1998 (1) TMI 111 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of loss claims on revaluation of securities.
2. Disallowance u/s 37(3A) of the Act.
3. Disallowance u/s 80VV of the Act.

Summary:

1. Disallowance of Loss Claims on Revaluation of Securities:
The assessee, a scheduled bank, claimed losses due to revaluation of Central and State Government securities, arguing these were held as stock-in-trade. The CIT(A) confirmed the disallowance by the Assessing Officer (AO), stating that the valuation of closing stock typically arises where there is a separate trading account, which the appellant did not maintain. The CIT(A) noted that the securities were shown as investments in the balance sheet and not as stock-in-trade. The Tribunal upheld this view, emphasizing that investments are capital in nature and should be valued at cost price, not revalued annually. The Tribunal cited various case laws, including CIT v. UCO Bank [1993] 200 ITR 68 and Madhya Pradesh Co-operative Bank Ltd v. Addl. CIT [1996] 218 ITR 438, to support its decision. The Tribunal concluded that the loss claimed by the assessee was not admissible as the securities were investments and not stock-in-trade.

2. Disallowance u/s 37(3A) of the Act:
The assessee contested the disallowance of Rs. 1,58,074 u/s 37(3A), arguing that certain expenses should not be included under this section. The Tribunal noted that section 37(3A) and 37(3B) clearly include expenses on advertisement, publicity, sales promotion, running and maintenance of aircrafts and motor crafts, and payments to hotels. The Tribunal found the provisions constitutionally valid and upheld the disallowance, stating that the action of the AO and CIT(A) was reasonable and justified.

3. Disallowance u/s 80VV of the Act:
The assessee challenged the disallowance of Rs. 2,250 u/s 80VV, which restricts the deduction of expenses incurred in connection with proceedings under the Act to Rs. 5,000. The Tribunal upheld the CIT(A)'s order, stating that the provisions of section 80VV are clear and unambiguous, and there was no reason to interfere with the disallowance.

Conclusion:
The appeals filed by the assessee for all three assessment years were dismissed, with the Tribunal finding no infirmity in the orders passed by the CIT(A).