TaxTMI 
TaxTMI 
2018 (6) TMI 144
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....issioner of Income-tax (Appeals), [CIT(A)] Mysore, dated 21/06/2011 for the assessment year 2008-09. The assessee had come up in cross objections. 3. Brief facts of the case are that the assessee is a scheduled private commercial bank engaged in the business of banking. The return of income for assessment year 2008-09 was filed on 30/9/2008 declaring total income of Rs. 295,82,61,670/-. Against the said return of income the assessment was completed by the Dy.CIT, Circle 2(1), Mangalore, vide order dated 22/12/2010 passed under section 143(3)of the Income Tax Act 1961 (hereinafter referred to as the Act for short)at total income of Rs. 295,82,61,679/-. While doing so, the Assessing Office made the following disallowances: Add : Disallowances and additions as discussed in the order Rs. 1. Expenses related to the exempted income 2,97,38,902 2. Broken period interest on Government securities 14,51,83,335 3. Bad debts written off under section 36(1)(vii) 31,81,22,183 4. Provision for depreciation on investment 5,91,39,314 5. Capital expenditure debited to the profit and loss acc....
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....r section 36(1)(vii) and for rural debts under section 36(1)(viia) is not tenable as there are no such distinctions as per the said sections. 2.7 The learned Commissioner of Income-tax (Appeals) has not taken into cognizance the fact that the deductions under section 36(1)(vii) are subject to the provisions of section 36(2)(v) which is overriding in nature. 2.8 The learned Commissioner of Income-tax (Appeals) erred in not considering the accounting principle that bad debts actually written off under section 36(1)(vii) has to be first adjusted against the provision for bad and doubtful debts created under section 36(1)(viia) and the balance or unabsorbed bad debts only can be written off. 2.9 The learned Commissioner of Income-tax (Appeals) has failed to appreciate the fact that the assessee-bank has followed the Reserve Bank of India guidelines for valuation of investment portfolio for the purpose of books but has treated the entire investments as stock-in- trade and valued the same as per the least of cost or market value, values for Income-tax purpose only thereby making a claim for a notional loss. Only real profit/loss can be recognised under the Income-tax Act and not....
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....of surplus provision for depreciation on investment held in the books of account as per the Reserve Bank of India Guidelines. The Department is allowing the claim of depre ciation on investments, if the same is valued as per the Reserve Bank of India Guidelines. At the same time, any surplus provision has to be reversed in the profit and loss account. In the instant case, the asses see-bank has taken a dual stand to their advantage as could be seen from their letter dated November 26, 2010. The assessee-bank has made a claim of Rs. 20,56,25,224 being depreciation on securities shifted from available for sale category to held to maturity category. This shifting of investment has been done as per the Reserve Bank of India Guidelines and the resultant depreciation has been claimed. But for valuing investment for Income-tax purpose, the bank is treating the entire investments as stock-in-trade. This dual stand adopted by the assessee-bank gives an undue advantage as far as taxable income is concerned. Accordingly, the surplus provision worked out by the assessee-bank for depreciation on investments in accordance with the Reserve Bank of India Guidelines of Rs. 5,91,39,314 is disallowed....
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....stion is, in the earlier years though investments are shown as investments in the books of account, for income-tax purposes, the same was shown as stock-in-trade. Therefore, assesseebank changed its method of accounting during the previous year relevant to assessment year under consideration is not a material fact in deciding the issue in the present appeal. In the earlier years, the same was claimed as stock-in-trade and the resultant loss or gain on account of following the principle cost or market price whichever is less, is recognized for income-tax purpose. In this context, it is apt to reproduce circular No. 18/2015: 'Circular No. 18 of 2015, dated November 02, 2015. Subject : Interest from Non-SLR securities of Banks-reg. It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, "expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i) of the Act as interest on non-SLR securities is income from other sources". 2. Clause (id) of sub-section (1) of section 56 of the Act provides that income by way of interest on securities shall be chargeable t....
