The Ahmedabad Dist. Co. Op. Bank Ltd., Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-2(2), Ahmedabad

ITA 899/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7025 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Depreciation; Question of law; Cost of acquisition
• Section: 271(1)(c)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH A (SMC) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.1249/AHD/2016 / ASSTT. YEAR: 2011-2012 AND ./ ITA NO.899/AHD/2017 / ASSTT. YEAR: 2012-2013 THE AHMEDABAD DIST. CO-OP. BANK LTD., NR. GANDHI BRIDGE OPP: INCOME TAX ASHRAM ROAD AHMEDABAD. PAN : AAAAT 1067 D VS. DCIT, CIR.7/ACIT, CIR.2(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SMT.ARTI N. SHAH, AR REVENUE BY : SHRI S.K. DEV, SR.DR ! / DATE OF HEARING : 27/11/2018 '#$ ! / DATE OF PRONOUNCEMENT: 17 /01/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST ORDERS OF THE LD.CIT(A)-10, AHMEDABAD DATED 10.3.2016 AND 25.1.2017 PASSED FOR THE ASSTT.YEARS 2011-12 AND 20 12-13. SINCE COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, THERE FORE WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY THIS COMMON ORDER. ITA NO.1249/AHD/2016 AND 899/AHD/2017 2 2. A PERUSAL OF THE GROUND WOULD INDICATE THAT THEY ARE VERBATIM SAME EXCEPT VARIATIONS OF FIGURES IN BOTH THE ASSES SMENT YEARS. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING DISALLOWANCE OF THE CLAIM FOR DEDUCTION OF RS.3,16,00,000/- AND RS.3,03,14,000/- IN RESPECT OF INVESTMENT DEPRECIATION RESERVE IN THE ASSTT.YEAR 2011-12 AND 2012-13. 3. FACTS ON ALL VITAL POINTS ARE COMMON. THEREFORE , FOR THE FACILITY OF REFERENCE, WE TAKE UP THE FACTS MAINLY FROM ASSTT.Y EAR 2011-12. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPER ATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. IT HAS FILED ITS RETUR N OF INCOME FOR THE ASSTT.YEAR 2011-12 ON 29.9.2011 DECLARING TOTAL INC OME AT RS.10,68,73,920/-. SIMILARLY, IN THE ASSTT.YEAR 20 12-13, IT HAS DECLARED TAXABLE INCOME OF RS.12,40,78,520/-. THE CASE OF T HE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT IN BOTH THE ASSESS MENT YEARS. NOTICE UNDER SECTION 143(2) DATED 1.8.2011 AND 6.8.2013 WE RE ISSUED AND SERVED UPON THE ASSESSEE IN BOTH THESE ASSESSMENT Y EARS. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASS ESSEE HAS DEBITED AN AMOUNT OF RS.3,16,00,000/- AND RS.3,03,14,000/- AS PROVISION IN INVESTMENT DEPRECIATION RESERVE. THE LD.AO HAS CO NFRONTED THE ASSESSEE AS TO HOW THIS CLAIM IS ADMISSIBLE. ACCOR DING TO THE AO, IT WAS CONTENDED BY THE ASSESSEE THAT DEPRECIATION RESERVE IS REQUIRED TO BE CREATED TO DISCLOSE TRUE AND CORRECT VALUE OF ITS I NVESTMENT IN THE BALANCE SHEET. IF THE INVESTMENT IS LESS THAN THE COST, THE DEPRECIATION RESERVE IN RESPECT OF SUCH SHORTFALL IN THE COST IS TO BE REFLECTED BY WAY OF CREDITING THE RESERVE, AND THEREFORE, BANK HAS T O MAKE A PROVISION FOR INVESTMENT DEPRECIATION RESERVE. IT HAS CLAIME D ON THE BASIS OF GUIDELINES ISSUED BY RESERVE BANK OF INDIA AS WELL AS CBDT. