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TMI Blog2015 (2) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... j BoyceManufacturing Co. case [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein held that Rule 8D of IT Rules, 1962 is applicable only prospectively, i.e., from assessment year 2008- 09, thus Rule 8D is only prospective and cannot be applied for the assessment year 2007-08. For quantum of disallowance there is no dispute about the fact that the assessee himself has disallowed 5%, following the earlier decision of the Tribunal in assessee's own case. In such circumstances, we do not find it necessary to interfere with the same as the assessee has accepted the earlier decision of the Tribunal and has not taken it before the High Court, particularly the facts and circumstances remaining the same. - Decided in favour of assessee. - I.T.A No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment portfolio for the purpose of books but has treated the entire investments as stock-in-trade and valued the same as per least of cost or market values for income tax purpose only thereby making a claim for a notional loss. Only real profit/loss can be recognized under the I. T Act and not the notional loss arrived at by valuing investment portfolio as per LCM Values. 2.4. The CBDT Circular No.665 directs the Assessing Officers to approach the issue of valuation of investment portfolio held by the banks in line with the RBI guidelines issued from time-to-time. The learned Commissioner of Income-tax(A) has not considered this circular properly. 03. The brief facts are that while framing the assessment for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of investment portfolio and also accounting standards on investments. The appellant had followed the RBI guidelines for the purpose of books of account, but not for computation of income for income-tax purposes. Therefore, The Assessing Officer proceeded to disallow the depreciation of ₹ 2,92,77,66,969/-. Aggrieved the assessee moved the matter in appeal before the first appellate authority. 04. The Commissioner of Income-tax(A) following the ITAT's decision in assessee's own case for assessment year 2004-05 deleted the disallowance made under the head Depreciation on Investment . Now the Revenue is aggrieved and is in second appeal before us with the grounds of appeal extracted elsewhere in this order. 05. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the method by which the assessee Bank is valuing securities is in accordance with the accounting principles by treating such securities as stock-in-trade. Moreover, the revenue itself is treating the profit on maturity of such security as business income and, therefore, such securities cannot be treated as capital assets. 16. Considering the facts and circumstances of the case before us and respectfully following the decision of the Hon'ble Supreme Court in the case of United Commercial Bank v. Commissioner of Income-tax referred supra, it is held that the assessee Bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such investment as stock-in-trade. We, therefore, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod prescribed under section 14A(2) r.w.Rule 8D(2), the AO proceeded to work out the expenditure incurred on earning the income at ₹ 31,82,49,475/- and added the same to assessee's total income. Aggrieved by this order of the Assessing Officer, the assessee filed appeal before the Commissioner of Incometax( A). 10. The Commissioner of Income-tax(A) following the decisions of ITAT in the case of Karnataka Bank Ltd., in ITA.1160/Bang/2007, dated.21.11.2008 for the assessment year 2004-05; the Third Member decision of the Delhi Bench in Wimco Seedings P. Ltd. v. DCIT and Maruti Udyog Ltd v. DCIT (2005) 92 ITD 119 (Del), held that the Assessing Officer was not justified in making the said addition. Thus, the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court decision in Commissioner of Incometax v. Reliance Utilities Power Ltd., (2009) 178 Taxman 135 (Bom) ; v) Third Member decision of the ITAT, Delhi Bench A in Maruti Udyog Ltd v. DCIT (2009) 92 ITD 119 ; vi) ITAT, Mumbai decision in M/s. Godrej Industries Ltd., v. DCIT in ITA.1090/Mum/09, dated.8.10.2010 ; and vii) Chart showing the details of investments in Tax Free securities and interest free funds. The Chartered Accountant has also placed on record a synopsis of arguments on this ground. 13. We have heard the rival submissions and considered the facts and circumstances and the materials on record including the decisions cited by both sides. First of all we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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