The Andhra Pradesh State Co-operative Bank Limited, Secunderabad V. ACIT, Circle-2(3), Hyderabad

ITA 851/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74430 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEEVAN LAL LAVADIYA
• Assessee Lawyers: A V SADASIVA
• Keywords: Depreciation; Additional evidence; Reasonable cause
• Section: 37(1)

Judgement Text

CIN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 851/HYD/2013 ASSESSMENT YEAR 2008-09 THE ANDHRA PRADESH STATE CO-OPERATIVE BANK LTD., HYDERABAD PAN: AAAAT2971J VS. THE ASST. CIT CIRCLE-2(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI A.V. SADASIVA RESPONDENT BY: SRI JEEVAN LAL LAVADIYA DATE OF HEARING: 01 . 01 .201 4 DATE OF PRONOUNCEMENT: 01 . 01 .201 4 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-III, HYDERABAD DATED 18 TH MARCH, 2013 FOR A.Y. 2008-09. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. YOUR APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN THE MATTER OF DISALLOWANCE OF DEPRECIATION IN THE VALUE OF CURREN T INVESTMENTS DEBITED TO PROFIT AND LOSS ACCOUNT OF R S. 28,41,84,357/-. 2. YOUR APPELLANT SUBMITS THAT THE NON-SLR INVESTMENTS WERE CLASSIFIED AS CURRENT INVESTMENTS UNDER 'AFS' AS PER GUIDELINES OF RBI AND VALUED SCRIP WISE AT MARKET VALUE AS ON 31 ST MARCH. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE FAILED TO APPRECIATE THAT YOUR APPELLANT WAS CONSISTENTLY FOLLOWING THE METHO D OF VALUING THE CURRENT ASSETS AT COST OR MARKET VAL UE ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 2 WHICHEVER WAS LOWER. YOUR APPELLANT REITERATES THAT THE NON-SLR INVESTMENTS ARE STOCK IN TRADE AND CURRENT ASSETS VALUED AT COST OR MARKET VALUE. 3. YOUR APPELLANT SUBMITS THAT BOTH COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS ASSESSING OFFICER ERRED IN CONCLUDING THAT THE NON- SLR INVESTMENTS ON WHICH DEPRECIATION IN VALUE WAS CLAIMED AS DEDUCTION BELONGED TO 'HTM' CATEGORY WHERE THEY ACTUALLY BELONGED TO 'AFS' CATEGORY. 4. YOUR APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS OF T HE CASE IN CONFIRMING THAT THE ACTION OF THE ASSESSING OFFICER IN APPLYING THE DECISION OF THE SPECIAL BEN CH OF ITAT DELHI BENCH IN THE CASE OF NEW INDIA INDUSTRIES LTD. VS ADDL.CIT (18 SOT 51), WHICH RELATES TO NON- BANKING FINANCE COMPANIES AND NOT TO CO-OPERATIVE BANKS. 5. YOUR APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS OF T HE CASE IN NOT FOLLOWING THE PRINCIPLES LAID DOWN BY SUPREME COURT IN THE CASE OF UNITED COMMERCIAL BANK VS CIT (240 ITR 355) (SC); MADRAS HIGH COURT IN THE CASE OF CIT VS KARUR VYSYA BANK (273 ITR 510) (MAD); CIT VS CITY UNION BANK LTD. (291 ITR 144); CIT VS NAINITAL BANK LTD. ( 309 ITR 335) AND CIT VS BANK OF BARODA (262 ITR 334). 