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE. HE REJECTED THE CLAIM OF THE ASSESSEE. FINDING RECORDED BY THE AO IN THE ASSTT.YEAR 2011-12 ON THIS ISSUE, READS AS UNDER: ITA NO.1249/AHD/2016 AND 899/AHD/2017 3 5.3 THE CONTENTION OF THE ASSESSEE HAVE BEEN CAREF ULLY GONE THROUGH. HOWEVER, THE SAME IS NOT FOUND ACCEPTABLE. IN THE INCOME TAX ACT, THERE IS NO PROVISION FOR ALLOWING INVESTMENT DEPRECIATION RESERVE. THE DEPRECIATION OF ASSETS GO VERNED BY SECTION 32, IN WHICH IN RESPECT OF BLOCK ASSETS, TH E DEPRECIATION IS ALLOWED AT SPECIFIED RATE OF DEPRECIATION. THE BLOC K OF ASSETS IS DEFINED U/S. 2(11) OF THE ACT IN WHICH IT IS PROVID ED AS UNDER: 'BLOCK OF ASSETS MEANS A GROUP OF ASSETS FALLING WI THIN A CLASS OF ASSETS COMPRISING A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINE RY, PLANT OR FURNITURE, B) INTANGIBLE ASSETS, BEING KNOWN HOW, PATEN TS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSIN ESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE '. INVESTMENT DOES NOT COVER UNDER THE DEFINITION OF B LOCK OF ASSETS AND HENCE THE ASSESSEE IS NOT ENTITLED TO CLAIM DEP RECIATION ON IT. FURTHER, THERE IS NO PROVISION IN THE INCOME TAX AC T TO ALLOW INVESTMENT DEPRECIATION RESERVE ON ACCOUNT OF DIMIN ISHING THE VALUE OF INVESTMENT. THOUGH, THE ASSESSEE HAS SPECI FICALLY ASKED TO EXPLAIN HOW THE SAME IS ALLOWED IN THE COMPUTATI ON OF THE TOTAL INCOME. BUT THE ASSESSEE HAS NOT EXPLAINED UNDER WH ICH SECTION THE SAME IS ALLOWABLE. MOREOVER, IN THE EARLIER YEA R, THOUGH THERE WAS INVESTMENT, THE ASSESSEE HAS NOT CREATED ANY IN VESTMENT DEPRECIATION RESERVE AND CLAIMS THE SAME IN THE PRO FIT AND LOSS ACCOUNT. FURTHER, AT THE TIME OF SALE OF INVESTMENT NATURALLY THE INCOME MAY BE CONSIDERED BEING DIFFERENCE BETWEEN F ACE VALUE OF INVESTMENT AND SAFE CONSIDERATION BECAUSE THE INVES TMENT IS NOT CONSIDERED AS DEPRECIABLE ASSETS. 5.4 CONSIDERING THE ABOVE FACTS, IT IS HELD THAT T HE INVESTMENT DEPRECIATION RESERVE HAS BEEN DEBITED ONLY FOR THE PURPOSE TO REDUCE THE TAX LIABILITY WHICH IS NOT PERMISSIBLE A S PER DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MCDOWELL AND C O. LTD. VS. COMMERCIAL TAX OFFICER (SC) 154 ITR 148. THEREFORE, THE INVESTMENT DEPRECIATION RESERVES AMOUNTING TO RS.3, 16,00,000/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME. SINCE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE PARTICULARS OF INCOME, THE PENALTY PR OCEEDINGS U/S. 271(1)(C) IS INITIATED. 4. