TaxTMI 
TaxTMI 
2015 (2) TMI 891
X X X X Extracts X X X X
X X X X Extracts X X X X
.... viz., (i) whether the Commissioner of Income-tax(A) erred in allowing the assessee's claim of depreciation of valuation of investment portfolio by treating the investments held by the bank as stock-in-trade, and (2) whether, the learned Commissioner of Income ITA. tax(A) erred in deleting the addition of Rs. 31,82,49,475/- being expenditure related to exempt income. 02. Let us first take up the issue relating to claim of depreciation of valuation of investment portfolio. The relevant grounds of appeal read as under : "2.1. The learned Commissioner of Income-tax(A) erred in allowing the assessee's claim of depreciation of valuation of investment portfolio by treati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onformity with Schedule-17 of the Annual Report filed. RBI's Master Circular dated.02.09.2003 stipulated that the entire investment portfolio should be held under three categories, viz., 'Available for Sale' (AFS), 'Held to Maturity' (HTM), and 'Held for Trading' (HFT) and that the whole investment portfolio could not be classified as stock-in-trade. According to the circular, while depreciation was not available on financial assets in the HTM category, only net depreciation, if any, could be debited to the profit and loss account on assets in the AFS and HFT categories. The Assessing Officer observed that the CBDT had clarified, vide Circular No.665, dated.05.10.1993, that the Assessing Officer should determine ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd. 06. In our considered opinion, the decision of the coordinate bench of this Tribunal in assessee's own case is binding on us, facts and circumstances being the same. In the said decision cited above, the Tribunal in para nos.14 to 16 has held as under : "14. We are of the considered view that the decision of the Hon'ble Supreme Court in the case of United Commercial Bank v. Commissioner of Income-tax reported in 240 ITR 355 is directly applicable to the facts of the case on hand. As per the Head Note of the said decision, the Hon'ble Apex Court has held that preparation of the Balance sheet in accordance with the statutory provisions would not disentitle the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ove decision, this issue is decided in favour of the assessee by dismissing the grounds of appeal raised by the Revenue. 08. Now let us turn to the next issue relating to deletion of addition of Rs. 31,82,49,475/- being expenditure relating to exempt income. The relevant ground of appeal reads as under : "2.2 The learned Commissioner of Income-tax(A) erred in deleting the addition of Rs. 31,82,49,475/- being expenditure related to exempt income. The learned Commissioner of Income-tax(A) has failed to appreciate the fact for this assessment year 2007-08, the expenditure on exempt income was not worked out as an estimate but in accordance with section 14A(2) of the IT Act, 1961 re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... i) Pradeep Kar v. ACIT (2009) 319 ITR 416 (Kar); ii) ITO v. Sanatan Textrade Ltd (ITAT-Mum) (2010) 4 ITR (Trib)593; iii) Dharmasingh M. Popat v. ACIT (ITAT-Mum) (2010) 2 ITR (Trib) 586; iv) Renaissance Asset Management Co. P. Ltd v. Assessing Officer (ITAT-Del) (2010) 2 ITR (Trib) 0765 ; and v) ITO v. Daga Capital Management P. Ltd., (ITAT-Mum) (2009) 312 ITR (AT) 1 (SB) ; By placing the above orders on record, the learned DR contended ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Tax Free securities and interest free funds. The Chartered Accountant has also placed on record a synopsis of arguments on this ground. 13. We have heard the rival submissions and considered the facts and circumstances and the materials on record including the decisions cited by both sides. First of all we have to decide whether Rule 8D is prospective or retrospective. We find that the Mumbai Bench in ITA.1090/Mum/2009, for the assessment year 2005-06, following the Bombay High Court decision in Godrej Boyce Manufacturing Co., in ITA.626 of 2010, dated12.08.2010, held that Rule 8D of IT Rules, 1962 is applicable only prospectively, i.e., from assessment year 2008- 09. However, we also find that the Hon'ble Kerala High Court in the....