The Asstt. Commr. Income Tax, Cir.-2(1), RAJKOT-GUJARAT V. Rajkot Nagrik Sahakari Bank Ltd., RAJKOT-GUJARAT

ITA 767/RJT/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9080 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: D M RINDANI AR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.767/RJT/2014 ( / ASSESSMENT YEAR : 2011-14) THE ACIT CIRCLE-2(1) RAJKOT / VS. RAJKOT NAGRIK SAHKARI BANK LTD., DHEBAR ROAD, NR.JUBILEE BAUG RAJKOT ./ ./ PAN/GIR NO. AAAAR 2912 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI C.S. ANJARIA, SR.DR ! / RESPONDENT BY : SHRI D.M. RINDANI, AR ' #$% ! & / DATE OF HEARING 03/04/2017 '( ! & / DATE OF PRONOUNCEMENT 05/ 04 /2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II I, RAJKOT [CIT(A) IN SHORT] DATED 16/10/2014 FOR THE ASSESSMENT YEAR (AY) 2011-12. 2. THE REVENUE HAS ASSAILED THE ACTION OF THE CIT(A ) IN DELETING THE ADDITION OF RS.2,95,23,715/- MADE ON ACCOUNT OF AMO RTIZATION OF LOSS OF ITA NO.767 /RJT /2014 ACIT VS. RAJKOT NAGRIK SAHKARI BANK LTD. ASST.YEAR 2011-12 - 2 - GOVERNMENT SECURITIES AND NOT CONSIDERED THE FACT T HAT THE ASSESSEE HAS IGNORED THE DISCOUNTED AMOUNT IN CASE OF HTM (HELD TO MATURITY) SECURITIES WHILE ARRIVING AT THE LOSS FIGURE FOR AMORTIZATION. 3. BRIEFLY STATED, THE ASSESSEE IS A CO-OPERATIVE S OCIETY ENGAGED IN BANKING BUSINESS AND OTHER ACTIVITIES. DURING THE ASSESSMENT YEAR, THE ASSESSEE HAS CLAIMED A SUM OF RS.2,95,23,715/- TOWA RDS AMORTIZATION OF SECURITY PREMIUM HELD TO MATURITY (HTM) CATEGORY. THE ASSESSING OFFICER (AO) OBSERVED THAT THE CLAIM OF THE ASSESSE E TOWARDS AMORTIZATION OF HTM CATEGORIES OF SECURITIES IS NOT PERMISSIBLE AS THE BANK CANNOT SELL THE SECURITIES MARKED UNDER HTM CA TEGORY AND IT IS ORDINARILY REQUIRED BE HELD BY THE BANK TILL ITS MA TURITY. IT WAS FURTHER OBSERVED BY THE AO THAT A LOSS IF ANY CAN BE CRYS TALLIZED ONLY ON ITS MATURITY. THEREFORE, THE DIFFERENCE BETWEEN THE M ARKET VALUE IN THE SECURITIES HELD TO MATURITY (HTM) AND THEIR COST O WING TO ITS DIMINUTION CANNOT BE ALLOWED AS DEDUCTION IN COMPUTING THE BUS INESS INCOME OF THE ASSESSEE. THE AMORTIZATION OF LOSS WAS THUS DENIE D. 4. THE LD.AR IN THE COURSE OF HEARING, SUBMITTED TH AT THE QUESTION OF AMORTIZATION OF LOSS ON INVESTMENT HELD TILL MATURI TY (HTM) HAS BEEN DEALT WITH BY THE HONBLE GUJARAT HIGH COURT IN ITS OWN CASE IN TAX APPEAL NO.307 OF 2015 ORDER DATED 24/04/2015 FOR TH E AY 2007-08. IT WAS POINTED OUT THAT IN ASSESSEES OWN CASE THE AMO RTIZATION OF SECURITY ITA NO.767 /RJT /2014 ACIT VS. RAJKOT NAGRIK SAHKARI BANK LTD. ASST.YEAR 2011-12 - 3 - PREMIUM AS CLAIMED WAS ALLOWED. SIMILAR ORDER HAS BEEN PASSED BY THE HONBLE GUJARAT HIGH COURT FOR THE AY 2009-10 IN TA X APPEAL NO.309 OF 2015 ORDER DATED 24/04/2015. 5. IN THE LIGHT OF AFORESAID JUDGEMENTS OF THE HON BLE GUJARAT HIGH COURT, THE DISALLOWANCE OF LOSS DEBITED AS A RESUL T OF AMORTIZATION OF LOSS OF GOVERNMENT SECURITIES IS NOT JUSTIFIED. THE ACT ION OF THE CIT(A) IN ADMITTING THE APPEAL OF THE ISSUE IN AFFIRMATIVE CA NNOT THUS BE FAULTED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 05 / 04/ 2017 AT AHMEDABAD. SD/- SD/- ( MAHAVIR PRASAD) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 05/04/2017 ..#, $.,#../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-III, RAJKOT 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT