Deputy Commissioner of Income-tax, V. Jalgaon Janta Sahakari Bank Ltd., Jalgaon

ITA 838/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1136 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Depreciation; Question of law; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! # $% , & ' BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ( / ITA NOS. 837 & 838/PN/2015 ) * +* / ASSESSMENT YEARS : 2008-09 & 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON ....... / APPELLANT ) / V/S. JALGAON JANTA SAH. BANK LTD., 117/119, SEVA, NAVI PETH, JALGAON - 425001 PAN : AAAAJ0477D / RESPONDENT #,'( / CO NO. 28/PN/2016 ) * +* / ASSESSMENT YEAR : 2008-09 JALGAON JANTA SAH. BANK LTD., 117/119, SEVA, NAVI PETH, JALGAON - 425001 PAN : AAAAJ0477D ....... / APPELLANT ) / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2, JALGAON / RESPONDENT ASSESSEE BY : SHRI JAYESH DOSHI REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 23-08-2016 / DATE OF PRONOUNCEMENT : 23-08-2016 2 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 - / ORDER PER VIKAS AWASTHY, JM : THESE TWO APPEALS BY THE REVENUE ARE AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 25-03 -2015 FOR THE ASSESSMENT YEAR 2008-09 AND THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS) OF EVEN DATE FOR ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS FILED CROSS OBJECTIONS FOR THE ASSESSMENT YEAR 2008-09. IN BOTH THE APPEALS, THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE ON DEPRECIATION CLAIMED ON VALUATION OF GOVERNMENT SECURITIES HELD TO MATURITY (HTM) CATEGORY. SINCE, THE ISSUE RAISED IN BOTH THE APPEALS IS IDENTICAL, THES E APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE WE ARE EXTRACTING THE FACT S FROM THE APPEAL OF THE REVENUE IN ITA NO. 837/PN/2015 FOR ASSESSM ENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A SCHEDULED CO-OP. BANK. THE ASSESSEE FILED IT S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 SHOWING TAXABLE INCOME AS NIL AND CLAIMED CURRENT YEAR LOSS ` 10,73,80,780/-. THE ASSESSMENT PROCEEDINGS WERE COMPLETED IN THE CASE OF ASSESSEE FOR A SSESSMENT YEAR 2008-09 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFT ER REFERRED TO AS THE ACT) ADMITTING THE LOSS OF ` 10,72,98,310/-. THEREAFTER, REASSESSMENT PROCEEDINGS WERE INITIATED AND NOTICE U/S. 1 48 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 20-03-2013. IN REASSES SMENT 3 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION OF ` 13,32,31,750/- ON ACCOUNT OF AMORTIZATION OF INVESTMENT IN GOVERNMENT SECU RITIES HELD UNDER HTM CATEGORY. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23-03-2014, T HE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ENTIR E ADDITION BY PLACING RELIANCE ON THE DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF LATUR URBAN CO-OP. BANK LIMITED VS. DY. COMMISSIONER OF INCOME TAX IN ITA NO. 778/PN/2011 FOR ASS ESSMENT YEAR 2007-08 DECIDED ON 31-08-2012 AND IN THE CASE OF THE SANGLI BANK LTD. VS. ACIT IN ITA NO. 846/PN/2006 FOR ASSESSMENT YEAR 2004-05 DECIDED ON 30-05-2013. THE COMMISSIONER OF INCO ME TAX (APPEALS) FURTHER DRAWS STRENGTH TO SUPPORT HIS FINDINGS FRO M THE FOLLOWING DECISIONS : I. UNITED COMMERCIAL BANK VS. COMMISSIONER OF INCOME TAX, 240 ITR 355 (SC); II. COMMISSIONER OF INCOME TAX VS. CORPORATION BANK LIMITED, 1 74 ITR 616 (KAR). 3. SIMILARLY, IN ASSESSMENT YEAR 2011-12 THE ASSESSING OFFIC ER MADE ADDITION OF ` 2,73,37,590/- IN RESPECT OF AMORTIZATION OF PREMIUM ON GOVERNMENT SECURITIES HELD TO MATURITY (HTM) CATEGOR Y. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY PLACING RELIANCE ON THE DECISIONS OF HON'BLE SUPREME COU RT OF INDIA, HON'BLE KARNATAKA HIGH COURT AND THE PUNE BENCH OF THE TRIBUNAL. NOW, THE REVENUE IS IN APPEAL AGAINST THE ORDERS OF COMMIS SIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION IN BOTH THE IMP UGNED ASSESSMENT YEARS. 4 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT SU BMITTED THAT THE SECURITIES HELD UNDER HTM CATEGORY ARE LONG TE RM INVESTMENT AND HENCE, DEPRECIATION ON THE SAID SECURITIES IS NOT ALLOWA BLE. THE LD. DR CONTENDED THAT THE INVESTMENTS ARE NOT LIQUID ASSETS WHICH CAN BE CATEGORIZED AS STOCK-IN-TRADE. THE COMMISSIONER OF INCOM E TAX (APPEALS) HAS ERRED IN DELETING THE ADDITIONS BY PLACING RE LIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA AND THE DECISIO N OF PUNE BENCH OF THE TRIBUNAL. THE LD. DR CONTENDED THAT THE INV ESTMENT IN GOVERNMENT SECURITIES HELD UNDER HTM CATEGORY IS A CAPITAL INVESTME NT AND NOT STOCK-IN-TRADE, THEREFORE, THE VALUATION OF HTM CA TEGORY INVESTMENT AT COST OR MARKET PRICE, WHICHEVER IS LESS DOE S NOT ARISE. AS PER CBDT CIRCULAR NO. 665 DATED 05-10-1993 IT IS FOR THE ASSESSING OFFICERS TO DETERMINE ON THE FACTS AND CIRCUMSTANCES OF E ACH CASE AS TO WHETHER ANY PARTICULAR SECURITY CONSTITUTES STOCK-IN-TRA DE OR INVESTMENT TAKING INTO ACCOUNT THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA IN THIS REGARD FROM TIME TO TIME. THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF ASSESSING OFFICER AND PRAYED FOR S ETTING ASIDE THE IMPUGNED ORDERS. 5. ON THE OTHER HAND SHRI JAYESH DOSHI APPEARING ON BE HALF OF THE ASSESSEE SUBMITTED THAT THE ISSUE OF ALLOWABILITY OF AMORTIZ ATION OF PREMIUM ON GOVERNMENT SECURITIES HELD UNDER HTM CATEGOR Y HAS BEEN ADJUDICATED IN FAVOUR OF ASSESSEE BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. HDFC BANK LTD . REPORTED AS 366 ITR 505 (BOM). THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE TRIBUNAL HAS BEEN CONSISTENTLY HOLDING THAT THE GOVERNMENT SECURITIES HELD UNDER HTM CATEGORY ARE STOCK-IN-TRADE A ND ALLOWED THE AMORTIZATION OF PREMIUM ON SUCH SECURITIES HELD UNDER HTM CATEGORY. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE 5 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F COSMOS CO-OP. BANK LTD. VS. DCIT REPORTED AS 64 SOT 90 (PUNE-T RIB.). THE LD. AR FURTHER SUBMITTED THAT THERE ARE SEVERAL DECISIONS OF THE TRIBUNAL WHEREIN SIMILAR VIEW HAS BEEN TAKEN. 6. IN RESPECT OF CROSS-OBJECTIONS, THE LD. AR OF THE ASSE SSEE STATED AT THE BAR THAT HE IS NOT PRESSING THE SAME. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR OF T HE ASSESSEE HAS PLACED RELIANCE IN SUPPORT OF HIS CONTENTIONS. THE ON LY ISSUE RAISED IN THE APPEALS BY THE DEPARTMENT IS WITH RESPECT TO DISA LLOWANCE OF DEPRECIATION CLAIMED IN VALUATION OF GOVERNMENT SECURITIES HE LD UNDER HTM CATEGORY. THE ISSUE RAISED BY THE DEPARTMENT IN THE APPEALS IS NO MORE RES INTEGRA . THE TRIBUNAL HAS BEEN CONSISTENTLY HOLDING THAT GOVERNMENT SECURITIES HELD UNDER HTM CATEGORY ARE PART OF STOCK-IN- TRADE. THE HON'BLE JURISDICTIONAL HIGH COURT HAS UPHELD THE FINDINGS OF TRIBUNAL IN THE CASE OF COMMISSIONER OF INCOME TAX VS. HDF C BANK LTD. (SUPRA). 8. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. HDFC BANK LTD. IN ITA NO. 4529/MUM/20 05 DECIDED ON 29-06-2011 UPHELD THE FINDINGS OF COMMISSIONER O F INCOME TAX (APPEALS) IN DELETING THE DISALLOWANCE OF LOSS DUE TO DI MINUTION IN THE VALUE OF THE CURRENT INVESTMENT AND AMORTIZATION OF P REMIUM ON INVESTMENTS HELD TO MATURITY. THE RELEVANT EXTRACT OF TH E FINDINGS OF THE TRIBUNAL ARE AS UNDER: 6 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 THE NEXT ISSUE IN THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2001-02 IS WHETHER, IN THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF LOSS DUE TO DIMINUTION IN THE VALUE OF THE CURRENT INVESTMENT AND AMORTISATION OF PREMIUM ON INVESTMEN TS HELD TO MATURITY. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AS WELL AS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE A ND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LEARNED AUTHORISED REPRESENTATIVE HAS POINTED OUT THAT THIS ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE CASE OF LORD KRISHNA BANK LTD. IN I TA NO. 118/COCH/2007 FOR THE ASSESS MENT YEAR 1999-2000, V IDE ORDER DATED APRIL 27, 2011. THE COMMISSIONER OF INCOME-TAX (APP EALS) HAS DECIDED THE ISSUE IN PARAGRAPH 10 AS UNDER : 10. RESPECTFULLY FOLLOWING THE HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT V. BANK OF BARODA [2003 262 ITR 334 (BOM)] W HEREIN THE HONBLE COURT HELD THAT LOSS DEBITED TO THE PROFIT AND LOSS WHERE IN THE HONBLE COURT HELD THAT LOSS DEBITED TO THE PROFIT AND LOSS ACCOUNT DUE TO DECREASE IN VALUE OF SECURITIES IS ALLOWABLE AS DEDUCTION AND THE HONBLE SUPREME C OURT IN THE CASE OF UNITED COMMERCIAL BANK V. CIT [1999] 240 ITR 355 (SC) WHER E THE HON'BLE COURT REVERSING THE DECISION OF THE HIGH COURT HELD THAT NATIONALISED BANK GOVERNED BY THE BANKING REGULATION ACT. THE BANK IS FOLLOWING T HE MERCANTILE SYSTEM OF ACCOUNTING BOTH FOR BOOK KEEPING AS WELL AS TAX PUR POSES. THE BANK IS VALUING STOCK-IN-TRADE (INVESTMENTS) AT COST IN THE BALAN CE-SHEET IN ACCORDANCE WITH THE BANKING REGULATION ACT AND VALUING VERY SAME INVEST MENTS AT COST OR MARKET VALUE, WHICHEVER WAS LOWER, FOR INCOME-TAX PURPOSE S. THE METHOD FOLLOWED CONSISTENTLY WAS VALID AND COULD NOT BE REJECTED. I N THE PRESENT CASE, THE FACTS BEING SIMILAR TO THE FACTS REPORTED IN UCO BANK, TH E ASSESSING OFFICER IS DIRECTED TO ALLOW THE REVALUATION OF SECURITIES. HOWEVER, FO R THE COMPUTATION OF DEPRECIATION ALLOWABLE, THE ASSESSING OFFICER IS AL SO DIRECTED TO REVALUE THE SECURITIES IN THE SAME MANNER IN THE BEGINNING OF T HE YEAR ALSO. WE FIND THE TRIBUNAL