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....Ltd. v. Jt. CIT [2010] 320 ITR 577/187 Taxman 346 and UCO Bank v. CIT [1999] 237 ITR 889/104 Taxman 547 (SC) held that the directions of the RBI are only disclosed norms and they have nothing to do with computation of taxable income. The jurisdictional High Court further upheld the claim of the assesseebank following the principle of consistency. Even the Hon'ble Apex Court in the case of UCO Bank (supra) only laid down principle that where the investments are forming part of stock-in-trade, loss arising on account of fall in value of the securities should be recognized and allowed as a deduction. But the above case cited supra does not come to the rescue of the assessee-bank for the reason that the assesseebank, even in the books of account, has treated the investments as stock-in-trade from the assessment year 2005-06 onwards. Therefore, the question boils down to the one issue whether the change of method of accounting is bona fide or not. It is not the case of the revenue that the assessee-bank changed for a casual period to suit its own purpose. Therefore, the bona fide of the assessee-bank in changing the method of accounting cannot be doubted. Now, it is well settled tha....
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....tments do not have even the interest cost. The explanation offered by the assessee-bank is not acceptable, as any income earned should have the related expenditures attributed to it. The bank's contention that it has invested cost free funds on the tax-free investments is not acceptable, as these investments will always have notional interest cost attached to it. It is pertinent to mention that in the case of Corporation Bank, the hon'ble Income-tax Appellate Tribunal has upheld the disallowance made on this issue in the earlier assessment years. The proposal to disallow expenses on exempt income under section 14A is in line with the decision of the hon'ble Income-tax Appellate Tribunal. The expenditure incurred with respect to exempt income as specified in section 14A(2) read with rule 8D(2) is worked out as under : Rs. (i) Amount of expenditure directly relating to income which does not form part of total income Nil (ii)A Amount of expenditure by way of interest 1101,70,85,000 (ii)B Average value of investment as on the first day and last day of previous year (Rs. 161,12,95,000 + 132,34,84,000/2) 187,83,25,000 (ii)C....
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....hich does not form part of the total income under the Act. Under the provisions of sub-sec. (2) of 14A of the Act, the AO is required to examine the accounts of the assessee and only when he is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to exempt income, AO can determine the amount of expenditure which should be disallowed in accordance with methods prescribed i.e. rule 8D of the IT Rules. Therefore, at the first instance, himself examine the claim of the assessee that no expenditure was incurred to earn exempt income and it is only thereafter, and only if the AO is not satisfied on this account, and after making reference to accounts, he is entitled to adopt the method prescribed under rule 8D of the IT Rules. Rule 8D of the IT Rules read as under:- "METHOD FOR DETERMINING AMOUNT OF EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME 8D(1) Where the Assessing Officer having regard to the accounts of the assessee of the previous year, is not satisfied with- (a) the correctness of the claim of expenditure made by the assessee ; or (b) the claim made by the assessee that no expenditure has been incurr....
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....ld that no disallowance can be made u/s 14A of the Act. The ground of appeal of revenue is dismissed. 8.4 The facts in the present case are identical to the facts in the case of Canara Bank (supra). Respectfully following the decision of the coordinate bench in the case of Canara Bank (supra) we hold that no disallowance under section 14A is warranted. Hence, the ground of appeal No.2.2 raised by the revenue is dismissed. 9. Ground No.2.3 challenges the finding of the CIT(A) granting relief on account of addition made on broken period interest. The facts set out by the Assessing Officer on the above addition are as under: "2. Broken period interest received on Government securities : 2.1 In the profit and loss account for the year ending March 31, 2008, the assessee-bank has credited an amount of Rs. 431,25,25,137 being interest on securities. As per the schedule A to the return of income, wherein the business income for the year has been worked out, an amount of Rs. 416,73,41,802 is said to be the gross interest on securities realised for the previous year i.e. the financial year 2007-08, leaving a balance amount of Rs. 14,51,83,335 being the interest due, but yet to b....
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....e followed by any class of assessee-bank or in respect of any class of income . . ." 2.5 According to these provisions, it is explicitly known that the assessee-bank cannot follow the dual method of accounting i.e. one method to arrive at the book profits and the other method to arrive at the taxable income in the return of income. After the substitution of section 145(1) and the deletion of the head of income 'Interest on securities', the assessee-bank should have offered the income from interest on securities on accrual basis only as that is the method of accounting consistently followed by it. Considering the above discus sions and careful reading of the section 145, it is concluded that the assessee-bank has understated its taxable income to the extent of interest due but not realised for this assessment year. So, the differ ence between the amount offered for taxation and the amount shown in the profit and loss account, i.e. interest on securities including interest accrued but not due is brought back to the tax net. 2.6 Accordingly, the difference of Rs. 14,51,83,335 (Rs. 431,25,25,137 (-) Rs. 416,73,41,802) is disallowed and added back to the total income.' 9.....
