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TMI Blog2010 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... eal by the Revenue raises the following substantial question of law: "Whether the Tribunal was justified in holding that the initiation of proceedings under section 263 was not justifiable, on the ground that the order of the Assessing Officer was not erroneous or prejudicial to the interests of the Revenue?" 3. The assessee is a bank. In the present case, an order of assessment under section 143(3), in relation to the assessment year 2002-03, was passed on December 24, 2004. In so far as it is material to this proceeding, the Assessing Officer, while dealing with a provision for depreciation on current investments noted that in the computation of total income of the assessee, depreciation on current investments was computed at Rs. 6.22 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of the assessee. However, while calculating taxable income the guidelines had not been followed to the extent that appreciation, as suggested by the Reserve Bank of India had been ignored. In these circumstances, depreciation on current investment was allowed only to the extent computed in accordance with the guidelines of the Reserve Bank of India and booked in the amount of Rs. 6.22 crores. The claim of the assessee to the extent of Rs. 10.81 crores in the computation was disallowed. 4. At this stage, it would be necessary to note that during the course of the assessment proceedings, a communication was addressed by the Assessing Officer to the assessee on September 20, 2004. The communication, inter alia, sought a disclosure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er furnishing to the assessee an opportunity and after conducting an enquiry on the following issues: "(i) Whether the capital gain of Rs. 1,26,30,070 has been earned by the assessee on transactions related to investments held to maturity. (ii) Whether the depreciation of Rs. 622.39 lakhs allowed on investments is only for those investments held as stock-in-trade and whether it is an allowable deduction. (iii) Whether the long-term capital loss of Rs. 1,66,021 is to be allowed to be carried forward. (iv) Whether the profit on transfer of tenancy rights amounting to Rs. 21,32,427 can be set off against long-term capital loss claimed on sale of Government securities mainly in the light of the fact that sale of Government securities is a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails with regard to the capital gain of Rs. 1.26 crores in the computation of business income. Moreover, a break up of the investments was called for by the Assessing Officer. The Tribunal noted that all the details were furnished and, after they were considered by the Assessing Officer, an assessment order was passed under section 143(3). Hence, the Tribunal came to the conclusion that the Commissioner of Income-tax was not justified in exercising the suo motu power of revision under section 263. 8. A reading of the order passed by the Commissioner of Income-tax would show that the principal objection which the revisional authority expressed against the order of the Assessing Officer was an alleged failure of the Assessing Officer to exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stock- in-trade. We have indicated this only as and by way of an illustration in aid of our finding that there was no basis or justification for the Commissioner of Income-tax to invoke the provisions of section 263. In the order of assessment, the Assessing Officer had after making an enquiry and eliciting a response from the assessee come to the conclusion that the assessee was entitled to depreciation to the extent of Rs. 622.39 lakhs on the value of securities held on the trading account. In the absence of any tangible material to the contrary, the Commissioner of Income-tax could not have treated this finding to be erroneous or to be prejudicial to the interests of the Revenue. The observation of the Commissioner of Income- tax tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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