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Issues:
1. Nature of investment made by the bank - whether stock-in-trade or not. 2. Permissibility of changing the method of valuation of investment. 3. Tribunal's refusal to refer the question to the High Court. 4. Revenue seeking contradictory stands in respect of the same assessee. Nature of Investment Made by the Bank: The High Court examined the Revenue's contention regarding the nature of the investment made by the bank. Referring to previous judgments and decisions, the court upheld that the investment made by the banking company, to fulfill obligations under section 24 of the Banking Regulation Act, is considered stock-in-trade. The court emphasized that the bank had the option of maintaining a cash reserve or holding money in investments. Additionally, the court referred to various decisions, including those of the Privy Council and other High Courts, to support the conclusion that the profit arising from the redemption of securities is assessable under "Business profit" and not "Capital gains." Permissibility of Changing Valuation Method: In the assessment year 1988-89, the Tribunal followed the judgment of the Karnataka High Court and held that changing the method of valuation of investment was permissible. The Tribunal noted that the assessee had the option to value the investment at cost or market price. The Tribunal found no fault in the assessee's decision to change the valuation method from cost price to market price, as it was not contrary to the requirements of the Act. The Tribunal's decision was in line with previous approvals by the High Court, and no exceptions were taken to this finding. Tribunal's Refusal to Refer Question: Despite the Revenue's attempt to raise a question before the Tribunal, seeking a reference to the High Court, the Tribunal rejected the application. The Tribunal justified its decision by citing previous judgments and decisions, including those involving the same parties. The Tribunal's refusal was supported by the fact that the High Court had already considered and decided against the Revenue's arguments in previous cases. The Tribunal's stance was clear in not entertaining a question that had already been settled by the High Court. Revenue Seeking Contradictory Stands: The High Court expressed strong disapproval of the Revenue's actions in seeking contradictory stands regarding the same assessee. The court criticized the Revenue for attempting to have references made while taking contradictory positions, despite previous decisions upholding its contentions. The court highlighted the inconsistency in the Revenue's arguments and emphasized the need for consistency in legal proceedings. As a result, the tax case petitions were dismissed, and the Revenue was directed to pay exemplary costs of Rs. 4,000. ---
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