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.... section 145 now insists mercantile system of accounting where on the income accrued the tax can be levied whether or not received unlike in cash system. Merely because in the books of accounts the interest income, which is not due and payable is shown in the account of the assessee, that itself will not give right to A.O to tax unless it has become due and payable as per provisions of section 5 of the IT Act. In that view, the questions of law are answered against the revenue. Insofar as the factual situation is concerned, the AO has to redo the assessment regarding interest on the Government securities in light of the observations made above. Accordingly, the appeals are disposed of. The Assessing Authority while re-doing, shall give opportunity to the assessee by issuance of notice and giving opportunity of hearing." The decision of the ld.CIT(A) is in consonance with the law laid down by with the Hon'ble jurisdictional High Court in the case of the assessee, therefore, we do not find any reason to interfere with the order of the ld.CIT(A). The ground of appeal filed by the revenue is dismissed. 10. Ground Nos.2.4 and 2.5 challenge the finding of the ld.CIT(A) delet....
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....he assessee-bank for the previous year : Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubt ful debts account made under that clause ; Explanation.-For the purpose of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the asses see shall not include any provision for bad and doubtful debts made in the accounts of the assessee.' 3.5 As seen from the computation of income, the provision for bad and doubtful debts made in the books and claimed under section 36(1)(viia) is Rs. 54 crores and bad debts written off claimed under section 36(1)(vii) is Rs. 31,81,22,183. From the above, it is clear that the amount of bad debts written off and claimed under section 36(1)(vii) is subsumed in the provision for bad and doubtful debts made in the books of account and claimed under section 36(1)(viia) at Rs. 54 crores. 3.6 Hence, as per the proviso and its Explanation referred to above, the assessee-bank is not eligible to clai....
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....) of the Act. The case of the AO is that the assessee-bank had not written off bad debts in the books of account as it is only a mere provision and therefore, disallowed the claim. Then the question as to what is meant by write off. Similar issue had come up before the Hon'ble Apex Court in the case of Vijaya Bank (supra) wherein it was held that debiting the profit and loss account by an amount of provision for bad debts, reducing provision for bad and doubtful debts from debtors account in balance-sheet amounts to write off. In the present case, it is undisputed fact that provision for bad and doubtful debts was reduced from sundry debtors account in the balance-sheet. Therefore, it satisfies the law laid down by the Hon'ble Apex Court in Vijaya Bank (supra). The same reasoning was followed in the decisions cited by the learned counsel for the assessee-bank. The ld. CIT(A) also, after considering the law and the precedents on the issue, had come to the conclusion that it amounts to write off and the claim was allowed. Since the findings of the ld. CIT(A) are in line with the law laid down by the Hon'ble Apex Court, we uphold the order of the ld. CIT(A) and dismiss the....
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.... other banks - Rs. 6,44,93,357/-. 15.1 Being aggrieved by the assessment order, an appeal was preferred by the ld.CIT(A), who vide impugned order, granted relief on account of broken period interest and also on account of bad debts written off. However, the ld.CIT(A) confirmed the addition on account of disallowance u/s 14A of the Act and also u/s 40(a)(ia) of the Act. 15.2 Being aggrieved by this order both the assessee as well as the revenue is in appeal before us. 30. The assessee raised the following grounds of appeal in ITA No.1334/Bang/2012: Alleged estimated expenditure Rs. 3,41,48,167 1. The learned Assessing Officer and the Commissioner of Income- tax (Appeals) is not justified in adopting rule 8D for disallowance under section 14A of the Income-tax Act which gives an unrealistic result of more than three times more expenditure than the exempted income. 2. The learned Assessing Officer and the Commissioner of Income- tax (Appeals) both had failed to note that there is absolutely no inter est cost in investment yielding exempted income. The total accumu lated investment in securities yielding exempted income till March 31, 2009 is only Rs. 15,041 lakhs as ....
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....ailway receipts, warrants, debentures, certificates. scripts and other instruments, and securities whether transferable or negotiable or not ; the granting and issuing of letters of credit, traveller's cheques and circular notes ; the buying, selling and dealing in bullion and specie ; the buying and selling of foreign exchange including foreign bank notes ; the acquiring, holding, issuing on commission, under writing and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds ; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances ; the receiving of all kinds of bonds, scrips or valuables on deposits or for safe custody or otherwise ; the providing of safe deposit vaults ; the collecting and transmitting of money and secu rities ; The combined reading of section 5(b) and (c) (definition of banking) and section 6(a) (business of banking) clearly indicates that the securities and shares held as investment is for the purpose its business activities of dealing in the same. Dealing in investments and securities 6. T....
