Assistant Commissioner of Income-tax, V. Kallappana Awade Ichalkaranji Janata Sahakari Bank Ltd., Ichalkaranji

ITA 949/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0999 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Capital asset; Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 9 49 /PN/201 4 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE DY . COMMISSIONER OF INCOME TAX, ICHALKARANJI CIRCLE, ICHALKARANJI . / APPELLANT VS. KALLAPPANA AWADE ICHALKARANJI JANATA SAHAKARI BANK LTD., WARD NO.12, H.NO .1, MAIN ROAD, WARD NO.12, H.NO .1, MAIN ROAD, JANATA BANK BHAVAN, ICHALKARANJI . / RESPONDENT PAN: AA AA I0111M / APPELLANT BY : S HRI B.C. MALAKAR / RESPONDENT BY : SHRI M.K. KULKARNI / DATE OF HEARING : 13 . 1 0.2015 / DATE OF PRONOUNCEMENT: 16 .1 0.2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) , KOLHAPUR , DATED 2 6 . 0 2 .20 1 4 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE DISALLOWANCE MADE BY THE AO, ON ACCOUNT OF AMORTIZATION IN RESPECT OF GOVT. SECURITIES HELD IN HTM CATEGORY (HELD TO MATURITY). 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN ALLOWING AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES PURCHASED BY ASSESSEE IGNORING THE LEGAL PROVISIONS THAT ALL CAPITAL ASSETS ARE TO BE VALUED AT COST ONLY AND NO PART THEREOF CAN BE CLAIMED AS REVENUE EXPENDITURE IN COMPUTING TOTAL INCOME. 3) THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX 3) THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS), KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO. 9 49 /PN/20 1 4 KALLAPPANA AWADE ICHALKARANJI JANATA SAH BANK LTD. 2 4) THE APPELLANT CRAVES RIGHT TO ADD, ALTER, AMEND ANY OR ALL GROUNDS DURING HEARING OF APPEAL. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED O UT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION TO AMORTIZATION IN RESPECT OF GOVERNMENT SECURITIES HELD IN HTM CATEGORY , WAS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 200 7 - 0 8 AND 20 1 0 - 1 1 . 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE BANK WAS A SCHEDULED CO - OPERATIVE BANK DOING BANKING BUSINESS UNDER THE BANKING REGULATION ACT, 1949 AND AS PER RESERVE BANK OF INDIA GUIDELINES. ON VERIFICATION OF THE PROFIT & LOSS ACCOUNT, BAL ANCE SHEET AND AUDIT REPORT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEBITED OTHER EXPENDITURE OF RS. 6,16,21,831/ - , WHICH CONSIST S OF RS.1,02,15,086/ - ON ACCOUNT OF AMORTIZATION OF PREMIUM PAID ON PURC HASE OF GOVERNMENT SECURITIES, THE ASSESSEE W AS SHOW CAUSED TO EXPLAIN AS TO WHY THE SAME SHOULD BE ALLOWED IN ITS HANDS. AFTER CONSIDERING THE EXPLANATION OF THE SAME SHOULD BE ALLOWED IN ITS HANDS. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT WHERE ANY SECURITIES WERE HELD AS INVESTMENTS THEN, ONLY AT THE TIME OF SALE / TRANSFER OF SUC H SECURITIES, LOSS IN SECURITIES HELD AS STOCK IN TRADE COULD BE RECOGNIZED ON SALE / TRANSFER OR AT THE YEAR END, ON THE BASIS OF PRINCIPLE I.E. LOWER OF COST AND MARKET VALUE. AS PER THE ASSESSING OFFICER, INCOME - TAX DID NOT RECOGNIZE THE CONVERSION OF STOCK IN TRADE INTO ASSET AS TRANSFER, HENCE, THE NOTIONAL LOSS ON RE - CATEGORIZATION OF SE CURITIES, WAS NOT ASSET AS TRANSFER, HENCE, THE NOTIONAL LOSS ON RE - CATEGORIZATION OF SE CURITIES, WAS NOT ALLOWABLE AS A DEDUCTION. THUS, THE AMORTIZATION OF PREMIUM PAID ON PURCHASE OF GOVERNMENT SECURITIES AT RS. 1,02,15,086/ - WAS DISALLOWED BY THE ASS ESSING OFFICER. 5. THE CIT(A) IN TURN, FOLLOWING THE ORDER OF PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2009 - 10 IN ITA NO.2352/PN/2012 , DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO. 9 49 /PN/20 1 4 KALLAPPANA AWADE ICHALKARANJI JANATA SAH BANK LTD. 3 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES. WE FIND THAT THE SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ITA NO. 449/PN/2012 RELATING TO ASSESSMENT YEAR 2008 - 09. FURT HER, THE TRIBUNAL IN ITA NO. 2352/PN/2012 , RELATING TO ASSESSMENT YEAR 2009 - 10 FOLLOW ED THE EARLIER VIEW TAKEN BY THE TRIBUNAL. FURTHER, IN ITA NOS.1765 & 1766/PN/2013 , RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2010 - 11 , THE TRIBUNAL VIDE ORDER DATED 20.05.2 015 HAD ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE, IN TURN FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN EARLIER YEARS. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION ON ACCOUNT OF AMORTIZATI ON OF PREMIUM PAID ON GOVERNMENT SECURITIES HELD IN HTM CATEGORY. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED ON THIS 16 TH DAY OF OCTOB ER , 2015. ORDER PRONOUNCED ON THIS 16 DAY OF OCTOB ER , 2015. SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH OCTOBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), KOLHAPUR ; 4. / THE CIT - I / II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE