9911796707
TMI Blog2017 (1) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... and order dated 18.05.2016 passed by the learned Income Tax Appellate Tribunal, Ahmedabad in ITA No. 1579/Ahd/2011 for A.Y. 200809, the assessee has preferred the present Appeal with the following proposed questions of law: A. Whether on the facts and in the circumstances of the case as well as in law, the Appellate Tribunal was justified in confirming the addition of ₹ 45 lakhs towards the provision on account of diminution in the value of securities made during A.Y. 200304 to 200607, though the actual claim made by the appellant was the loss of ₹ 40,44,000/on account of sale of the securities during the year under consideration? B. Whether on the facts and in the circumstances of the case as well as in law, the conclusion reached by Income Tax Appellate Tribunal to uphold the addition of ₹ 45 lakhs was perverse and based on irrelevant evidence or such as could be arrived at? 2. The facts leading to the present petition are in nutshell as under: 2.1. The assessee who at the relevant point of time was a Cooperative Bank registered under the Gujarat Cooperative Societies Act filed return of income for A.Y. 200809 declaring total income at ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved and dissatisfied with the order of assessment, the assessee preferred the Appeal before the learned CIT (A). The learned CIT (A) confirmed the order passed by the learned A.O. by observing in Para4.2 as under: 4.2 I have gone through the order of the AO and submissions of the AR carefully. It is seen that the appellant had made provisions of diminution in the value of securities as under: Assessment Year Provision made 2003-04 500000 2004-05 1000000 2005-06 1500000 2006-07 1500000 4.2 (i) It is also seen that the appellant had on his own disallowed the provision for diminution in the value of securities during assessment year 200304 to 200607. It is to be seen that the entire depreciation which has been claimed is on the depreciation in respect of securities held for trading and not on securities held to maturity, In respect of securities held for trading it is clear that the same constitute stock in trade of the appellant. Only the securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 45 lakhs. 4. It is further submitted by the learned advocate appearing for the assessee, that the learned Tribunal ought to have appreciated that when the claim was with regard to the loss of ₹ 40,44,000/suffered on account of sale of the securities during the year under consideration, so that provision in respect of diminution in the value of Government Security had no relevance. It is submitted that, therefore, when the assessee sold the security during the year under consideration, considering the diminution in the value of securities, the loss was required to be considered under the year consideration. It is further submitted that, provision for diminution in the value of securities as per the guidelines issued by R.B.I. for which no deduction was claimed by the assessee in the relevant years and claimed the loss on the basis of depreciation on the value of government security by selling security during the year consideration, such a loss ought to have been allowed. It is submitted that, merely because in the earlier years, in which the value of Government security had taken place, the assessee did not claim any deduction and claimed any loss, that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in respect of securities held for trading and not on securities held to maturity, In respect of securities held for trading it is clear that the same constitute stock in trade of the appellant. Only the securities which are held to maturity are classified as investments of the appellant, in so far as the value of securities held to maturity is concerned, there is no diminution in the held to maturity are classified as investments of the appellant. In so far value of securities held to maturity is concerned, there is no diminution in the value of the same. As per the guidelines of the RBI the value of these security has to be taken at the cost price audit is only on their sale that the difference between the cost price and the sale price that has to be offered as capital gain or loss as the case may be. In respect of securities held for trading, being stock in trade, the same have to be valued at cost or market price whichever is lower. Thus the diminution in the value of such stocks has to be taken as the loss in the respective year and cannot be allowed as a loss o the current year. The action of the appellant in not claiming the loss on the securities held for trading which oc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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