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

ITA 894/AHD/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 7748 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Keywords: Depreciation; Question of law

Judgement Text

ITA NO. 894/AHD/2017 ACIT VS.THE GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2013-14 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO. 894/AHD/2017 ASSESSMENT YEAR: 2013-14 ASSTT. COMMISSIONER OF INCOME-TAX ........... .......APPELLANT CIRCLE-1(2), AHMEDABAD VS. THE GUJARAT STATE CO-OP. BANK LIMITED ............................RESPONDENT SAHKAR BHAVAN, RELIEF ROAD, AHMEDABAD 380 001 [PAN : AAAAT 9774 F] APPEARANCES BY: SAURABH SINGH, FOR THE APPELLANT TUSHAR HEMANI, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 29.06.2018 DATE OF PRONOUNCING THE ORDER : 27.09.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 24 TH JANUARY 2017, PASSED BY THE LEARNED CIT(A)-10, AHM EDABAD FOR THE ASSESSMENT YEAR 2013-14. 2. GRIEVANCE RAISED BY THE APPELLANT IS AS FOLLOWS: - THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.82,72,423/- MADE ON ACCOUNT OF DISALLOWANCE OF A MORTIZATION OF PREMIUM CLAIMED BY THE ASSESSEE FOR INVESTMENT MADE IN GOVERNMENT SECURITIES FALLING UNDER HELD TO MATURITY (HTM) 3. LEARNED REPRESENTATIVE FAIRLY AGREE THAT THE ABO VE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY HONBLE JURISDICTIONAL H IGH COURTS JUDGMENT IN THE CASE OF CIT VS. RAJKOT DIST. CO-OPERATIVE BANK LTD (TAX APP EAL NO.56 OF 2013; JUDGMENT DATED 10.02.2014) WHEREIN THEIR LORDSHIPS HAVE, INTER ALI A, OBSERVED AS FOLLOWS:- 5. THE LEARNED COUNSEL SHRI P.G. DESAI FOR THE APP ELLANT VEHEMENTLY CONTENDED THAT THE TRIBUNAL COMMITTED SERIOUS ERROR IN OVER RULING THE DECISION OF THE CIT (APPEALS), WHO HAD GIVEN DETAILED REASON S. HE SUBMITTED THAT THE INVESTMENT WAS IN THE NATURE OF CAPITAL INVES TMENT IN THE HANDS OF THE ASSESSEE AS HELD BY THE CIT (APPEALS). THE CBDT CIRCULAR DATED NOVEMBER 26, 2008 WOULD NOT APPLY. THERE WERE FURTHER 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 THE BENEFIT O F AMORTISATION HAD TO BE GRANTED. ITA NO. 894/AHD/2017 ACIT VS.THE GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2013-14 PAGE 2 OF 3 THE ASSESSEE AS A COOPERATIVE BANK WAS BOUND BY THE RBI DIRECTIVES. AS PER SUCH DIRECTIVES, THE ASSESSEE HAD TO INVEST CERTA IN AMOUNTS IN GOVERNMENT 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 SECUR ITY, THE LOSS HAD TO BE AMORTISED. PARAGRAPH (VII) OF THE CBDT CIRCULAR N O.17 OF 2008 DATED NOVEMBER 26, 2008 WOULD APPLY. SUCH INSTRUCTION READS AS UNDER : (VII) AS PER RBI GUIDELINES DATED 16TH OCTOBER, 2 000, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFI ED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION C OST 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 TH E BANK, THE DEPRECIATION / APPRECIATION IS TO BE AGGREGATED SCRIP-WISE A ND ONLY NET DEPRECIATION, IF ANY, IS REQUIRED TO BE PROVIDED FOR IN THE ACCOU NTS. THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWI NG ANY SUCH CLAIMS. 7. THE INSTRUCTIONS CLEARLY PROVIDE FOR AMORTISATIO N OF PREMIUM PAID ON ACQUISITION OF SECURITIES WHEN THE SAME ARE ACQUIRED AT THE RAT E HIGHER THAN THE FACE VALUE. SUCH AMORTISATION WOULD HAVE TO BE FOR THE REMAININ G PERIOD OF MATURITY. THIS PRECISELY THE TRIBUNAL HAD DIRECTED IN THE IMPUGNED ORDER. THOUGH CONTENDED, NO CONTRARY INSTRUCTIONS OF CBDT ARE BRO UGHT TO OUR NOTICE. THE INSTRUCTION IN QUESTION HAVING BEEN ISSUED UN DER 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 THE LEARNE D CIT(A) AND DECLINED TO INTERFERE IN THE MATTER. 5. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED I N THE OPEN COURT TODAY ON THE 27 TH SEPTEMBER, 2018 SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 27 TH DAY OF SEPTEMBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD ITA NO. 894/AHD/2017 ACIT VS.THE GUJARAT STATE CO-OP BANK LTD ASSESSMENT YEAR: 2013-14 PAGE 3 OF 3 1. DATE OF DICTATION: ..........AS PER 1 PAGE MANU SCRIPTS OF HONBLE AM..26.09.2018.... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 26.09.2018..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 27.09.2018... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: . 27.09.2018.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 27.09.2018. 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: ......