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....m the said income. It is not the case of the assessee retaining any shares so as to have the benefit of dividend. 63 per cent. of the shares, which were purchased, are sold and the income derived therefrom is offered to tax as business income. The remaining 37 per cent. of the shares are retained. It has remained unsold with the assessee. It is those unsold shares have yielded dividend, for which, the assessee has not incurred any payment of tax, if any expenditure is incurred in earning the said income, the said expenditure also cannot be deducted. But in this case, when the assessee has not retained shares with the inten tion of earning dividend income and the dividend income is inciden tal to his business of sale of shares, which remained unsold by the assessee, it cannot be said that the expenditure incurred in acquiring the shares has to be apportioned to the extent of dividend income and that should be disallowed from deductions. In that view of the matter, the approach of the authorities is not in conformity with the statutory provisions contained under the Act. Therefore, the impugned orders are not sustainable and require to be set aside.' 12. In the above case deci....
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....vide this office letter dated February 11, 2010. It is a known fact that there are certain expenses for earning these exempted income. The actual income which qualifies for exemption can be ascertained only after considering the expenses related to it and such expenses are disallowable under the provisions of section 14A of the Income-tax Act. Therefore, it was proposed to disallow the expenditure incurred with respect to exempt income in accordance with section 14A(2) read with rule 8D of the Income-tax Rules, 1962. The assessee-bank vide letter dated February 22, 2011 stated that there is no scope for utilisation of manpower in collecting income under the above sources and accordingly, the expenses involved is nil. The assessee-bank has further stated that it has a large amount of cost free funds, hence the investments do not have even the interest cost. The explanation offered by the assessee-bank is not acceptable, as any income earned should have the related expenditures attributed to it. The bank's contention that it has invested cost free funds on the tax-free investments is not acceptable, as these investments will always have notional interest cost attached to it. It i....
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.... such expenses along with the details of TDS compliance, were requested for vide this office letter dated February 24, 2011. In response, the assessee-bank has furnished the details vide its letter wherein it is seen that these payments relate to ATM maintenance charges, ATM replenishment charges, ATM secu rity charges and VISA fees. However, there is also a payment of Rs. 6,29,30,020 towards ATM usage charges of other banks. According to the assessee-bank, these payments cannot be quantified at any point of time. These payments are made to the National Financial Switch and Cash Tree consortium, who share these charges with the member banks. However, the charges paid is in respect of service being used by the account holders of the bank and hence the bank was bound to deduct tax, which it failed to do so, thereby not complied with the provisions of section 40(a)(ia) of the Income-tax Act 1961. Accord ingly, in view of the assessee-banks failure to deduct tax, the amount of Rs. 6,29,30,020 paid to NFS and cash tree is disallowed under section 40(a)(ia) of the Income-tax Act 1961. Similarly, the payments of Rs. 15,63,337 have been made to VISA for POS transaction on which tax has not....
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....13. Furthermore, the Hon'ble Supreme Court in the case of Kotak Securities (supra) held that consultancy managerial services involving services rendered by human efforts where services are made available to all customers and there is nothing special, exclusive or customer service charges, it does not par take character of managerial or Technical Services. In the light of this decision we hold that the assessee bank is not liable for tax deduction at source on these payments. We direct the Assessing Officer to delete addition on account of technical service. 18. In the result the appeal filed by the assessee is allowed. 19. The revenue raised the following grounds of appeal in ITA No.1369/Bang/2012: 1. The order of the learned Commissioner of Income-tax (Appeals) is opposed to law and facts of the case. 2.1 The learned Commissioner of Income-tax (Appeals) erred in allowing the relief to the assessee on the issue of the broken period of interest, accrued, on Government securities. 3 The learned Commissioner of Income-tax (Appeals) has failed to appreciate the fact that there is no ambiguity in respect of the date of accrual of the interest on Government secu....
