9911796707
TMI Blog2019 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13. 3. Facts on all vital points are common. Therefore, for the facility of reference, we take up the facts mainly from Asstt.Year 2011-12. Brief facts of the case are that the assessee is a cooperative society engaged in the business of banking. It has filed its return of income for the Asstt.year 2011-12 on 29.9.2011 declaring total income at Rs. 10,68,73,920/-. Similarly, in the Asstt.Year 2012-13, it has declared taxable income of Rs. 12,40,78,520/-. The case of the assessee was selected for scrutiny assessment in both the assessment years. Notice under section 143(2) dated 1.8.2011 and 6.8.2013 were issued and served upon the assessee in both these assessment years. On scrutiny of the accounts, it revealed to the AO that the assessee has debited an amount of Rs. 3,16,00,000/- and Rs. 3,03,14,000/- as provision in investment depreciation reserve. The ld.AO has confronted the assessee as to how this claim is admissible. According to the AO, it was contended by the assessee that depreciation reserve is required to be created to disclose true and correct value of its investment in the balance sheet. If the investment is less than the cost, the depreciation reserve in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investment depreciation reserves amounting to Rs. 3,16,00,000/- is disallowed and added to the total income. Since, the assessee has furnished inaccurate particulars of income and thereby concealed the particulars of income, the penalty proceedings u/s. 271(1)(c) is initiated. 4. Appeal to the ld.CIT(A) did not bring any relief to the assessee. The discussion made by the ld.CIT(A) on this issue reads as under: "8.2 The contentions raised by the appellant have been considered. The appellant's contention that this claim of investment depreciation reserve is as per well accepted accounting standard and method is consistently adopted is not found acceptable for the reason that the bank's book of accounts are regularly audited by competent Chartered Accountant but this is the first year, when such expenditure under the head 'Investment Depreciation Reserve' has been debited to the Profit & Loss Account. If this contention of the appellant is accepted for this year, it would mean that the books of accounts maintained by the appellant in previous years were not written as per accounting standards. The appellant failed to explain why this year, such claim has \been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be allowed. In other words, judgment of Hon'ble Gujarat High Court ought to be read in a manner that these guidelines governs the assessment of the bank, and if the case of the assessee-bank falls within the ambit of these guidelines, then benefit should be granted. During the course of hearing, we have confronted the ld.counsel for the assessee that if it is construed that if a security is being held as a trading stock, or available for sale, and there is a shortfall in cost vis-à-vis to the market price, on the date of valuation i.e. 31.3.2011 in the Asstt.Year 2011-12, then, the fall in the cost would be admissible as a depreciation. If it is to be accepted, then how it is demonstrated that these securities are held as stock-in-trade. We have also confronted the ld.counsel qua an interim-order passed by earlier Bench on 5.4.2018, which reads as under: "05.04.2018 1. With reference to issue involving claim of ' Investment Depreciation Reserve Rs. 3.16 crores as revenue expenditure, the Assessee seeks to submit that the aforesaid amount represents impairment of value of investments which, in essence, falls under category 'Held For Trading1 (HFT) in contrast t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to him, there is nothing available to this effect, nor there is a discussion in the assessment order. 8. We have duly considered rival contentions and gone through the record carefully. In the case of Rajkot District Co-op. Bank Ltd., reported in 43 taxmann.com 161, Hon'ble Gujarat High Court has considered the circular issued by the Board and thereafter allowed the assessee to amortize premium paid for acquiring securities in the category held to maturity. This premium was amortized over the period remained upto maturity and proportionately allowed in each assessment year. Thus, in principle Hon'ble Gujarat High Court has held that these instructions are applicable for determining the taxability of an assesseebank, and if the securities acquired by the bank under the category held to maturity, then premium paid on acquiring such security is to be spread over remaining period upto maturity and would be allowed to the assessee in each year. If we take guidance of this judgment of Hon'ble Gujarat High Court, then, these instructions are required to be applied to the securities held for trading as well as available for sale. Therefore, at this stage, we deem it fit to take not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
