2018 (12) TMI 1715 - HC - Income Tax

Depreciation on valuation of investment portfolio - Tribunal allowable it by treating the investments held by the assessee bank as stock-in-trade once the RBI Master Circular read with CBDT Circular No.665 came into force - whether Tribunal's order can be said as perverse in nature since the Tribunal has followed the decisions which have not reached finality? - HELD THAT - The aforesaid substantial questions of law are covered by the judgment of this Court in the case of CIT v. Corporation Bank 2014 (12) TMI 1351 - KARNATAKA HIGH COURT wherein the very same questions of law were answered in favour of the assessee and against the revenue. Hence, following the aforesaid judgment, the substantial questions of law are answered accordingly.

Summary

Issues:
1. Depreciation on valuation of investment portfolio as stock-in-trade.
2. Tribunal's order being considered as perverse due to following decisions not reaching finality.

Depreciation on valuation of investment portfolio as stock-in-trade:
The High Court admitted the appeal to consider whether depreciation on the valuation of the investment portfolio is allowable by treating the investments held by the assessee bank as stock-in-trade post the RBI Master Circular in conjunction with CBDT Circular No.665. The Court noted that the substantial questions of law were previously addressed in the case of CIT v. Corporation Bank, where the same questions were resolved in favor of the assessee and against the revenue. Consequently, the Court decided to follow the precedent set by the aforementioned judgment and ruled in favor of the assessee, allowing depreciation on the valuation of the investment portfolio.

Tribunal's order being considered as perverse:
The second substantial question of law pertained to whether the Tribunal's order could be deemed as perverse for relying on decisions that had not reached finality. Both counsels agreed that the questions were covered by the judgment in CIT v. Corporation Bank, where the issues were resolved in favor of the assessee. The Court, therefore, concluded that the Tribunal's order was not perverse, as it was consistent with the decisions in the aforementioned case. Consequently, the Court disposed of the writ petition in line with the precedent established in the earlier judgment.