Deduction of Short fall in the value of securities cannot be disallowed only on the ground that in the books securities are valued as per RBI notification

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘C’: NEW DELHI

BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND

SHRI A.D.JAIN, JUDICIAL MEMBER

ITA No.6444/Del/1993

Assessment Year: 1987-88

M/s Punjab & Sind Bank,

H.O. A/c & Audit

Department,

38-39, Naraina Industrial

Area,

New Delhi.

(Appellant)

Vs.

Deputy Commissioner of Income Tax,

Special Range-14,

New Delhi.

 (Respondent)

Appellant by: Shri Vivek Gupta, CA.

Respondent by: Shri V.K.Saksena, CIT-DR.

ORDER

PER A.D.JAIN, JM:

This is assessee’s appeal for AY 1987-88, taking the following grounds:-

“a) Interest Suspense A/c Rs.4,99,27,967.00 That in the facts and circumstances of the case the learned CIT(A) without appreciating has passed a nonspeaking order. The learned CIT (A) has erred in confirming the addition in as much as :

i) it was established that no real income accrued or arose.

ii) the Supreme Court judgment 158 ITR 102 was not applicable, the facts in that case and this case being poles apart.

iii) the appellant bank, has consistently followed a method of accountancy that whenever a recoverable debt backed with sufficient security is available, the Interest Suspense merely presents a Memorandum of Parties with regard to when no real income arose. The order of the C.I.T. in sustaining the additions is a nonspeaking one and in utter disregard of the facts placed before him and is bad in law.

b) That the learned CIT (A) IV has erred in disallowing the following additions:-

1. Short fall in the market value of securities. - Rs.4,29,64,559.00

2. Depreciation of securities. - Rs.1,82,532.00

3. Donation u/s 80-G. - Rs.58,671.00

4. Inter corporate Dividend u/s 80-M. - Rs.47,133.00”

2. Apropos ground No.(a), the learned counsel for the assessee has placed on record the Tribunal order for AY 1984-85 (copy at APB-88) passed in assessee’s own case in ITA No.3858/Del/93. Therein, dealing with the issue at hand, the Tribunal has remitted the matter to the file of the Assessing Officer, to be decided afresh in the light of the directions given by the Tribunal in AY 1982-83 & 83-84. It has been observed as follows:-

“5. After going through the facts and material on record we are of the view that identical issue was there before the ITAT and the same stands restored back to the file of AO with certain direction. Facts and circumstances remaining the same herein also we restore the matter back to the file of AO for deciding the issue afresh in the light of direction given for A.Y. 1982-83 and 1983-84, of course after affording reasonable opportunity of being heard to the assessee.”

3. The facts remaining the same, in accordance with the aforesaid Tribunal order for AY 1984-85, for this year also, the matter is remitted to the file of the Assessing Officer, to be decided afresh as per the order in AY 1984-85.

4. So far as regards ground No.b(1), the learned counsel for the assessee has drawn attention to the Tribunal order (copy at APB-135 to 143), for AY 1986-87 in assessee’s own case in ITA No.6597/Del/94. Therein, the Tribunal has remitted the matter to the file of the Assessing Officer to decide it afresh in the light of the decision of the Hon’ble Supreme Court in the case of United Commercial Bank – 240 ITR 355 (SC). The Tribunal has observed as under:-

“14. in view of the above observation, we are of the view that the claim of the assessee could not be rejected merely on the ground that in the books of account the securities were being valued as per the notifications issued by the R.B.I. However, it is not clear from the orders of the lower authorities whether such securities were held by the assessee by way of stock in trade or by way of investment. It is also not clear as to what was the market value on the last date of the accounting year. In our view the matter should go back for denovo assessment on this issue in the light of the judgment of United Commercial Bank (supra). Accordingly, the order of the CIT(A) is set aside on this issue and the matter is restored to the  file of the A.O. for fresh adjudication in the light of the aforesaid Supreme Court judgment after examining all the necessary facts.”

5. Here also, since the facts are same as for the earlier year, the matter is remitted to the file of the AO, as done by the Tribunal in AY 1986-87 (supra), to be decided afresh in the light of the decision of the Hon’ble Supreme Court in United Commercial Bank (supra).

6. The learned counsel for the assessee has stated at the bar that ground No.b(2) is not pressed. The same is rejected as not pressed.

7. Apropos ground No. b(3) & b(4), the Assessing Officer has observed that the assessee did not file any evidence with regard to these issues. The learned counsel for the assessee has, however, submitted that the requisite evidence was, in fact, furnished before the Assessing Officer. He is, however, agreeable that if the matter is sent back to the Assessing Officer, he will again assist the fair assessment by furnishing proper evidence.

8. The learned DR does not oppose the remittance of the matter to the file of the Assessing Officer. Accordingly, these issues are also remitted to the Assessing Officer to be decided afresh in accordance with law, on providing due and adequate opportunity of hearing to the assessee.

9. In the result, the appeal is partly allowed, as indicated above.

Decision pronounced in the open Court on conclusion of hearing on 21st March, 2012.

                                                              Sd/-                           Sd/-

                                                 (G.D.AGRAWAL)        (A.D.JAIN)

                                               VICE PRESIDENT   JUDICIAL MEMBER

Dated: 21.03.2012

VK

Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT (A)

5. DR, ITAT

Assistant Registrar