 763/LKW/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6556 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K DEY
• Assessee Lawyers: P K KAPOOR
• Keywords: Depreciation; Opportunity of being heard
• Section: 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.763/LKW/2013 ASSESSMENT YEAR:2010 - 11 A.C.I.T. - 1, KANPUR. VS. M/S UNITED MERCANTILE COOPERATIVE BANK LTD., 106/382, GANDHI NAGAR, KANPUR. PAN:AAAAU2038F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI P. K. DEY, D.R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 02/05/2014 DATE OF PRONOUNCEMENT 1 6 /05/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - I, KANPUR DATED 06/08/2013 FOR ASSESSMENT YEAR 2010 - 2011. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,03,334/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION ON SECURITIES. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LA W AND ON FACTS IN ALLOWING THE DEPRECIATION ON SECURITIES WITHOUT APPRECIATING THE FACT THAT THE DEPRECIATION AND AMORTIZATION CLAIMED BY THE ASSESSEE ON INVESTMENTS HELD IN THE PERMANENT CATEGORY CANNOT BE ALLOWED TO BE DEDUCTED WHILE COMPUTING TAXABLE IN COME. 2 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN ALLOWING RELIEF TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT INCOME OF THE ASSESSEE IS TO BE COMPUTED AS PER THE MANDATORY PROVISIONS OF SECTION 14 5 OF THE INCOME TAX ACT, 1961 AND NOT IN ACCORDANCE WITH GUIDELINES ISSUED BY ANY OTHER AGENCY /INSTITUTION. 4. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR DATED 06.08.2013 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE A SSESSING OFFICER DATED 25.01.2013 BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE AS SESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IT IS HELD BY LEAR NED CIT(A) THAT IN THE LIGHT OF VARIOUS DECISIONS OF THE TRIBUNAL AND INSTRUCTION OF CBDT, BEING INSTRUCTION NO. 17 OF 2008, DATED 26/11/2008 AND RBI CIRCULAR REGARDING INVESTMENT BY PRIMARY (URBAN) CO - OPERATIVE BANK, THE ASSESSEE IS ENTITLED TO GET RELI EF AND HE ALLOWED THE SAME. WE ARE OF THE CONSIDERED OPINION THAT HE SHOULD HAVE OBTAINED A REMAND REPORT FROM THE ASSESSING OFFICER IN THE LIGHT OF THESE TRIBUNAL DECISIONS AND BOARD CIRCULAR AND RBI CIRCULAR BUT HE HAS NOT DONE THE SAME. AS PER THE TRI BUNAL DECISION, REPRODUCED BY LEARNED CIT(A), WE FIND THAT IN THAT CASE , IT IS NOTED BY THE TRIBUNAL THAT THERE WAS NO DISPUTE IN ACCEPTING THE ASSESSEES CLAIM THAT ALL INVESTMENTS WERE IN THE NATURE OF STOCK IN TRADE. IT IS ALSO NOTED BY THE TRIBUNAL TH AT AMORTIZATION OF PREMIUM IN RESPECT OF INVESTMENTS HELD IN HTM WAS IN ACCORDANCE WITH THE METHOD OF VALUATION PRESCRIBED BY THE RBI AND WAS CONSISTENTLY FOLLOWED BY THE ASSESSEE. IN THE PRESENT CASE, NO 3 FINDING IS GIVEN BY CIT(A) AFTER EXAMINING THE FAC TS OF THE CASE AS TO WHETHER THE INVESTMENTS WERE STOCK IN TRADE AND WHETHER THE ASSESSEE WAS FOLLOWING THIS METHOD CONSISTENTLY. HENCE, WE FEEL IT PROPER THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION IN THE LIGHT OF BOARDS INSTRUCTION NO. 17 DATED 26/11/2008 AND RBI CIRCULAR NOTED BY LEARNED CIT(A). WE WANT TO MAKE IT CLEAR THAT THE BURDEN IS ON THE ASSESSEE TO BRING NECESSARY EVIDENCE ON RECORD TO SATISFY THE ASSESSING OFFICER THAT THE CON DITIONS AS PER THIS BOA RDS INSTRUCTION ARE SATISFIED I.E. THE INVESTMENTS WERE STOCK IN TRADE AND THE ASSESSEE WAS CONSISTENTLY FOLLOWING THE METHOD PRESCRIBED BY RBI. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 /05/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR