×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
13-03-2020, Bank of Maharashtra, Section 40(a)(ia), 115JB, Tribunal Pune
These are four cross appeals filed by the Revenue and the assessee in relation to the assessment years 2013-14 and 2014-15. ITA No.81/PUN/2018 filed by the Revenue and ITA No.114/PUN/2018 filed by the assessee are emanating from the order of the Ld. CIT(Appeals)-1, Pune dated 24.10.2017 for the assessment years 2013-14. ITA No. 585/PUN/2018 filed by the Revenue and ITA No. 780/PUN/2018 filed by the assessee are emanating from the order of the Ld.CIT(Appeals)-1, Pune dated 14.12.2017 for the assessment year 2014-15.
2. These cases were heard together. Since facts common and issues are similar, these cases are being disposed of vide this consolidated order. For the sake of convenience, first we would take up Revenue‟s appeal in ITA No.81/PUN/2018 & ITA No.585/PUN/2018 for the assessment year 2013-14 & 2014-15 for adjudication.
ITA No.81/PUN/2018 (By Revenue)
ITA No.585/PUN/2018 (By Revenue)
A.Ys.2013-14 & 2014-15
3. In ITA No.81/PUN/2018 and ITA No.585/PUN/2018, the Revenue has raised common grounds of appeal which reads as under:
“1. The order of the Ld. CIT(A) is contrary to law and to the facts and circumstances of the case.
2. The Ld. Commissioner of Income Tax (Appeal) has erred on the facts and circumstances of the case in allowing loss of valuation of Held to Maturity (HTM) securities when HTM securities are capital in nature.
3. The appellant craves to add, amend, alter or d lete any of the above grounds of appeal during the course of appellate proceedings before the Hon’bleTribunal.”
4. At the very outset, the Ld. Counsel for the assessee submitted that grounds of appeal raised by the Revenue pertains to the allowability of depreciation on Held to Maturity (HTM) Investment. In this regard, the Ld. Counsel submitted that this issue is covered by the decision in assessee‟s own case in ITA Nos.634 & 635/PN/2017 order dated 27.06.2019 and it was adjudicated by the Tribunal against the Revenue. The Ld. Counsel for the assessee has drawn our attention to Para 2, Page No.105-108 of the paper book.
5. We have heard both the sides and perused the relevant paragraphs of the order of the Tribunal in assessee‟s own case (supra.) wherein, the Tribunal on the issue has held as follows:
“2. The Revenue has assailed the findings of Assessing Officer on the single issue of allowing loss on valuation of securities Held to Maturity (HTM).
2.1 The ld. AR submitted that this issue has been let to rest by the Hon’ble Bombay High Court in assessee’s own case in Income Tax Appeal No. 920 of 2015 decided on 27-02-2018. The ld. AR further submitted that the Tribunal in appeal by the assessee in ITA No. 1370/PUN/2014 for the assessment year 2010-11 decided on 11-03- 2019 has also considered this issue and has decided in favour of assessee.
2.2 Mrs. Kesang Y. Sherpa representing the Department fairly admitted that the issue relating to loss on valuation of HTM securities has been considered by the Tribunal in assessee’s own case in immediately preceding assessment years.
2.3 Both sides heard. Orders of the authorities below perused. The Revenue is in appeal against the findings of Commissioner of Income Tax (Appeals) on the issue of loss on valuation of HTM securities. We find that the Commissioner of Income Tax (Appeals) has decided this issue in favour of assessee by following the order of Tribunal in assessee’s own case for assessment year 2005-06 in ITA No. 1505/PN/2008 and in ITA Nos. 1135 to 1138/PN/2013 decided on 17-08-2014. The issue of allowability of loss on valuation of HTM ecurities is recurring in assessment years after assessment years. The Co-ordinate Bench in assessee’s own case for assessment year 2010-11 in ITA No. 1370/PUN/2014 (supra) has decided this issue in favour of the assessee by placing reliance on the order of Tribunal in ITA No. 1505/PN/2008 and now the same has been upheld by the Hon’ble Bombay High Court in Income Tax Appeal No. 920 of 2015. For the sake of completeness the relevant extract of the findings of Tribunal in ITA No. 1370/PUN/2014 (supra) on this issue are reproduced here-in-below :
“5.3 Both side heard on the issue of disallowance of claim of loss in respect of securities held under HTM category. Both sides are unanimous in stating that the present issue was subject matter of appea before the Tribunal in ITA No. 1505/PN/2008 and in ITA Nos 1135 to 1138/PN/2013 (supra). The Co-ordinate Bench adjudicated the issue by observing as under:
“20. In the background of the aforesaid legal position, a premise which can be drawn is that for the purposes of valuation of the closing stock it is permissible for the assessee to value it at the cost or market value, whichever is lower. In-fact, the Hon‟ble Supreme Court in the case ofChainrup Sampatram vs. CIT, (1953) 24 ITR 481 (SC) held that the assessee is entitled to value the closing stock either at cost price or market value, whichever is lower. In the present case,Revenue does not dispute that the method of the valuation adopted by the assessee, namely, valuing the stock either at cost price or market value whichever is lower, is a generally accepted method of valuation. No doubt, there are no statutory rules for the valuation of closing stock but the ordinarily accepted method of commercial accounting support the valuation of closing stock based on the lower of the cost or market value. Therefore, the departure from the erstwhile method of valuation of closing stock by the assessee is quite appropriate, and in fact is line with a method approved by the Hon‟ble Supreme Court in the case of Chainrup Sampatram (supra). In-fact, the only basis for the Revenue