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2017 (5) TMI 255 - HC - Income TaxDisallowance of on account of amortization in respect of Govt. Securities held in HTM category - Held that - The issue raised herein stand concluded against Revenue and in favour of the Respondent-Assessee by decision of this Court in CIT v/s. Thane Bharat Sahakari Bank Ltd. 2015 (3) TMI 1026 - BOMBAY HIGH COURT Tax on unclaimed dividend to Reserve Fund - addition on write back of unclaimed dividend - Held that - We note that it is an undisputed position before us that in the present facts, the dividend had not been charged to the Profit & Loss Account. It forms part of appropriation of income as it is not debited to its Profit & Loss Account. In the above view, it is not disputed that the unclaimed dividend which has been transferred to the Reserve Fund, has already borne income tax. Thus, bringing the same to tax, would amount to double taxation. Our view is fortified by the observations of this Court in CIT v/s. M/s. Deogiri Nagari Sahakari Bank Ltd. 2015 (1) TMI 1218 - BOMBAY HIGH COURT on an identical fact situation, that the view of the Tribunal that no tax is payable or transfer of unclaimed dividend to Reserve Fund, calls for no interference. The above observations were made even when no specific question with regard to the same, had been specifically raised therein.
Issues:
1. Allowance of depreciation on transfer of securities from AFS category to HTM category 2. Disallowance of amortization in respect of Govt. Securities held in HTM category 3. Addition made on account of write back of unclaimed dividend Issue 1 - Allowance of depreciation on transfer of securities: The appeal challenges the Tribunal's order allowing depreciation on transfer of securities from AFS to HTM category for Assessment Year 2009-10. The Revenue questions whether HTM securities can be treated similarly to AFS and HFT securities. The Counsel for the Revenue cited a previous decision, arguing against the Revenue. The Court found no substantial question of law in this issue and did not entertain it. Issue 2 - Disallowance of amortization in HTM category: The Revenue contested the disallowance made by the AO regarding amortization of Govt. Securities in the HTM category. The Assessing Officer added an amount to the income of the Respondent for the subject Assessment Year, which was upheld by the CIT(A). However, the Tribunal accepted the Respondent's contention that the unclaimed dividend was already taxed as part of post-tax income. The Tribunal did not find any contradiction from the Revenue and allowed the appeal. The Court held that the unclaimed dividend, not charged to the Profit & Loss Account, had already borne income tax, and taxing it again would lead to double taxation. Citing a previous judgment, the Court found no substantial question of law in this issue and did not entertain it. Issue 3 - Addition of unclaimed dividend: The Assessing Officer added an unclaimed dividend amount to the Respondent's income, considering it as income when transferred to the Reserve Fund. The CIT(A) upheld this view, but the Tribunal sided with the Respondent, stating that taxing the unclaimed dividend again would result in double taxation. The Court noted that the unclaimed dividend had not been charged to the Profit & Loss Account and had already borne income tax. Referring to a previous judgment, the Court found no substantial question of law in this issue and did not entertain it. In conclusion, the appeal was dismissed, and no costs were awarded.
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