6. YOUR APPELLANT SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE ACCOUNTING TREATMENT IN RESPECT OF CURRENT ASSETS WHERE ONLY NET APPRECIATION/DEPRECIATION IN THE VALUE OF STOCK IN TRADE IS CREDITED/DEBITED TO THE REVENUE ACCOUNT. IN SUCH METHOD OF PRESENTING STOCK IN TRADE IN THE FINANCIAL STATEMENTS, THE VALUES OF OPENING STOCK AND CLOSING STOCK OF INVENTORIES WOUL D NOT APPEAR IN THE REVENUE ACCOUNT. 7. YOUR APPELLANT SUBMITS THAT COMMISSIONER OF INCOME TAX (A) AS WELL AS THE ASSESSING OFFICER FAI LED TO APPRECIATE THAT UNDER THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED, YOUR APPELLANT WAS TREATING, THE NON-SLR INVESTMENTS CLASSIFIED AS 'AFS), ON PAR WITH STOCK IN TRADE AND PASSING ENTRIES TO VALUE TH EM AT COST OR MARKET VALUE WHICHEVER IS LOWER. ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 3 8. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE CONSIDERED ONLY A PART OF THE DEPOSITION GIVEN BY THE MD AND IGNORED THE QUESTION NOS. 6, 9, AND 12 OF THE SAME DEPOSITION AND YOUR APPELLANT'S REPLIES THERETO, WHICH CONFIRM THAT THE INVESTMENTS ARE VALUED AT COST OR MARKET VALUE AND ARE STOCK IN TRADE/CURRENT ASSETS, THEREFORE THE DISALLOWANCE OF DEPRECATION ON THESE INVESTMENTS IS NOT WARRANTED. 3. THE ASSESSEE FILED THE FOLLOWING ADDITIONAL EVIDENC E: (1) INVESTMENT PORTFOLIO REVIEW NOTE FOR QUARTER ENDED 31.3.2008 AS FILED BEFORE THE RBI & NABARD.- P 68-8 4 OF THE PAPER BOOK. (2) INVESTMENT PORTFOLIO REVIEW NOTE FOR QUARTER ENDED 31.12.2007 AS FILED BEFORE THE RBI & NABARD. - P 85 - 100 OF THE PAPER BOOK. (3) INVESTMENT PORTFOLIO REVIEW NOTE FOR QUARTER ENDED 30.09.2007 AS FILED BEFORE THE RBI & NABARD. - P 10 1- 117 OF THE PAPER BOOK. (4) INVESTMENT PORTFOLIO REVIEW NOTE FOR QUARTER ENDED 30.06.2007 AS FILED BEFORE THE RBI & NABARD. - P 11 8- 134 OF THE PAPER BOOK. (5) SCRIP WISE DETAILS OF DEPRECIATION AS ON 31.3.2008. - P 135-140 OF THE PAPER BOOK. 4. THE ASSESSEE FILED A PETITION SEEKING ADMISSION OF THE ABOVE ADDITIONAL EVIDENCES, AS FOLLOWS: 'MAY YOUR HONOURS PLEASE: YOUR PETITIONER IS A GOVERNMENT PARTNERED SCHEDULED BANK. YOUR PETITIONER IS THE STATE LEVEL APEX CO- OPERATIVE CREDIT INSTITUTION FOR THE STATE OF ANDHR A PRADESH, WHICH PROVIDE AGRICULTURAL LOANS TO FARMER S IN THE STATE THROUGH ITS AFFILIATED DISTRICT CO-OPE RATIVE CENTRAL BANKS (DCCBS) AND IN TURN THROUGH THE PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACS). YOUR PETITIONER COULD NOT PRODUCE THE COPIES OF THE RESERVE BANK OF INDIA LETTER DATED 25 TH APRIL 2005, BOARD RESOLUTIONS, GOM'S NO. 53, STATEMENT OF SLR AND NON-SLR AS FILED BEFORE THE REGULATOR BEFORE TH E ASSESSING OFFICER, AS THE ASSESSING OFFICER HAD NEV ER CALLED FOR THE SAME. ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 4 YOUR APPELLANT PRAYS THE COPIES OF THE RESERVE BANK OF INDIA LETTER DATED 25 TH APRIL 2005, BOARD RESOLUTIONS, GOM'S NO. 53, STATEMENT OF SLR AND NON-SLR AS FILED BEFORE THE REGULATOR, MAY BE ADMITTED AS ADDITIONAL EVIDENCE. YOUR PETITIONER SUBMITS THAT ON A PERUSAL OF THE SAME HON'BLE MEMBER MAY CONSIDER THE CONTENTION THAT THE NON- SLR INVESTMENTS ARE CURRENT INVESTMENTS. THIS IS FURTHER SUPPORTED BY THE CIRCULAR ISSUED BY NABARD. HON'BLE MEMBER MAY ADMIT THE ADDITIONAL EVIDENCE AND PASS SUCH ORDERS DEEMED FIT. SD/- AUTHORISED REPRESENTATIVE 5. THE AR SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIV E BANK SPONSORED BY THE GOVERNMENT OF ANDHRA PRADESH. AS P ART OF ITS BANKING BUSINESS THE ASSESSEE APART FROM GIVING LOA NS ALSO MAKES INVESTMENTS. THE INVESTMENTS ARE BROADLY CAT EGORISED AS SLR (STATUTORY LIQUIDITY RATIO) INVESTMENTS AND NON -SLR INVESTMENTS. THE ASSESSEE TREATED ALL NON-SLR INVES TMENTS AS CURRENT INVESTMENTS AND CONSEQUENTLY CLAIMING DIMIN UTION IN THE VALUE OF SUCH INVESTMENTS AS DEPRECIATION ON IN VESTMENTS AT RS. 28,41,84,257/-. THE MODE OF CALCULATION OF DEPR ECIATION OF INVESTMENTS IS GIVEN IN THE PAPER BOOK FILED. IT C OULD BE NOTICED IN THE SAID TABLE THAT THE TOTAL DEPRECIATION OF NO N-SLR INVESTMENTS IS RS. 3000.37 LAKHS AND AS THERE WAS A N OPENING BALANCE OF RS. 164.33 LAKHS IN THE DEPRECIATION OF INVESTMENTS, THE NET AMOUNT OF RS. 2841.84 LAKHS WAS CHARGED TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS DISALLOWED THE SAME AS HE WAS OF THE OP INION THAT THE SAME CONSTITUTED PERMANENT INVESTMENTS WHICH SH OULD BE VALUED AS HTM (HELD TO MATURITY). HE INVITED OUR A TTENTION TO PAGE 21 OF THE PAPER BOOK WHICH IS AN EXTRACT OF 'N OTES TO ACCOUNTS' IN RESPECT OF DISCLOSURE OF 'INVESTMENTS' . IN SUB PARA ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 5 (G) THE VALUE OF NON-SLR INVESTMENTS IS STATED. IN ITEM (C) AND (D) OF THE AFOREMENTIONED STATEMENT THE ACCOUNTING TREATMENT OF INVESTMENTS FOR THE FINANCIAL YEAR 2007-2008 IS GIV EN AS UNDER:- (C) INVESTMENTS WHICH ARE UNDER CURRENT CATEGORY A RE MARKED TO MARKET AND VALUED AT THE MARKET RATES AVAILABLE ON THE BALANCE SHEET DATE. (D) THE NET DEPRECIATION UNDER EACH GROUP IS FULLY PROVIDED FOR, WHEREAS NET APPRECIATION UNDER ANY OF THE AFORESAID GROUPS IS IGNORED. 6. HE ALSO DREW OUR ATTENTION TO PAGE 35 RELATING TO ACCOUNTING POLICY OF 'INVESTMENTS' FOR THE YEAR 200 6-07 IS GIVEN WHICH READ AS UNDER: (C) INVESTMENTS WHICH ARE UNDER CURRENT CATEGORY A RE MARKED TO MARKET AND VALUED AT THE MARKET RATES AVAILABLE ON THE BALANCE SHEET DATE. (D) THE NET DEPRECIATION UNDER EACH GROUP IS FULLY PROVIDED FOR, WHEREAS NET APPRECIATION UNDER ANY OF THE AFORESAID GROUPS IS IGNORED. 