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. THE DISCUSSION MADE BY THE LD.CIT(A) ON THIS ISSUE READS AS UNDER: ITA NO.1249/AHD/2016 AND 899/AHD/2017 4 8.2 THE CONTENTIONS RAISED BY THE APPELLANT HAVE B EEN CONSIDERED. THE APPELLANT'S CONTENTION THAT THIS CL AIM OF INVESTMENT DEPRECIATION RESERVE IS AS PER WELL ACCE PTED ACCOUNTING STANDARD AND METHOD IS CONSISTENTLY ADOP TED IS NOT FOUND ACCEPTABLE FOR THE REASON THAT THE BANK'S BOO K OF ACCOUNTS ARE REGULARLY AUDITED BY COMPETENT CHARTERED ACCOUN TANT BUT THIS IS THE FIRST YEAR, WHEN SUCH EXPENDITURE UNDER THE HEAD 'INVESTMENT DEPRECIATION RESERVE' HAS BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. IF THIS CONTENTION OF THE APPELLANT IS ACCEPTED FOR THIS YEAR, IT WOULD MEAN THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT IN PREVIOUS YEARS WERE NOT WRITTEN AS PER ACCOUNTING STANDARDS. THE APPELLANT FAILED TO EXPLAIN WHY THIS YEAR, SUCH CLAIM HAS \BEEN MADE IN PROFIT & LOSS ACCOUNT, THE APPELLANT'S FURTHER ARGUMENT THAT IT FOLLOWS THE LAWS LAID DOWN BY BANKING REGULATION ACT 1949 AND GUIDELINES ISSUED BY THE RB I IS ALSO NOT ACCEPTABLE AS THE BANK REGULATION ACT AND THE GUIDE LINES ISSUED BY THE RBI GOVERNS THE BANKS DAY TO DAY BANKING BUS INESS ACTIVITIES BUT AS FAR AS TAXATION PART IS CONCERNED , PROVISIONS OF INCOME-TAX ACT, 1961 ARE APPLICABLE. FURTHER CONTEN TIONS OF THE APPELLANT THAT SUCH ADDITIONS WERE NOT MADE IN PREV IOUS THREE YEARS IS ALSO NOT ACCEPTABLE FOR THE SIMPLE REASONS THAT EVERY ASSESSMENT YEAR IS SEPARATE ASSESSMENT YEAR AND THI S CANNOT BE REASON FOR NOT MAKING ADDITIONS BECAUSE IT WAS NOT MADE IN EARLIER YEARS. MOREOVER, WHEN SUCH CLAIM WAS NOT DE BITED TO PROFIT & LOSS ACCOUNT IN PREVIOUS YEARS, QUESTION OF ADDIT IONS DID NOT ARISE. KEEPING IN VIEW THE DISCUSSION ABOVE, THE AR GUMENTS ADVANCED BY THE APPELLANT AGAINST THE ADDITIONS MAD E ARE NOT FOUND ACCEPTABLE, HENCE THESE ARE REJECTED. THE ADD ITIONS MADE BY THE AO ARE, THUS, CONFIRMED. THIS GROUND OF APPE AL IS DISMISSED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THIS ASPECT HAS BEEN CONSIDERED BY THE ITAT, BANGALORE B ENCH IN THE CASE OF ACIT VS. KARNATAKA BANK LTD., 63 ITR (TRIB) 376 (BE NGALURU). SHE PLACED ON RECORD COPY OF TRIBUNALS ORDER. SHE ALS O CONTENDED THAT CBDT HAS ISSUED A CIRCULAR BEARING NO.17/2008 DATED 26.11.2008. THIS CIRCULAR PROVIDED CERTAIN GUIDELINES FOR GRANTING D EDUCTION TO THE BANK WHILE THEIR ASSESSMENT IS BEING UNDERTAKEN. FOR TH E PURPOSE OF PRESENT CONTROVERSY, INSTRUCTIONS AT SERIAL NO.8 ARE RELEVA NT. SHE TOOK US THROUGH THESE INSTRUCTIONS. SHE FURTHER CONTENDED T HAT THESE VERY INSTRUCTIONS WERE CONSIDERED BY THE HONBLE GUJARAT HIGH COURT IN THE ITA NO.1249/AHD/2016 AND 899/AHD/2017 5 CASE OF CIT VS. RAJKOT DISTRICT COOPERATIVE BANK AN D HONBLE GUJARAT HIGH COURT HAS UPHELD AMORTIZATION OF PREMIUM PAID BY THE BANK WHILE ACQUIRING SECURITIES WHICH WAS HELD UPTO THE MATURI TY. THIS PREMIUM WAS TO BE SPREAD OVER. DURING PERIOD OF SECURITY A PROPORTIONATE DEDUCTION IS TO BE ALLOWED IN EACH YEAR. THOUGH JU DGMENT IS ON A DIFFERENT ISSUE, BUT IT DEALS WITH SECURITY HELD BY THE BANK UNDER DIFFERENT CATEGORY. ON THE BASIS OF THESE INSTRUCT IONS, DEDUCTION QUA ONE OF THE LIMB OF THESE SECURITIES HAS BEEN ALLOWE D. IF THE INSTRUCTION IS BEING APPLIED IN SAME SPIRIT, THE DEPRECIATION O N THE SECURITIES HELD FOR TRADING OR AVAILABLE FOR SALE IS TO BE ALLOWED. IN OTHER WORDS, JUDGMENT OF HONBLE GUJARAT HIGH COURT OUGHT TO BE READ IN A MANNER THAT THESE GUIDELINES GOVERNS THE ASSESSMENT OF THE BANK, AND IF THE CASE OF THE ASSESSEE-BANK FALLS WITHIN THE AMBIT OF THESE GUIDELINES, THEN BENEFIT SHOULD BE GRANTED. DURING THE COURSE OF HEARING, WE HAVE CONFRONTED THE LD.COUNSEL FOR THE ASSESSEE THAT IF IT IS CONSTRUED THAT IF A SECURITY IS BEING HELD AS A TRADING STOCK, OR AVAIL ABLE FOR SALE, AND THERE IS A SHORTFALL IN COST VIS--VIS TO THE MARKET PRIC E, ON THE DATE OF VALUATION I.E. 31.3.2011 IN THE ASSTT.YEAR 2011-12, THEN, THE FALL IN THE COST WOULD BE ADMISSIBLE AS A DEPRECIATION. IF IT IS TO BE ACCEPTED, THEN HOW IT IS DEMONSTRATED THAT THESE SECURITIES ARE HE LD AS STOCK-IN-TRADE. WE HAVE ALSO CONFRONTED THE LD.COUNSEL QUA AN INTERIM-ORDER PASSED BY EARLIER BENCH ON 5.4.2018, WHICH READS AS UNDER: 05.04.2018 1. WITH REFERENCE TO ISSUE INVOLVING C LAIM OF ' INVESTMENT DEPRECIATION RESERVE RS.3.16 CRORES AS REVENUE EXPE NDITURE, THE ASSESSEE SEEKS TO SUBMIT THAT THE AFORESAID AMO UNT REPRESENTS IMPAIRMENT OF VALUE OF INVESTMENTS WHICH , IN ESSENCE, FALLS UNDER CATEGORY 'HELD FOR TRADING 1 (HFT) IN CONTRAST TO CAPITAL INVESTMENTS UNDER ( HELD TO MATURITY' (HTM). IN THIS REGARD, IT IS INTER ALIA OBSERVED AT THE TIME OF HEARING THAT THE FACTUAL ASPECTS TO SUPPORT THE PLE A OF INVESTMENTS CLAIMED TO BE HELD AS TRADING ASSETS IS NOT DISCERNIBLE FROM MATERIAL PLACED ON RECORD. THE ASS ESSEE IS ACCORDINGLY REQUIRED TO FURNISH SUCH EVIDENCES AS M AY BE ITA NO.1249/AHD/2016 AND 899/AHD/2017 6 CONSIDERED EXPEDIENT INCLUDING (A) THE BOARD RESOLU TION AUTHORISING APPROPRIATE CLASSIFICATION OF INVESTMEN TS AND TREATMENT IN BOOKS, (B)DISCLOSURE MADE THE FINANCIA L STATEMENT, IF ANY, IN THIS REGARD AND (C) SUBSEQUENT TREATMENT IN BOOKS AT THE TIME OF ACTUAL SALE OF SECURITIES. 2. THE MATTER IS ADJOURNED AND REFIXED FOR HEARING ON 20/08/2018. 3. COPY OF THIS ORDER-SHEET BE PROVIDED FOR BOTH SI DES. 6. IN RESPONSE TO THE ABOVE QUERY, THE LD.COUNSEL F OR THE ASSESSEE FILED A CHART ON PAGE NO.108 OF THE PAPER BOOK. SH E HAS COMPILED WITH DETAILS OF NINE SECURITIES AND CONTENDED THAT; FOR EXAMPLE, SECURITY VIZ. 7.95%/GOI 2032 IS CONCERNED, IT WAS ACQUIRED ON 24. 