2016 (12) TMI 121 - HC - Income Tax

Depreciation on investment in Government Securities - Held that - Tribunal dismissed the Revenue s Appeal before it by following a decision of the Coordinate Bench of the Tribunal in DCIT v/s. Nashik Merchant Cooperative Bank Ltd. 2013 (4) TMI 769 - ITAT PUNE allowing depreciation on investment in Government Securities when the securities held as stockintrade

Summary

Issues:
1. Appeal challenging the order of the Income Tax Appellate Tribunal related to Assessment Year 2008-09.
2. Justification for allowing depreciation on investment in Government Securities.
3. Deletion of disallowance on account of amortization of premium on Government Securities held in Held to Maturity category.

Analysis:
The judgment by the High Court of Bombay pertains to an appeal under Section 260A of the Income Tax Act, 1961, contesting the order of the Income Tax Appellate Tribunal dated 5th August, 2013, concerning the Assessment Year 2008-09. The primary issues raised in the appeal revolve around the allowance of depreciation on investments in Government Securities and the deletion of disallowance on the amortization of premium on such securities held in the Held to Maturity (HTM) category. The appellant's counsel argued whether the Tribunal was justified in allowing depreciation on securities shifted to the HTM category with the intention to claim loss, which he contended had the character of a capital asset and loss. Additionally, the appellant questioned the deletion of disallowance made by the Assessing Officer on the amortization of premium on Government Securities held in the HTM category.

The High Court noted that the impugned order of the Tribunal had dismissed the Revenue's appeal based on a decision of a Coordinate Bench in a similar case. It was highlighted that the Revenue had not filed any appeal from the said decision, and no distinction in fact or law had been presented to warrant the Revenue's challenge in the current appeal. The judgment emphasized the importance of certainty and equal application of law, citing previous cases where the Revenue's acceptance of decisions precluded further litigation unless justified by cogent reasons. The court expressed dissatisfaction with the casual attitude of the Revenue, especially in the absence of written communication or supporting documents for their stance. Consequently, the court dismissed the appeal, citing the lack of justification and supporting evidence from the Revenue.

In conclusion, the High Court of Bombay upheld the Tribunal's decision and dismissed the appeal without any order as to costs. The judgment underscored the necessity for the Revenue to provide valid justifications for challenging settled decisions and reiterated the importance of certainty and equal application of tax laws to avoid unnecessary litigation.