7. HE SUBMITTED THAT THE ACCOUNTING POLICY FOR THE YEA R 2005-06 IS GIVEN IN PAGE 39 WHICH IS EXACTLY THE SA ME AS IN THE ABOVE YEARS. PAGES 42 TO 49 OF THE PAPER BOOKS IS A COPY OF CIRCULAR NO. 100/DOS-15/2008 DATED 27-6-2008 ISSUED BY NABARD (NATIONAL BANK FOR AGRICULTURE AND RURAL DEV ELOPMENT) BY ITS DEPARTMENT OF SUPERVISION. IN PARA (2) (ON PAGE 43) OF THE SAID CIRCULAR STATUTORY (SLR) INVESTMENTS OF THE BA NK ON ANY DAY SHALL NOT BE LESS THAN 25% OF THE TOTAL DEMAND AND TIME LIABILITIES IN INDIA. NON-SLR INVESTMENTS ARE DEALT IN PARA 12 AT PAGE 44. ANNEXURE IV OF THE SAID CIRCULAR IN PAGE 49 OF THE ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 6 PAPER BOOK GIVES THE DISCLOSURE REQUIREMENTS OF 'NO N-SLR REQUIREMENTS'. IN PARA 12.3 OF THE SAID CIRCULAR AT PAGE 45 'ALL NON-SLR INVESTMENTS ARE TO BE CATEGORIZED AS CURREN T INVESTMENTS'. THE ASSESSEE COULD, THEREFORE, HAVE T HE NON-SLR SECURITIES AS STOCK-IN-TRADE. 8. THE AR SUBMITTED THE FOLLOWING REGARDING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE ASSESSEE H AS BEEN TREATING NON-SLR INVESTMENTS AS CURRENT INVESTMENTS CONSISTENTLY FROM YEAR TO YEAR AS DETAILED ABOVE FR OM THE ACCOUNTING POLICY STATEMENTS IN 'NOTES TO ACCOUNTS' . HENCE THE SAME CONSTITUTE HIS STOCK IN TRADE. REGARDING TREA TMENT OF NON- SLR SECURITIES THE AR SUBMITTED THAT ACCORDING TO T HE RBI AND NABARD GUIDELINES, ALL NON-SLR INVESTMENTS ARE TO B E CLASSIFIED AS 'CURRENT INVESTMENTS'. HENCE THE ASS ESSING OFFICER AS WELL AS THE CIT(A) IN THE FACTS AND CIRCUMSTANCE S OF THE CASE COULD NOT HAVE HELD THAT THE 'DEPRECIATION' PROVIDE D IS IN RESPECT OF PERMANENT SECURITIES TO BE VALUED AT COST AS SEC URITIES UNDER THE HTM CATEGORY. THE AR SUBMITTED THAT THE CBDT C IRCULAR NO. 665 DATED 3.10.1993 (AT PAGES 62-63 OF THE PAPE R BOOK) CLEARLY STATES IN PARA (4) OF THE CIRCULAR AS UNDER : 'THE QUESTION WHETHER A PARTICULAR ITEM OF INVESTME NT IN SECURITIES CONSTITUTES STOCK-IN-TRADE OR A CAPIT AL ASSET IS A QUESTION OF FACT. IN FACT, THE BANKS ARE GENERALLY GOVERNED BY THE INSTRUCTIONS OF THE RESER VE BANK OF INDIA FROM TIME TO TIME WITH REGARD TO THE CLASSIFICATION OF ASSETS AND ALSO THE ACCOUNTING STANDARDS FOR INVESTMENTS. THE BOARD HAS, THEREFORE , DECIDED THAT THE ASSESSING OFFICERS SHOULD DETERMIN E ON THE FACTS AND CIRCUMSTANCES OF EACH CASE AS TO WHETHER ANY PARTICULAR SECURITY CONSTITUTES STOCK-I N- TRADE OR INVESTMENT TAKING INTO ACCOUNT THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA IN THIS REGARD FROM TIME TO TIME.' 9. THE AR SUBMITTED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN CIT VS UCO BANK (240 ITR 355) SQUA RELY ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 7 APPLICABLE TO THE FACTS OF THE CASE, THE HEADNOTE O F THE SAME IS AS BELOW: 'SECTION 28(I) OF THE INCOME-TAX ACT, 1961 - BUSINE SS LOSS/DEDUCTION - ASSESSMENT YEAR 1982-83 - ASSESSEE-BANK VALUED STOCK-IN-TRADE AT COST FOR PURPOSE OF STATUTORY BALANCE SHEET - FOR INCOME-TAX RETURN VALUATION WAS MADE AT COST OR MARKET