3.2009. ITS MATURITY DATE IS 28.8.2032. ITS PURCHASE RATE WAS 1 02.21 AND MARKET RATE AS ON 31.3.2011 WAS RS.95.47. THUS, BOOK VALU E WAS RS.10,22,10,000/- WHEREAS MARKET VALUE WAS 9,54,70, 000/-. THERE IS A LOSS OF RS.67,40,000/- IN THE VALUE OF SECURITY. T HIS LOSS HAS BEEN CLAIMED BY THE ASSESSEE AS DEPRECIATION. SHE HAS E XPLAINED OTHER SECURITIES IN A SIMILAR MANNER. 7. THE LD.DR ON THE OTHER HAND, CONTENDED THAT THIS ASPECT WAS NEITHER PLEADED BY THE ASSESSEE BEFORE THE AO NOR B EFORE THE LD.CIT(A). THIS SECURITY WAS PURCHASED IN 2009. THE STATEMENT OF INVESTMENT AS ON 31.3.2009 IS AVAILABLE AT PAGE NO.137 OF THE PAP ER BOOK. THE ASSESSEE HAS SHOWN FACE VALUE OF THIS SECURITY AT R S.1,000 LAKHS; BOOK VALUE AT RS.1022 LAKHS AND MARKET VALUE AT RS.1014 LAKHS. THERE WAS A DIFFERENCE OF RS.(-)7.16 LAKHS, BUT IT WAS NOT CL AIMED AS A DEDUCTION. SECURITY WAS CATEGORIZED UNDER THE HEAD INVESTMENT AND NOT UNDER HEAD STOCK-IN-TRADE. HAD IT BEEN SHOWN AS STOCK-IN -TRADE OR AVAILABLE FOR SALE, THEN IT COULD HAVE BEEN SHOWN UNDER THE A BOVE HEADS, AND THIS DIFFERENCE IN THE VALUE COULD HAVE BEEN CLAIMED BY THE ASSESSEE AS DEDUCTION IN THE YEAR ENDING ON 31.3.2009. THUS, W HAT IS EVIDENCE ITA NO.1249/AHD/2016 AND 899/AHD/2017 7 AVAILABLE ON RECORD DEMONSTRATING THE FACT THAT WHE N THIS SECURITY WAS CONVERTED IN STOCK-IN-TRADE, AND IF IT WAS TREATED AS A STOCK-IN-TRADE, WHAT TREATMENT WAS GIVEN IN THE ACCOUNTS ? ACCORDI NG TO HIM, THERE IS NOTHING AVAILABLE TO THIS EFFECT, NOR THERE IS A DI SCUSSION IN THE ASSESSMENT ORDER. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. IN THE CASE OF RAJKOT DISTRICT C O-OP. BANK LTD., REPORTED IN 43 TAXMANN.COM 161, HONBLE GUJARAT HIG H COURT HAS CONSIDERED THE CIRCULAR ISSUED BY THE BOARD AND THE REAFTER ALLOWED THE ASSESSEE TO AMORTIZE PREMIUM PAID FOR ACQUIRING SEC URITIES IN THE CATEGORY HELD TO MATURITY. THIS PREMIUM WAS AMORTI ZED OVER THE PERIOD REMAINED UPTO MATURITY AND PROPORTIONATELY ALLOWED IN EACH ASSESSMENT YEAR. THUS, IN PRINCIPLE HONBLE GUJARAT HIGH COUR T HAS HELD THAT THESE INSTRUCTIONS ARE APPLICABLE FOR DETERMINING THE TAX ABILITY OF AN ASSESSEE- BANK, AND IF THE SECURITIES ACQUIRED BY THE BANK UN DER THE CATEGORY HELD TO MATURITY, THEN PREMIUM PAID ON ACQUIRING SUCH SE CURITY IS TO BE SPREAD OVER REMAINING PERIOD UPTO MATURITY AND WOUL D BE ALLOWED TO THE ASSESSEE IN EACH YEAR. IF WE TAKE GUIDANCE OF THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT, THEN, THESE INSTRUCTION S ARE REQUIRED TO BE APPLIED TO THE SECURITIES HELD FOR TRADING AS WELL AS AVAILABLE FOR SALE. THEREFORE, AT THIS STAGE, WE DEEM IT FIT TO TAKE NO TE OF JUDGMENT OF HONBLE GUJARAT HIGH COURT. IT READS AS UNDER: 6. ON THE OTHER HAND, THE LEARNED COUNSEL SHRI TUS HAR HEMANI FOR THE RESPONDENT