2012 (9) TMI 974

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.... this common order.   2. Shri Mohan Pulickal, the ld.representative for the taxpayer submitted that the only issue arises for consideration is disallowance of loss on revaluation of the securities. The ld.representative for the taxpayer submitted that the taxpayer banking company invested funds in the securities. During the year under consideration the securities were revalued as per the norms prescribed by Reserve Bank of India (RBI) and the loss was claimed as deduction. However, the assessing officer disallowed the claim of the taxpayer. On appeal by the taxpayer in original round of litigation this Tribunal directed the assessing officer to reconsider the matter on the ground that the judgment of the jurisdictional High Court in....

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....tion of the securities. According to the ld.representative, in the absence of balance-sheet of the respective companies, the taxpayer cannot claim any loss. 4. We have considered the rival submissions and also perused the material available on record. The only question arises for consideration is whether the notional loss said to be suffered by the taxpayer on revaluation of the securities is allowable as deduction or not. This issue was considered by the jurisdictional High Court in Commissioner of Income-tax vs Nedungadi Bank Ltd (supra) and after considering the judicial pronouncements on the subject found that security held by the bank constitute their stock in trade or investment. Consequently, the loss claimed by the bank in valuat....

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....k Ltd (supra) and observed as follows: ".......It is a settled position through various decisions including that of this court in COMMISSIONER OF INCOME-TAX VS.NEDUNGADI BANK LTD. reported in (2003) 264 ITR 545 THAT FOR THE PURPOSE OF ASSESSMENT COST PRICE OR MARKET VALUE WHICHEVER IS LOW SHOULD BE ADOPTED. Admittedly market value is not known and so much so, some method has to be adopted to fix the market value and thereafter only the lower of the cost price or the market value has to be taken for the purpose of computation of profit or loss in respect of the unsecured securities. Senior counsel appearing for the assessee ITA No.234/2009 produced RBI guidelines before us wherein the RBI has suggested Banks to value unquoted Central Gove....