9911796707
TMI Blog2006 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... capital/stock-in-trade? 2. Whether on the facts and in the circumstances of the case the Tribunal was correct in holding that the decision of the Supreme Court in the case of Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT and Madhya Pradesh Rajya Sahkari Bank Maryadit v. CIT [1996] 218 ITR 438 (SC) and the various decisions referred to in its order for the assessment years 1985-86 and 1986-87 would be applicable to the applicant's case? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not following the orders of the Tribunal in the applicant's own case for the earlier years under exactly identical circumstances? 4. Whether, on the facts and in the circumstances of the case the Tribunal was correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of this court in CIT v. Karur Vysya Bank Ltd. [2005] 273 ITR 510. Learned senior standing counsel for the Department submitted that the assessee-bank held the Government securities only as investment and therefore they are not entitled to any relief. We have given careful consideration to the submissions of both sides. It is brought to the notice of this court that the assessee is also dealing with purchase and sale of Government securities. The profit and loss on the sale of Government securities had been assessed as business income/loss under the Income-tax Act. The assessee-bank has always been treating the Government securities as stock-in-trade. It is further brought in our notice that whenever there is depreciation/appreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38. In that case, the bank was holding Government securities as investments and not stock-in-trade. Based on this fact, the Supreme Court came to the conclusion that the fall in the market value of the Government securities is not an allowable deduction and hence, the same would not apply to the facts of this case. The said Supreme Court judgment was later on considered by the Supreme Court in CIT v. Karnataka State Co-operative Apex Bank [2001] 251 ITR 194, wherein it was held that the said decision of the Supreme Court reported in Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT [1996] 218 ITR 438 does not set down the correct law and the relevant portion of the said judgment reads as under: "The question is whether we agree with the reasoni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) That for valuing the closing stock, it is open to the assessee to value it at the cost or market value, whichever is lower; (2) in the balance-sheet, if the securities and shares are valued at cost, from that no firm conclusion can be drawn. A taxpayer is free to employ for the purpose of his trade, his own method of keeping accounts, and for that purpose, to value stock-in-trade either at cost or market price; (3) a method of accounting adopted by the taxpayer consistently and regularly cannot be discarded by the Departmental authorities on the view that he should have adopted a different method of keeping accounts or of valuation; (4) the concept of real income is certainly applicable in judging whether there has been income or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting income-tax return on the real taxable income in accordance with a method of accounting adopted by the assessee consistently and regularly. That could not be discarded by the Departmental authorities on the ground that the assessee was maintaining the balance-sheet in the statutory form on the basis of the cost of the investments. In such cases, there was no question of following two different methods for valuing its stock-in-trade (investments) because the bank was required to prepare the balance-sheet in the prescribed form and it had no option to change it. For the purpose of income-tax what is to be taxed is the real income which is to be deduced on the basis of the accounting system regularly maintained by the assessee and that wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the courts or the tribunals and not reached objectively on the basis of the facts placed before the authorities. If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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