PLACED HEAVY RELIANCE ON THE SAI D CBDT CIRCULAR DATED NOVEMBER 26, 2008 AND CONTENDED THAT THE BENEFIT OF AMORTISATION HAD TO BE GRANTED. THE ASSESSEE AS A COOPERATIVE BANK WAS BOUND BY THE RBI DIRECTIVES. AS PER SUCH D IRECTIVES, THE ASSESSEE HAD TO INVEST CERTAIN AMOUNTS IN GOVERNMEN T 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 SECURITY, THE LOSS HAD TO BE AMORTISED. PARAGRAPH (VII) OF THE CB DT CIRCULAR NO.17 OF 2008 DATED NOVEMBER 26, 2008 WOULD APPLY. SUCH INSTRUCTION READS AS UNDER: ITA NO.1249/AHD/2016 AND 899/AHD/2017 8 '(VII) AS PER RBI GUIDELINES DATED 16TH OCTOBER, 20 00, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM), HELD FOR TRADING (HFT) AND AVAILABLE FOR SALE (AFS). INVESTM ENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE CARRIED AT ACQUISITION COST UNLESS T HESE 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-TRA DE OF THE BANK, THE DEPRECIATION/ APPRECIATION IS TO BE AGGRE GATED SCRIP-WISE AND ONLY NET DEPRECIATION, IF ANY, IS RE QUIRED TO BE PROVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELI NES OF THE RBI MAY BE REFERRED TO FOR ALLOWING 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 RATE HIGHER THAN THE FACE VALUE. SUCH AMORTISAT ION WOULD HAVE TO BE FOR THE REMAINING PERIOD OF MATURITY. THIS PR ECISELY THE TRIBUNAL HAD DIRECTED IN THE IMPUGNED ORDER. THOUGH CONTENDED, NO CONTRARY INSTRUCTIONS OF CBDT ARE BROUGHT TO OUR NOTICE. THE INSTRUCTION IN QUESTION HAVING BEEN ISSUED UNDER SE CTION 119(2) OF THE INCOME-TAX ACT, 1961, WOULD BIND THE REVENUE. N O QUESTION OF LAW, THEREFORE, ARISES. 9. QUESTION BEFORE US, IS WHETHER THE ASSESSEE HAS PRODUCED DEMONSTRATIVE EVIDENCE INDICATING THAT SECURITIES O N WHICH DEPRECIATION HAS BEEN CLAIMED WERE CATEGORIZED UNDER HFT OR AFS. IN THE YEAR IN WHICH SECURITIES WAS ACQUIRED, IT WAS SHOWN UNDER T HE HEAD INVESTMENT WITHOUT SPECIFYING CATEGORY. IT IS QUITE DIFFICULT FOR US TO CONCLUSIVELY TO HOLD THAT THESE SECURITIES WERE HELD IN HFT OR AFS. ORDERS OF BOTH REVENUE AUTHORITIES ARE SILENT ON THIS ASPECT. WE HAVE EXTRACTED FINDING OF THE AO AS WELL AS LD.CIT(A). WE HAVE NO TICED THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE ON PAGE NO.137 AND 127 OF THE PAPER BOOK. FACED WITH THIS DIFFICULT, WE DEEM IT APPROP RIATE TO SET ASIDE THIS ISSUE TO THE FILE OF AO FOR RE-ADJUDICATION. THE L D.AO SHALL FIRST DETERMINE THE ISSUE WHETHER THESE SECURITIES ARE ID ENTIFIABLE UNDER CATEGORY HFT OR AFS, AND IF YES, THEN ACCORDING TO THE JUDGMENT OF HONBLE GUJARAT HIGH COURT, IN THE CASE OF RAJKOT D ISTRICT COOPERATIVE ITA NO.1249/AHD/2016 AND 899/AHD/2017 9 BANK, DEPRECIATION IS TO BE ALLOWED. OTHERWISE, TH E LD.AO SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 17 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER