TaxTMI 
TaxTMI 
2015 (12) TMI 292
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....s of the case, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that of the AO may be restored to the above extent. 2. Briefly stated the facts are that the assessee filed its return of income on 14.9.2008, showing total income of Rs. 93,60,730/-. The case was selected for scrutiny and assessment under section 143(3) of the Act was framed wherein addition of Rs. 1,87,98,785/- only was made which included addition on account of provisions of investment depreciation disallowed by AO of Rs. 1,47,66,239/-. Against the order of AO, the assessee went in appeal before the CIT(A) who after considering the submissions of assessee deleted the disallowance of Rs. 1,47,66,239/-. 3. Aggrieved, the Revenue is in appeal before the Tribunal. We would like to mention here that as per the order of A.O. the addition on account of disallowance of provision of investment depreciation was made at Rs. 1,47,66,239/- whereas in the grounds of appeal filed by the Revenue the amount mentioned in ground no.1 is Rs. 1,47,48,785/-. There seems to be some typographical error on the part of Revenue wh....
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....s deduction. The Supreme Court in the case of United Commercial Bank vs. CIT 240 ITR 355, 366 held as under : "From the decision discussed above, it can be held - (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 but 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 of account or of valuation; (4) The concept of real income is certainly applicable in judging whether there has been income or not, but in every case, it must be applied with care and within their recognized limits; (5) Whether the income has really accrued or arisen to the assessee must be judged in the light of the reality of the situation; (6) Und....
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....m the above, it is clear that the provision made for investment depreciation is allowable as deduction. 2. It may please be noted that the CIT(A) has allowed the appeal for AY 2007-08. The facts are identical. The ITAT has dismissed the Revenue appeal for AY 2007-08." 6. We have heard the rival submissions and gone through the facts and circumstances of the case, perused the material available on record and gone through the orders of authorities below. From the perusal of the office file we notice that this appeal came up before the Co-ordinate Bench on 14.7.2015 wherein the Bench issued an order which was supplied to both the parties and the same is reproduced below:- "14.7.2015 Present : Shri D. C. Mishra, Sr. DR. Shri A. C. Shah, ld. counsel for the ssessee. Solitary grievance of the Revenue is that the learned CIT(A) has erred in allowing depreciation on account of investment amounting to Rs. 1.47 crores. With the assistance of the learned representatives, we have gone through the records carefully. We find that in para No.4, the learned AO has recorded a categorical finding that this provision has been made with regard to the securities he....
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.... a) The excess comprises only or SLR securities b) The total SLR securities held in the HTM category is not more than 25 per cent of their NDTL as on the last Friday of the second preceding fortnight. 15.2.3 Primary (urban) co-operative banks are not permitted to invest in bonds and debentures of private sector companies. Their investments in bonds of PSUs and shares (as permitted by RBI) should be classified under "Held to Maturity" category but these will not be counted for the purpose of specified ceiling under this category. 15.2.4 Profit on sale of investments in this category should be first taken to the P & L account and thereafter be appropriated to the investment Fluctuation Reserve. Less on sale will be recognized in the P & L a/c. 15.3 Held for Trading 15.3.1 Securities acquired by the banks with the intention to trade by taking advantage of the shorter price/interest rate movements will be classified under "Held for Trading" category. 15.3.2 If banks are not able to sell the security within 90 days due to exceptional circumstances such as tight liquidity conditions, or extreme volatility, or market becoming unidirectional, the security shoul....
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....e the premium should be amortized over the period remaining to maturity. In the case of HFT and AFS securities forming stock in trade of the bank, the depreciation/appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. The lastest guidelines of the RBI may be referred to for allowing any such claims." 8. After going through the above guidelines of RBI and CBDT Circular loss invoice the facts of the assessee that as per audited balance sheet of the assessee investment in Central and State Government Securities its book value was valued at Rs. 109 crores out of which permanent category securities were Rs. 101.50 crores and current category securities were of Rs. 7.5 crores and as per the submissions made by the ld. AR these investments of Rs. 109 crores are investments held as stock-in-trade and for valuing closing stock at the end of the year the value prevailing on the last date of the year is relevant and assessee has, therefore, claimed 1,47,66,239/- as investment depreciation. 9. Similar facts were examined in assessee's own case by the Tribunal in ITA No.626/Ahd/2012 for AY 2007-08 and the Co-ordinate....