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.....CIT(A) deleted the addition on account of (i) Broken period interest (ii) addition on account of bad debts written off and (iii) depreciation in the value of investments. 26. Being aggrieved, the assessee is in appeal before us in ITA No.1335/Bang/2012 and the revenue is in appeal in ITA No. 1397/Bang/2013. 27. The assessee raised the following grounds of appeal in ITA No.1335/ Bang/2012 : Non-applicability of section 115JB 1. The learned Commissioner of Income-tax (Appeals) failed to note that it is only the amendment brought by the Finance Act, 2012 that has covered all other forms of companies by introducing sub- section (2), clauses (a) and (b) to section 115JB. The amendment has made it clear that all other companies presenting balance-sheet in any other form other than under the provisions of Parts II and III of the Sixth Schedule to the Companies Act, 1956 are not exigible to section 115JB prior to the assessment year 2013-14. 2. The Commissioner of Income-tax (Appeals) also has failed to note the decision in the following cases wherein a similar issue is considered. (i) Krung Thai Bank PCL v. Joint DIT (International Taxation) [2010] 133 TTJ 435 (Mum) ; [....
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....ublic, repayable on demand, or otherwise, and withdrawable by cheque, draft, order or otherwise ; (c) "banking company" means any company which transacts the business of bonking in India.' Again section 6 of the Banking Regulation Act lists out Banking business as follows : 'Forms of business in which banking companies may engage.-(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business namely :- (b) the borrowing, raising, or taking up of money ; the lending or advancing of money either upon or without security ; the drawing, making, accepting ; discounting, buying, selling collecting and dealing in bills of exchange, hundis, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scripts and other instruments, and securities whether transferable or negotiable or not ; the granting and issuing of letters of credit, traveller's cheques and circular notes ; the buying, selling and dealing in bullion and specie ; the buying and selling of foreign exchange including foreign bank notes ; the acquiring, holding, issuing on commission, under writ....
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....r dividend and it is only incidental. As it is an incidental income, no expenditure can be alleged to be directly or indirectly related to earn the said income. The entire expenditure incurred to hold and dealing in the investments is pertaining to the business activity of holding investment to comply the twin statutory requirement i.e. SLR coupled with carrying on dealing in the same. 13. The appellate authority and the Assessing Officer has not considered the decision of the Karnataka High Court in re CCI Limited v. Joint CIT [2012] 71 DTR 141 (Karn) which is on all fours with the facts of the instant case. In the said case the hon'ble High Court has held as follows : 'When no expenditure is incurred by the assessee in earning the dividend income, no notional expenditure could be deducted from the said income, it is not the case of the assessee retaining any shares so as to have the benefit of dividend. 63 per cent. of the shares, which were purchased, are sold and the income derived therefrom is offered to tax as business income. The remaining 37 per cent. of the shares are retained. It has remained unsold with the assessee. It is those unsold shares have yielded d....
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....(Vishakhapatnam) v. Asst. CIT [2012] 70 DTR 81 (Visakha-Trib) [SB] 18. Any other grounds to be urged at the time of hearing. 28. Ground Nos.1 and 2 challenge the finding of the ld.CIT(A) that the assessee bank is liable to tax under section 115 JB of the Act. This issue is covered by the decision of the co-ordinate bench of Tribunal in the case of Canara Bank vs. Joint CIT in ITA Nos.979 & 1035/Bang/2013, 1440 & 1493/Bang/2014 and 903 & 931/Bang/2016 dated 15/09/2017 wherein it was held as follows: "13. Ground of appeal No.5 is on the applicability of the provisions of section 115JB of the Act. This issue had come up before the coordinate bench in the case of assessee for asst. year 2005-06 in ITA No.305/Bang/2011 dated 18/06/2012 wherein it was held as follows: '7. We have heard the rival submissions and considered the facts and material on record. There is no dispute about the fact that the assessee is a bank and in this assessee's case, the provisions of section 115JB have been invoked. There are at least two decisions of this Tribunal in the case of banking companies itself as listed below : (i) Union Bank of India v. Asst. CIT (I. T. A. Nos. 4702 a....
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....arned Commissioner of Income-tax (Appeals) has failed to appreciate the fact that the assessee-bank has followed the Reserve Bank of India guidelines for valuation of investment portfolio for the purpose of books but has treated the entire investments as stock-in- trade and valued the same as per the least of cost or market value, values for Income-tax purpose only thereby making a claim for a notional loss. Only real profit/loss can be recognised under the Income-tax Act and not the notional loss arrived at by valuing invest ment portfolio as per the LCM values. 3.2 The Central Board of Direct Taxes Circular No. 665 directs the Assessing Officers to approach the issue of valuation of investment portfolio held by the banks in line with the Reserve Bank of India guidelines issued from time to time. The learned Commissioner of Income-tax (Appeals) has not considered this circular properly. 4. The appellant craves leave to add, alter or amend all or any of the grounds of appeal before or at the time of hearing. 5. For these and such other grounds that may be urged at the time of hearing it is prayed that the order of the Commissioner of Income- tax (Appeals) may be cancelled ....
