TaxTMI 
TaxTMI 
2020 (12) TMI 301
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....DBODNo.BP.BC19/21.02.141/2011-12 dated 01.07.2011 enabled shifting of securities from one category to the other. The said circular categorically directed the banks to value the securities shifted from AFS to HTM category at the lower of book value (i.e., cost) or market value on the date of shifting. 2. Based thereon, the Applicant had claimed a deduction in respect of shifting loss of Rs. 159, 74,79,854 (arising on account of shifting securities from AFS to HTM category) by way of an additional ground before the CIT(A). The additional ground was admitted by the CIT(A) and the said deduction of shifting loss was allowed by the CIT(A) relying on the judgement of the Bombay High Court in the case of CIT v. HDFC Bank Ltd. [2014] 368 ITR 377. 3. However, the CIT(A) enhanced the assessment by making an addition of Rs. 3,43,236. The said amount represents reversal of the loss as there was a rise in the price of a security between the date of shifting and the end of the year. The market value of 7.56% GOI 2014 as on date of shifting was Rs. 158,51,31,384 while as on 31.03.2012, i.e., on the last date of the financial year was Rs. 158, 54,74,620. The amount of Rs. 3, 43, ....
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....the revised workings of the said loss before the Ld. CIT(A) which resulted in an enhancement of Rs. 3,42,336. We find that the assessee bad not provided any evidence before us to counter the said workings given before the Ld CIT(A) and hence we do not deem it fit to interfere in the said enhancement done by the Ld. CIT(A). However, the observations made by the Ld. CIT(A) for justifying the addition is not warranted. Accordingly, the ground No.8 of the revenue is dismissed and ground no.3 of the assessee is dismissed subject to removal of remarks by the Ld. CIT(A) as observed hereinabove." (emphasis supplied) Therefore, the Tribunal has in principle agreed that addition to income based on reversal of shifting loss on account of increase in value of shifted securities as at the year-end was not justified in view of the clear mandate of RBI requiring booking of such loss at the time of shifting and recording of such shifted securities at lower of book value or market value as on ,the date of shifting. In fact, it concludes that remarks in the CIT(A)'s order to that extent should be treated as removed. However, ground No.3 of Applicant's appeal has been dismissed as, a....
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....nal may be pleased to omit the following part from para 6.3 of its order and thereby allow ground No.3 of the Applicant's appeal: "We find that the assessee had not provided any evidence before us to counter the said workings given before the Ld. CIT(A) and hence we do not deem it fit to interfere in the said enhancement done by the Ld. CIT(A)." In view of the above, the Applicant prays that the Tribunal may be pleased to: (a) clarify the aforesaid position and allow ground No. 3 in the Applicant's appeal; (b) pass such further or other orders as the facts and circumstances of the case may require; (c) grant costs of and incidental to this present application. 2. By virtue of this miscellaneous application, the assessee seeks to expunge the observations made by this Tribunal in para 6.3 of the order and allow ground No.3 raised by the assessee. 3. We find that assessee is a bank and had held its securities as "stock in trade" both in Available For Sale category (AFS) and as well as in "Held to Maturity" (HTM) category. There is no dispute that the income derived from such securities had been duly offered by the assessee und....
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....merely complied with the directions of the ld. CIT(A) by furnishing the necessary details of valuation of securities as on 31/03/2012 in the prescribed format given by the ld. CIT(A) and the said details were furnished on without prejudice basis. While this is so, it would be wrong on the part of the ld. CIT(A) to conclude that assessee had filed revised valuation of losses on account of securities and observed that a sum of Rs. 3,43,236/- requires to be reversed thereon. So based on this working, the ld. CIT(A) had resorted to enhancement of Rs. 3,43,236/- on the valuation difference of securities by holding that the said valuation was not done in accordance with RBI guidelines. 5.1 Against this enhancement, the assessee was in appeal before us vide ground No.3. We find that this Tribunal in paragraph 6.2 and 6.3 of its order had categorically held that assessee had fully complied with RBI Circular dated 01/07/2011 with regard to valuation of securities at the time of shifting of securities from AFS to HTM category and this Tribunal had also held that the shifting loss incurred would be squarely allowable as deduction to the tune of Rs. 159,74,79,854/- . Having done so, the enh....