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TMI Blog2016 (10) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... extracting the facts from the appeal of the Revenue in ITA No. 837/PN/2015 for assessment year 2008-09. 2. The brief facts of the case as emanating from records are: The assessee is a Scheduled Co-op. Bank. The assessee filed its return of income for the assessment year 2008-09 showing taxable income as Nil and claimed current year loss Rs. 10,73,80,780/-. The assessment proceedings were completed in the case of assessee for assessment year 2008-09 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") admitting the loss of Rs. 10,72,98,310/-. Thereafter, reassessment proceedings were initiated and notice u/s. 148 of the Act was issued to the assessee on 20-03-2013. In reassessment proceedings the Assessing Officer made addition of Rs. 13,32,31,750/- on account of amortization of investment in Government Securities held under HTM category. Aggrieved by the assessment order dated 23-03-2014, the assessee preferred appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) deleted the entire addition by placing reliance on the decisions of Pune Bench of the Tribunal in the case of Latur Urban Co-op. Bank Limited Vs. Dy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f premium on Government Securities held under HTM category has been adjudicated in favour of assessee by the Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. HDFC Bank Ltd. reported as 366 ITR 505 (Bom). The ld. AR of the assessee further submitted that the Tribunal has been consistently holding that the Government Securities held under HTM category are stock-in-trade and allowed the amortization of premium on such Securities held under HTM category. In support of his submissions, the ld. AR placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of Cosmos Co-op. Bank Ltd. Vs. DCIT reported as 64 SOT 90 (Pune-Trib.). The ld. AR further submitted that there are several decisions of the Tribunal wherein similar view has been taken. 6. In respect of Cross-Objections, the ld. AR of the assessee stated at the Bar that he is not pressing the same. 7. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the ld. AR of the assessee has placed reliance in support of his contentions. The only issue raised in the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em of accounting both for book keeping as well as tax purposes. The bank is valuing stock-in-trade (investments) 'at cost' in the balance-sheet in accordance with the Banking Regulation Act and valuing very same investments 'at cost' or 'market value', whichever was lower, for Income-tax purposes. The method followed consistently was valid and could not be rejected. In the present case, the facts being similar to the facts reported in UCO Bank, the Assessing Officer is directed to allow the revaluation of securities. However, for the computation of depreciation allowable, the Assessing Officer is also directed to revalue the securities in the same manner in the beginning of the year also." We find the Tribunal in the case of Lord Krishna Bank Ltd. (supra) has considered and adjudicated the issue in paragraphs 3 and 4 as under : "3. We have heard the rival submissions and perused the relevant material on record. The learned authorised representative has relied on Circular DBOD. No. BP.BC.29/21.04.048/98, dated April 11, 1998, issued by the Reserve Bank of India prescribing the method to be followed for valuation of Government and other securities. The learned authorised repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Southern Technologies Ltd. v. Joint CIT [2010] 320 ITR 577 (SC) ?" The Hon'ble Jurisdictional High Court dismissed the substantial question of law on this issue by observing as under : "As far as question (C) is concerned, we find that an identical question of law was framed and answered in favour of the assessee by this court in its judgment dated July 4, 2014, in Income Tax Appeal No. 1079 of 2012, CIT v. Lord Krishna Bank Ltd. (now merged with HDFC Bank Ltd.) [2014] 366 ITR 416 (Bom). Mr. Suresh Kumar fairly stated that question (C) reproduced above is covered by the said order. In view thereof, we are of the view that even question (C) does not raise any substantial question of law that requires an answer from us." 10. The issue relating to securities held by assessee under HTM category constitute stock-in-trade and the consequential loss on valuation of said securities on the basis of cost or market value, whichever, is less whether allowable as deduction was raised in the case of Cosmos Co-op. Bank Ltd. Vs. DCIT (supra). The Tribunal decided the issue in favour of the assessee by holding as under : "16. The Ground of Appeal No. 4 is with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk succeeded before the CIT(A). The Tribunal confirmed the order of the CIT(A). The Revenue carried the issue before the Hon'ble High Court. The core issue was the method of valuation adopted by the assessee Bank for valuing the stock of the Securities. The Hon'ble High Court followed the decision of Hon'ble Supreme Court in the case of United Commercial Bank (Supra). 15. In the case of United Commercial Bank (Supra), even the issue of valuation of the stock in trade of the investment was before the Hon'ble Supreme Court. In the case of the assessee, the issue is regarding allowability of the loss on the sale of the Securities. Merely because the Securities are kept under the head till the maturity, the said Security cannot be treated as a purely investment. Law is well settled that the Securities held by the Bank are in the nature of Stock-in-Trade. We may like to quote here the decision of the Hon'ble High Court of Kerala in the case of CIT Vs. Nedungadi Bank Ltd., 264 ITR 545. In the said case, the Hon'ble High Court has held that the securities held by the Bank are in the nature of stock-in-trade. Both the authorities below has merely gone on the nome ..... X X X X Extracts X X X X X X X X Extracts X X X X
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