IN THE CASE OF LORD KRISHNA BA NK LTD. (SUPRA) HAS CONSIDERED AND ADJUDICATED THE ISSUE IN PARAGRAPHS 3 AND 4 AS UNDER : 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED AUTHORISED REPRESENTATIVE HAS R ELIED ON CIRCULAR DBOD. NO. BP.BC.29/21.04.048/98, DATED APRIL 11, 1998, ISSUED BY THE RESERVE BANK OF INDIA PRESCRIBING THE METHOD TO BE FOLLOWED FOR VAL UATION OF GOVERNMENT AND OTHER SECURITIES. THE LEARNED AUTHORISED REPRESENTA TIVE INVITED OUR ATTENTION TOWARDS PAGE 4 OF THE PAPER BOOK, WHICH IS THE METH OD SUGGESTED BY THE RBI TO BE ADOPTED BY THE BANKS IN RESPECT OF PERMANENT INV ESTMENTS. CLAUSE (II) OF POINT NO. 1 OF THIS, BEING VALUATION OF PERMANENT I NVESTMENTS, WHICH HAS BEEN PRESSED INTO SERVICE BY THE LEARNED AUTHORISED REPR ESENTATIVE, READS AS UNDER : 7 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 PERMANENT INVESTMENTS SHOULD BE VALUED AT COST A ND IN CASE COST PRICE IS HIGHER THAN THE FACE VALUE, THE PREMIUM SHOULD BE A MORTISED OVER THE REMAINING PERIOD OF MATURITY OF THE SECURITY. ON THE OTHER HA ND, WHERE THE COST PRICE IS LESS THAN THE FACE VALUE, THE DIFFERENCE SHOULD BE IGNOR ED AND SHOULD NOT BE AMORTISED OR TAKEN TO INCOME ACCOUNT SINCE THE AMOU NT REPRESENTS UNREALIZED GAIN. 4. WHEN WE VIEW THE ABOVE METHOD OF VALUATION, IT C OMES TO NOTICE THAT THE PERMANENT INVESTMENT SHOULD BE VALUED AT COST AND W HERE SUCH COST PRICE IS HIGHER THAN THE FACE VALUE, THE PREMIUM SHOULD BE AMORTIZED FOR THE REMAINING PERIOD OF MATURITY OF THE SECURITY. FROM THE ABOVE , IT IS CLEAR THAT THE PREMIUM HAS TO BE AMORTIZED FOR THE REMAINING PERIOD OF MAT URITY OF THE SECURITY. THE LEARNED AUTHORISED REPRESENTATIVE FAIRLY CONCEDED T HAT DETAILS OF SUCH PREMIUM SPLITTING OVER THE REMAINING PERIOD OF THE MATURITY WAS NOT READILY AVAILABLE AND, HENCE, THE MATTER BE REMITTED TO THE FILE OF THE AS SESSING OFFICER FOR DECIDING IT AS PER THE ABOVE PART OF THE CIRCULAR. NO SERIOUS OBJE CTION WAS TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN VIEW OF THESE FACTS WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE ASS ESSING OFFICER FOR DECIDING THIS POINT IN ACCORDANCE WITH THE ABOVE NOTED METHOD. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE AND CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE. 9. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE T HE HON'BLE BOMBAY HIGH COURT. ONE OF THE SUBSTANTIAL QUESTION OF LA W BEFORE THE HON'BLE COURT FOR ADJUDICATION WAS : (C) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL IS R IGHT IN LAW IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION WITH RESPECT TO THE DIMINUTION IN VALUE OF THE INVESTMENT AND AMORTIZATION OF PREMIUM ON IN VESTMENT HELD TO MATURITY ON THE GROUND OF MANDATE BY THE RBI GUIDELINES THER EBY IGNORING THE DECISION OF THE SUPREME COURT IN THE CASE OF SOUTHERN TECHNO LOGIES LTD. V. JOINT CIT [2010] 320 ITR 577 (SC) ?' THE HON'BLE JURISDICTIONAL HIGH COURT DISMISSED THE SUBST ANTIAL QUESTION OF LAW ON THIS ISSUE BY OBSERVING AS UNDER : AS FAR AS QUESTION (C) IS CONCERNED, WE FIND THAT AN IDENTICAL QUESTION OF LAW WAS FRAMED AND ANSWERED IN FAVOUR OF THE ASSESS EE BY THIS COURT IN ITS JUDGMENT DATED JULY 4, 2014, IN INCOME TAX APPE AL NO. 1079 OF 2012, 8 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 CIT V. LORD KRISHNA BANK LTD. (NOW MERGED WITH HDFC BANK LTD.) [2014] 366 ITR 416 (BOM). MR. SURESH KUMAR FAIRLY STATED T HAT QUESTION (C) REPRODUCED ABOVE IS COVERED BY THE SAID ORDER. IN V IEW THEREOF, WE ARE OF THE VIEW THAT EVEN QUESTION (C) DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW THAT REQUIRES AN ANSWER FROM US. 10. THE ISSUE RELATING TO SECURITIES HELD BY ASSESSEE UNDE R HTM CATEGORY CONSTITUTE STOCK-IN-TRADE AND THE CONSEQUENT IAL LOSS ON VALUATION OF SAID SECURITIES ON THE BASIS OF COST OR MARKET VALUE, WHICHEVER, IS LESS WHETHER ALLOWABLE AS DEDUCTION WAS RAISED IN THE CASE OF COSMOS CO-OP. BANK LTD. VS. DCIT (SUPRA). THE TR IBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 16. THE GROUND OF APPEAL NO. 4 IS WITH REGARD TO T HE ASSESSEES CLAIM THAT THE SECURITIES HELD BY THE ASSESSEE BANK UNDER HELD TO MATURITY (HTM) CATEGORY CONSTITUTE ITS STOCK-IN-TRADE AND TH E CONSEQUENTIAL LOSS ON VALUATION OF THE SAID SECURITIES AS ON 31.03.2007 O N THE BASIS OF COST OR MARKET VALUE WHICHEVER IS LOWER (ON THE BASIS OF IN DIVIDUAL SCRIP) IS AN ALLOWABLE DEDUCTION. THE SAID CLAIM WAS MADE BY WAY OF AN ADDITIONAL GROUND OF APPEAL BEFORE THE CIT(A), WHICH WAS ADMIT TED BY HIM FOR ADJUDICATION BUT ON MERITS IT HAS BEEN DENIED. BEFO RE US, THE CLAIM OF THE ASSESSEE IS THAT THE SECURITIES HELD BY THE ASSESSE E BANK ARE PART OF STOCK-IN-TRADE IRRESPECTIVE OF THEIR CLASSIFICATION AND THAT A SIMILAR MATTER HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUN AL IN THE CASES OF LATUR URBAN COOP. BANK LTD. IN ITA NO.778/PN/2011 F OR ASSESSMENT YEAR 2007-08 DATED 31.08.2012 AND THE SANGLI BANK L TD. IN ITA NO.846/PN/2006 FOR ASSESSMENT YEAR 2004-05 DATED 30 .05.2013 WHEREIN SUCH SECURITIES ARE ACCEPTED AS STOCK-IN-TR ADE. IT WAS CONTENDED THAT THE ISSUE IS COVERED BY THE AFORESAID PRECEDEN TS. THE LEARNED DEPARTMENT REPRESENTATIVE HAS NOT DISPUTED THE AFOR ESAID FACTUAL MATRIX. 17. IN THIS CONTEXT, WE FIND THAT SO FAR AS SECURIT IES HELD UNDER HTM CATEGORIES ARE CONCERNED, THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF LATUR URBAN COOP. BANK LTD. (SUPRA) HELD THAT SUCH SECURITIES HELD BY AN ASSESSEE BANK ARE PART OF ITS STOCK-IN-TRADE. FOLLO WING THE AFORESAID DECISION WE ARE UNABLE TO UPHOLD THE PLEA OF THE RE VENUE THAT THE SECURITIES HELD BY THE ASSESSEE UNDER THE HTM CATEG ORY ARE CAPITAL IN NATURE. THE FOLLOWING DISCUSSION IN THE ORDER OF TH E TRIBUNAL IN THE CASE OF LATUR URBAN COOP. BANK LTD. (SUPRA) IS RELEVANT :- 9 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 14. WE HAVE HEARD THE PARTIES. THE LD COUNSEL PLAC ED HIS HEAVY RELIANCE ON THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BANK OF BARODA AND IN THE CASE OF UCO BA NK VS. CIT, 240 ITR 355 (SC). IN THE CASE OF BANK OF BARODA (SUPRA), TH E 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 VALU E INVESTMENTS AT COST OR MARKET VALUE WHICHEVER WAS LOWER. THE ASSES SEE HAD CLAIMED THE DEPREDATION