VALUE, WHICHEVER WAS LOW - METHOD FOLLOWED HAD BEEN ACCEPTED BY INCOME-TAX DEPARTMENT FOR OVER 30 YEARS - ASSESSEE'S CLAIM FOR DEDUCTION OF LOSS AS A RESUL T OF VALUATION WAS DISALLOWED ON GROUND THAT STOCK VALUATION OF SHARES SHOWN IN ASSESSEE'S FINAL ACCOUNTS COULD NOT BE PERMITTED TO BE REVALUED AT MARKET VALUE FOR INCOME-TAX PURPOSES ONLY - WHETHER FOR DETERMINING REAL INCOME, ENTRIES IN BALANCE SHE ET REQUIRED TO BE MAINTAINED IN STATUTORY FORM MAY NOT BE DECISIVE OR CONCLUSIVE - HELD, YES - WHETHER PREPARATION OF BALANCE SHEET IN ACCORDANCE WITH STATUTORY PROVISION WOULD NOT DISENTITLE ASSESSEE I N SUBMITTING INCOME- TAX RETURN ON REAL TAXABLE INCOM E IN ACCORDANCE WITH METHOD OF ACCOUNTING ADOPTED BY ASSESSEE CONSISTENTLY AND REGULARLY - HELD, YES - WHETHER, THEREFORE, DISALLOWANCE WAS NOT JUSTIFIED - HELD, YES SECTION 145(1) OF THE INCOME-TAX ACT, 1961, READ WI TH SECTION 29 OF THE BANKING REGULATION ACT, 1949 - METHOD OF ACCOUNTING - VALUATION OF STOCK - ASSESSMENT YEAR 1982-83 - ASSESSEE, A SCHEDULED NATIONALISED BANK WAS REQUIRED TO PREPARE BALANCE SHEET IN PRESCRIBED FORM UNDER BANKING LAW - IT WAS VALUING STOCK-IN-TRADE (INVESTMENTS) AT COST FOR PURPOSE FOR STATUTORY BALANCE SHEET IN TERMS OF SECTION 29 OF THE BANKING REGULATION ACT - FOR INCOME-TAX PURPOSE, VALUATION WAS MADE AT COST OR MARKET VALUE, WHICHEVER WAS LOWER - REVENUE HAD ACCEPTED SAID METHOD FOR OVER LAST 30 YEARS - WHETHER PREPARATION OF BALANCE SHEET IN ACCORDANCE WITH STATUTORY PROVISION WOULD NOT DISENTITLE ASSESSEE IN SUBMITTING INCOME-TAX RETURN ON REAL TAXABLE INCOME IN ACCORDANCE WITH METHOD OF ACCOUNTING ADOPTED BY ASSESSEE CONSISTENTLY AND REGULARLY - HELD, YES - WHETHER IT COULD BE SAID TH AT ASSESSEE WAS FOLLOWING TWO DIFFERENT METHODS FOR VALUING ITS STOCK-IN-TRADE (INVESTMENTS) - HELD, NO - WHETHER, THEREFORE, LOSS CLAIMED IN INCOME-TAX RETU RN COULD NOT BE DISALLOWED - HELD, YES' ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 8 10. THE AR SUBMITTED THAT THE LETTER OF RBI IN PAGES 50 OF THE PAPER BOOKS CLEARLY SHOWS THAT THE BONDS OF APPFC W HICH IS THE MAIN CONSTITUENT OF THE NON-SLR SECURITIES CANNOT P ARTAKE THE CHARACTER OF SLR SECURITIES AND HENCE THE DEPRECIAT ION OF INVESTMENT IN QUESTION IS CHARGEABLE TO PROFIT AND LOSS ACCOUNT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE AR PLEADED THAT THE ADDITION OF DEPRECIATION ON INVEST MENTS MAY BE DELETED. 11. THE LEARNED DR HAS NOT RAISED ANY OBJECTION FOR ADMISSION OF THE ADDITIONAL EVIDENCE AND HE SUBMITT ED THAT THE ISSUE MAY BE SET ASIDE TO THE AO FOR FRESH CONSIDER ATION. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD AND THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. IN OUR OPINION, THE ASSESSEE IS PREVENTED BY SUFFICIEN T CAUSE IN NOT PLACING THESE EVIDENCES BEFORE THE LOWER AUTHORITIE S AND IN THE INTEREST OF JUSTICE, WE ARE INCLINED TO ADMIT THE A DDITIONAL EVIDENCE FOR ADJUDICATION. FOR THIS PURPOSE WE PLA CE RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF NATIO NAL THERMAL POWER CO. LTD. VS. CIT (229 ITR 383) (SC) W HEREIN THE APEX COURT CLEARLY OBSERVED THAT THERE MAY BE SEVER AL FACTORS JUSTIFYING RAISING OF A NEW PLEA IN AN APPE AL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. T HE APPELLATE AUTHORITIES MUST BE SATISFIED THAT THE GR OUND RAISED WAS BONA-FIDE AND THAT THE SAME COULD NOT HA VE BEEN RAISED EARLIER FOR GOOD REASONS. THE APPELLAT E AUTHORITIES SHOULD EXERCISE THEIR DISCRETION IN PER MITTING OR NOT PERMITTING THE ASSESSEE TO RAISE AN ADDITION AL GROUND/ ADDITIONAL EVIDENCE IN ACCORDANCE WITH LAW AND REASONS. THERE IS NO BLANKET PERMISSION TO THE ASS ESSEE TO RAISE THE ADDITIONAL GROUND OR FILING OF ADDITIO NAL EVIDENCE ACCORDING TO HIS OWN WHIMS AND FANCIES. T HERE ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 9 SHOULD BE REASONABLE CAUSE FOR FURNISHING ADDITIONA L EVIDENCE BELATEDLY. ACCORDINGLY, THE ADDITIONAL EV IDENCES FILED BY THE ASSESSEE ARE ADMITTED FOR ADJUDICATION . 13. IN OUR OPINION, THE ABOVE ADDITIONAL EVIDENCE GO TO THE ROOT OF THE MATTER IN DECIDING THE ISSUE WHETHER TH E INVESTMENT MADE BY THE ASSESSEE FORM PART OF SLR AND/OR WHETHE R THE INVESTMENT IS CURRENT INVESTMENT OR LONG TERM INVES TMENT. BEING SO, IT IS APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION TO DECIDE THE DIMINI SHING IN THE VALUE OF INVESTMENT IS TO BE ALLOWED OR NOT. ACCOR DINGLY, WE REMIT THE ENTIRE ISSUE BACK TO THE FILE OF THE AO F OR CONSIDERING THE ISSUE DE NOVO . 14. WE ALSO DIRECT THE AO TO TAKE NOTE OF THE JUDGEMENT OF APEX COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LTD . VS. JCIT (320 ITR 577) WHEREIN IT WAS OBSERVED THAT RBI DIRE CTIONS, 1998 ARE MERELY DISCLOSURE NORMS AND OR NORMS REGARDING PRESENTATION OF NPA PROVISIONS IN THE BALANCE SHEET OF A NBFC/BANK AND, THEREFORE, PROVISION FOR NPA IN TERM S OF RBI DIRECTIONS DOES NOT CONSTITUTE EXPENSES ON THE BASI S ON WHICH DEDUCTION CAN BE CLAIMED BY NBFC/BANK U/S. 36(1)(II I) OR U/S. 37(1) OF THE IT ACT AND THE SAME HAS TO BE ADDED BA CK TO THE TOTAL INCOME, EVEN BY APPLYING THE THEORY OF REAL I NCOME. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2014. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 1 ST JANUARY, 2014 TPRAO ITA NO. 851/HYD/2013 THE AP STATE CO-OP. BANK LTD. ==============-======== 10 COPY FORWARDED TO: 1. THE ANDHRA PRADESH STATE CO - OPERATIVE BANK LTD., C/O. M. ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, SP ROAD, SECUNDERABAD-500 003. 2. THE ASST. CIT, CIRCLE - 2(3), HYDERABAD. 3. THE CIT(A) - III , HYDERABAD. 4. THE CIT - II , HYDERABAD 5. THE DR ' B ' BENCH, ITAT, HYDERABAD