2015 (3) TMI 1026 - HC - Income Tax

Disallowances on the loss of shifting classified securities - Held that - Tribunal in dismissing the revenue's appeal and upholding the order of the Commissioner found that similar exercise was undertaken by another assessee Latur Urban Coop. Bank Ltd. 2015 (3) TMI 920 - ITAT PUNE . - Once such is the nature of material before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, then, we are of the opinion that the view taken by the Tribunal cannot be termed as perverse. The Tribunal's view is in consonance with the banking policy and the guidelines issued by the Reserve Bank of India. We further feel that a different treatment cannot be given to an identically situated assessee, namely a co-operative bank. In these circumstances, the revenue's appeal has no merits - Decided against Revenue.

Summary

Issues:
Challenge to ITAT order for assessment year 2008-09 regarding disallowances on shifting classified securities by a Co-operative bank under the Maharashtra Co-operative Societies Act, 1960.

Analysis:
The High Court of Bombay heard the challenge by the revenue against the Income Tax Appellate Tribunal's order for the assessment year 2008-09. The assessee in question is a Co-operative bank operating under the Maharashtra Co-operative Societies Act, 1960, conducting banking business with a license from the Reserve Bank of India. The assessing officer disallowed an amount related to the loss on shifting classified securities. The bank appealed to the Commissioner of Income Tax (Appeals) citing a circular from the Reserve Bank of India allowing the shifting of securities once a year with specific valuation guidelines. The Commissioner accepted the bank's claim, emphasizing the RBI's directives on recording investment values and write-off procedures for losses. The assessing officer's decision was overturned based on these guidelines.

The Tribunal upheld the Commissioner's decision, noting a similar case involving another Co-operative bank for the previous assessment year. The High Court observed that the Tribunal's decision was not unreasonable, aligning with banking policies and RBI guidelines. It emphasized the need for consistent treatment of identically situated assesses, such as Co-operative banks. Consequently, the revenue's appeal was dismissed as lacking merit, with no costs awarded.

In conclusion, the judgment centered on the proper application of RBI guidelines regarding the treatment of losses on shifting securities by Co-operative banks, ensuring uniformity in assessments for similar entities. The legal analysis highlighted the significance of adhering to banking policies and guidelines in resolving tax disputes involving specialized financial institutions like Co-operative banks.