2018 (3) TMI 316

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....08-09 and 2009-10. This appeal relates to Assessment Year 2005-06. 2 Revenue urges the following questions of law, for our consideration: "(i) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in deleting the addition of Rs. 359,24,58,508/in allowing loss of valuation of Held to Maturity (HTM) securities, when HTM securities are capital in nature ? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that provisions of Section 115JB of the Act are not applicable to a Banking Company ?" 3 The Respondent-Bank in terms of the RBI Guidelines classifies its investments into three categories: (A) Held to Maturity (HTM) (B) A....

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....heet for various Assessment Years where the (HTM) securities were viewed as stock-in-trade and receipts on thereof were in fact offered as business income. In the aforesaid facts, the impugned order holds that the HTM securities are held by the Respondent Bank as as stock-in-trade. It holds the categorization as HTM securities as stock-in-trade is quite tenable because the very nature of banking activities allowed as per Banking Regulation Act, 1949 and HTM securities being categorised as 'stock-in-trade' is not dependent on the frequency of their sale/purchase carried out by the Respondent Bank. On the aforesaid basis, the impugned order of the Tribunal allowed the Respondent-Assessee's Appeal and directed the Assessing O....