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....en period of interest and fall in value of investments. 40. Being aggrieved, both the assessee and the revenue of are in appeal before us. 41. The assessee raised the following grounds of appeal in I. T. A. No. 1335/ Bang/2013 : General 1.1 The learned appellate officer is not justified both in law and on facts of the instant case in sustaining of the huge disallowance and additions to returned income to the extent retained. 1.2 The appellate officer has erred in summarily rejecting the reasoning, legal support and the merits of the disputed items urged before him. Non-applicability of section 115JB 2.1 The appellate authority has erred in rejecting the claim that section 115JB is not exigible in the instant case as the profit and loss account and the balance-sheet is not drawn under Schedule VI to the Companies Act as required under the provisions ; whereas the appel lant bank's profit and loss account and balance-sheet is drawn and presented under section 29 read with the Third Schedule to the Bank ing Regulation Act, 1949. 2.2 The appellate officer and the Assessing Officer also has failed to note that Parliament extended the exigibility of section 11....
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....ty has failed to note that the Assessing Officer has not complied with the pre-conditions prescribed under section 14(2) and (3) and rule 8D before applying rule 8D for disal lowance. 7.2 The Assessing Officer has summarily applied rule 8D without examining the accounts and being 'satisfied' before applying disal lowance under section 14A/rule 8D. 7.3 The appellate authority has failed to note that recording pre satisfaction for rejecting the contention of the appellant is very essen tial and only on the basis of examining the accounts by him he should have been satisfied by cogent reason before applying rule 8D. 7.4 'Satisfaction' which is the essence and a pre-condition to invoke section 14A(2) and rule 8D is not made before invoking the said rule. The claim of the appellant that 'no expenditure' has been incurred is rejected without any justification. 7.5 The Assessing Officer has erred in invoking rule 8D only on the basis of suspicion and surmise and without justifiable/cogent reason. Unworkable law 8.1 The Assessing Officer and the appellate authority have failed to note that in applying computation provision under rule 8D(2)(ii) and ....
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....for settlement of accounts for ATM and other services by setting up a company under section 25 of Companies Act which has no taxable income. 10.6 The appellate authority has failed to note that the expend iture is not to an income assessable entity liable to TDS. It is a section 25 companies without any liability to tax. Reimbursing share of expenditure 10.7 The Assessing Officer also has failed to note that the debit is only sharing of the common expenditure between the different banks as per the arrangement made by the Reserve Bank of India. General 11. Any other grounds to be urged at the time of hearing. 42. Ground Nos.1 and 11 are general in nature and do not require any adjudication. 43. Ground No.2 challenges the finding of the ld.CIT(A) confirming the liability of the assessee-bank under section 115-JB of the Act. This issue is covered in favour of the assessee-bank by our decision in ITA No.1335/Bang/2012 for the assessment year 2010-11. For the reasons stated therein, we hold that the assessee-bank is not liable to tax under section 115 JB of the Act. Ground No.2 filed by the assessee is allowed. 44. Ground Nos. 3 to 8.2 challenge the findings of t....
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....accounting. 4. The learned Commissioner of Income-tax (Appeals) has failed to appreciate the fact that the assessee-bank has followed the Reserve Bank of India guidelines for valuation of investment portfolio for the purpose of books but has treated the entire investments as stock-in- trade and valued the same as per the least of cost or market value, values for Income-tax purpose only thereby making a claim for a notional loss. Only real profit/loss can be recognised under the Income-tax Act and not the notional loss arrived at by valuing invest ment portfolio as per the LCM values. 5. The Central Board of Direct Taxes Circular No. 665 directs the Assessing Officers to approach the issue of valuation of investment portfolio held by the banks in line with the Reserve Bank of India guidelines issued from time to time. The learned Commissioner of Income-tax (Appeals) has not considered this circular properly. 6. The appellant craves leave to add, alter or amend all or any of the grounds of appeal before or at the time of hearing. 7. For these and such other grounds that may be urged at the time of hearing it is prayed that the order of the Commissioner of Income- tax (App....