TO THE TUNE OF RS. 11,82,35,007/- A ND THE SAID DEPRECIATION WAS CLAIMED AS A DEDUCTION WHICH WAS D ISALLOWED BY THE A.O, BUT THE ASSESSEE BANK SUCCEEDED BEFORE THE CIT (A). THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A). THE REVENUE CARR IED THE ISSUE BEFORE THE HON'BLE HIGH COURT. THE CORE ISSUE WAS THE METH OD OF VALUATION ADOPTED BY THE ASSESSEE BANK FOR VALUING THE STOCK OF THE SECURITIES. THE HON'BLE HIGH COURT FOLLOWED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA). 15. IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA), EVEN THE ISSUE OF VALUATION OF THE STOCK IN TRADE OF THE INVESTMENT W AS BEFORE THE HON'BLE SUPREME COURT. IN THE CASE OF THE ASSESSEE, THE ISS UE IS REGARDING ALLOWABILITY OF THE LOSS ON THE SALE OF THE SECURIT IES. MERELY BECAUSE THE SECURITIES ARE KEPT UNDER THE HEAD TILL THE MATURIT Y, THE SAID SECURITY CANNOT BE TREATED AS A PURELY INVESTMENT. LAW IS WE LL SETTLED THAT THE SECURITIES HELD BY THE BANK ARE IN THE NATURE OF ST OCK-IN-TRADE. WE MAY LIKE TO QUOTE HERE THE DECISION OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. NEDUNGADI BANK LTD., 264 ITR 545. I N THE SAID CASE, THE HON'BLE HIGH COURT HAS HELD THAT THE SECURITIES HEL D BY THE BANK ARE IN THE NATURE OF STOCK-IN-TRADE. BOTH THE AUTHORITIES BELOW HAS MERELY GONE ON THE NOMENCLATURE OF THE HEAD UNDER WHICH THE SEC URITIES ARE HELD. IN OUR CONSIDERED VIEW, NOMENCLATURE CANNOT BE DECISIV E FOR THE ASSESSEE BANK. WE, THEREFORE, HOLD THAT THE LOSS ON THE SALE OF THE SECURITIES IS REVENUE IN NATURE AND SAME IS ALLOWABLE. ACCORDINGL Y, GROUND NO. 2 IS ALLOWED. 18. FOLLOWING THE AFORESAID PRECEDENT, WE HOLD THAT THE CLAIM OF THE ASSESSEE IN GROUND OF APPEAL NO. 4 IS JUSTIFIED AND IS ALLOWABLE. THE TRIBUNAL HAS BEEN CONSISTENTLY TAKING SIMILAR VIEW IN RE SPECT OF THE GOVERNMENT SECURITIES HELD UNDER HTM CATEGORY. 11. THE LD. DR HAS NOT BEEN ABLE TO PLACE ON RECORD ANY DECISION OF HON'BLE APEX COURT TO CONTROVERT THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT ON THE ISSUE. WE FIND NO REASON T O TAKE ANY 10 ITA NOS. 837 & 838/PN/2015 AND CO NO. 28/PN/2016 CONTRARY VIEW. ACCORDINGLY, THE APPEALS OF THE REVENUE A RE DISMISSED BEING DEVOID OF ANY MERIT. 12. THE ASSESSEE HAS FILED CROSS-OBJECTIONS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN THE ASSESSMENT YEAR 2008 -09. THE LD. AR OF THE ASSESSEE STATED AT THE BAR THAT HE IS NOT PRESSING THE GROUNDS RAISED IN CROSS-OBJECTIONS. ACCORDINGLY, THE CRO SS-OBJECTIONS OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 13. IN THE RESULT, THE APPEALS BY THE REVENUE AND THE C ROSS- OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE HEARING ON TUESDAY, THE 23 RD DAY OF AUGUST, 2016. SD/- SD/- (PRADIP KUMAR KEDIA) (VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 23 RD AUGUST, 2016 RK -.#/01+/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. # # $ () / THE CIT(A)-2, NASHIK 4. PR. COMMISSIONER OF INCOME TAX-2, NASHIK 5. '() *+ , # *+ , , ,-. , / DR, ITAT, B BENCH, PUNE. 6. )/0 12 / GUARD FILE. // ' // TRUE COPY// #3 / BY ORDER, 4 *. / PRIVATE SECRETARY, # *+ , / ITAT, PUNE