Bombay High Court
The Commissioner Of Income Tax-Ii, ... vs M/S. Nagpur Nagrik Sahakari Bank Ltd., ... on 13 January, 2016
Author: B.P. Dharmadhikari
Bench: B.P. Dharmadhikari, V.M. Deshpande
1 jud130116 ita 1.14.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY :
NAGPUR BENCH : NAGPUR.
Income Tax Appeal No.1 of 2014
The Commissioner of Income Tax-II,
Saraf Chambers, Sadar, Nagpur. .... Appellant
Versus
M/s Nagpur Nagrik Sahakari Bank Ltd.,
79, Dr. Ambedkar Square,
Central Avenue, Nagpur. .... Respondent.
Shri Anand Parchure with Shri B.N. Mohata, Advocates for
appellant.
Shri K.P. Dewani, Advocate for respondent.
Coram : B.P. Dharmadhikari &
V.M. Deshpande, JJ.
th
Dated : 13 January, 2016.
ORAL JUDGMENT ( Per- B.P. Dharmadhikari, J.)
Heard learned Advocate Shri Parchure with Shri Mohata for the appellant and learned Advocate Shri Dewani for the respondent.
2] The following question is sought to be raised as substantial question of law :-
::: Uploaded on - 15/01/2016 ::: Downloaded on - 31/07/2016 00:54:36 :::2 jud130116 ita 1.14.odt "1. Whether on the facts and in circumstances of the case and in law, the order of the Tribunal is perverse as it failed to appreciate that the securities held as AFS were already 'marked to market' value of Rs.
69,88,05,000/- as on 31-03-2008, as per RBI guidelines disclosed in the Accounting Policies reported in Annual Report for the year ending on 31-03-2008, and thus the depreciation in igvalue by Rs. 4,01,35,000/- was already taken into account as on 31-03-2008, which could not be claimed as a loss again by recategorising the same securities as HTM on 02-04-2008."
3] Learned Advocate Shri Dewani has pointed out that the issue is squarely covered by the judgment of this Court delivered at Bombay in July, 2014 in Income Tax Appeal No. 250 of 2014.
4] Here the fact shows that the Revenue is not opposing the conversion. It is not their case that the conversion of 12 securities from AFS (available for sales) category to HTM (held to maturity) category is prohibited by law. The earlier financial year of assessee expired on 31-03-2008 and on 02-04-2008 the securities have been shifted from AFS to HTM category.
::: Uploaded on - 15/01/2016 ::: Downloaded on - 31/07/2016 00:54:36 :::3 jud130116 ita 1.14.odt 5] The RBI circular has been looked into by the CIT (Appeals). Paragraph 5 of its order shows that such transfer is to be done on acquisition of cost/ book value/ market value on the date of transfer whichever is least and the depreciation on such transfer should be fully provided for. This guideline is also not in dispute.
6] Perusal of order of CIT (Appeals) itself shows that as on 31-03-2008 book value of these sureties was Rs.73,89,40,000/-, while its market value was Rs. 69,88,05,000/-. The difference of Rs. 4,01,34,000/- has been appropriated as depreciation by the assessee on shifting of the securities.
7] The ITAT therefore has correctly appreciated the situation. We do not find any violation of RBI guidelines.
Though the order of assessment dated 26-12-2011 mentions that the income is to be computed as per the provisions of Section 145 of the Income Tax Act, 1961 and not in accordance with the guidelines issued by the RBI, no inconsistency has been pointed out to us between the two.
::: Uploaded on - 15/01/2016 ::: Downloaded on - 31/07/2016 00:54:36 :::4 jud130116 ita 1.14.odt 8] In judgment of this Court delivered at Bombay in July, 2014 (supra) the first question is the scope of jurisdiction available under Section 263 of the said Act and we are not concerned with it. The second question is one which precisely falls for consideration before us in this appeal. The Division Bench has accepted the depreciation resulting in this situation as an allowable deduction.
9] We do not find any reason to take a different view in the matter. No substantial question of law, therefore, arises.
The appeal is dismissed. No costs.
JUDGE JUDGE
Deshmukh
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