M/S. Janata Sahakari Bank Ltd.,, vs Department Of Income Tax

Janata Sahakari Bank Ltd., 1444, Shukrawar Peth, Pune - 411002 .... Appellant

PAN: AAAJJ0073G

Vs.

The Income Tax Officer, Ward 11(2), Pune .... Respondent

ITA No.235/PN/2014 Assessment Year: 2005-06

The Income Tax Officer, Ward 11(2), Pune .... Appellant

Vs.

Janata Sahakari Bank Ltd., 1444, Shukrawar Peth, Pune - 411002 .... Respondent

PAN: AAAJJ0073G

ITA No.236/PN/2014 Assessment Year: 2006-07

The Asst. Commissioner of Income Tax, Circle 11(1), Pune .... Appellant

Vs.

Janata Sahakari Bank Ltd., 1444, Shukrawar Peth, Pune - 411002 .... Respondent

PAN: AAAJJ0073G

ITA Nos.522 & 523/PN/2013 Assessment Years: 2007-08 & 2009-10

Janata Sahakari Bank Ltd., 1444, Shukrawar Peth, Pune - 411002 .... Appellant PAN: AAAJJ0073G

Vs.

The Income Tax Officer, Ward 11(2), Pune .... Respondent 2 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

And

ITA No.1872/PN/2013 Assessment Year: 2010-11

Janata Sahakari Bank Ltd., 1444, Shukrawar Peth, Pune - 411002 .... Appellant

PAN: AAAJJ0073G

Vs.

The Asst. Commissioner of Income Tax, Circle 11(1), Pune .... Respondent

Assessee by : Nikhil Pathak Revenue by : A K Modi

Date of hearing : 29-01-2015 Date of pronouncement : 25-02-2015

ORDER

PER SUSHMA CHOWLA, JM:

Out of this bunch of six appeals, cross appeals filed by the assessee and

Revenue are against the order of CIT(A)-I, Pune, dated 25.09.2013, relating to

assessment year 2005-06 against order passed under section 143(3) r.w.s. 263 of

the Income Tax Act, 1961. The Revenue is in appeal against the order of CIT(A)-I,

Pune, dated 25.09.2013 relating to assessment year 2006-07 against the order

passed under section 154 of the Income Tax Act, 1961. The assessee further has

filed appeals against consolidated order of CIT(A)-I, Pune, dated 28.12.2012 relating

to assessment years 2007-08 and 2009-10 against order passed under section

143(3) of the Act. Further, the assessee is in appeal against the order of CIT(A)-I,

Pune, dated 30.08.2013 relating to assessment year 2010-11 against order passed

under section 143(3) of the Act.

2. All the appeals relating to the same assessee were heard together and are

being disposed of by this consolidated order for the sake of convenience.

3. First we shall take the cross appeals filed by the assessee and the Revenue

relating to assessment year 2005-06.

3

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

4. The assessee has raised the following grounds of appeal in ITA

No.21/PN/2014:-

1] The learned CIT(A) erred in not allowing the entire loss of Rs.29,29,15,335/- incurred by the assessee bank on account of conversion of AFS securities to HTM securities.

2] The learned CIT(A) erred in allowing 1/5th of the total loss of Rs.29,29,15,335/- without appreciating that the entire loss incurred by the assessee bank was allowable as a deduction while computing the income of the assessee bank.

3] The learned CIT(A) erred in not allowing the amount of Rs.

1,44,31,124/- being the amount of premium amortized on HTM securities without appreciating that the said amount was allowable in view of the RBI guidelines and hence, the same should have been allowed while computing the total income of the assessee bank.

4] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.

5. The Revenue has raised the following grounds of appeal in ITA

No.235/PN/2014:-

1. On the facts and in the circumstances of the case, the Learned Commissioner of Income -tax (Appeals) erred in directing that the assessee be allowed I/5th of the depreciation (loss) resulting from the shifting of securities from the AFS category to HTM category only on the ground that as per the RBI circular the assessee was required to amortize the resultant depreciation (loss) over a period of five years.

2. On the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals) erred in failing to appreciate that securities in the HTM category are in the nature of capital assets and, therefore, any loss pertaining thereto could be allowed as deduction only at the time of transfer of sale or sale of such securities and that too in the computation of income under the head "Capital Gains" and not in any other manner.

3. On the facts and in the circumstances of the case, the Learned Commissioner of Income-tax erred in allowing I/5th of the impugned depreciation merely because as per the RBI circular the assessee was to amortize depreciation (loss) for over a period of five years, and in gross disregard of the fact that a circular issued by the RBI cannot supersede the Income-tax Act, 1961, and, there is no provision in the Income-tax Act, 1961 which recognizes or permits the impugned amortization.

4 The appellant craves leave to add, alter or amend any or all the grounds of appeal.

6. The grounds of appeal No.1 raised by the assessee is against the non-

allowance of loss on account of conversion of AFS securities to HTM securities

amounting to Rs.29,29,15,335/-. Vide ground of appeal No.2, the assessee is

aggrieved by the order of CIT(A) in allowing only 1/5th of the total loss in the year 4 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

under appeal and though as per the assessee, the entire loss was allowable as a

deduction.

7. The grievance of the Revenue vide grounds of appeal Nos.1 to 3 is against

the allowance of 1/5th of the loss resulting from shifting of securities from AFS to HTM

category.

8. The brief facts of the case are that, original assessment was completed vide

assessment order passed under section 143(3) of the Act on a net loss of

Rs.25,73,01,810/- vide order dated 26.12.2007. The CIT on perusal of the

assessment records noted that certain issues were not considered by the Assessing

Officer in the original assessment proceedings and the order of the Assessing Officer

was found to be erroneous and prejudicial to the interest of Revenue on (i)

depreciation loss on investment amortized at Rs.29,29,15,335/- was allowed, (ii) sum

of Rs.1,44,31,124/- debited on account of premium on investment amortized, and (iii)

sum of Rs.5,15,25,300/- was debited on account of depreciation on investments -

others, being loss on sale of securities. As per the CIT, the said loss was wrongly

allowed as business loss as HTM securities were in the nature of capital assets and

loss incurred on sale of those securities was a capital loss. Consequent thereto, the

CIT-I, Pune passed order under section 263 of the Act, dated 31.03.2010 and the

issues were set-aside to the file of Assessing Officer for examination. The Assessing

Officer in the second round of assessment proceedings in relation to the issue of

depreciation (loss) on investments amortized at Rs.29,29,15,335/- noted that the

assessee had shifted AFS securities to HTM securities. During shifting of the same,

the assessee had valued the investment at the market rate prevailing on the date of

shifting which had resulted in the loss, which was debited to Profit & Loss Account.

The Assessing Officer noted that as per RBI guidelines, the banks were allowed to

shift securities from one category to the others and on such shifting, if it results in any

depreciation in value of investments, the same can be claimed as deduction in the

Profit & Loss Account. However, under the Income-tax Act, loss arising on such

shifting of securities from AFS to HTM securities, was not an allowable deduction.

Consequently, the loss of Rs.29,29,15,335/- was disallowed. 5

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

9. The second issue of amount of Rs.1.44 crores debited on account of premium

on investment amortized was also in accordance with the RBI Circulars. The

Assessing Officer was of the view that the premium on investment amortized was

regarding HTM securities which are in the nature of capital assets and they had to be

valued at cost only, hence, the deduction was not allowed to the assessee.

10. Another addition was made by the Assessing Officer on account of amount

debited to Profit & Loss Account under the head depreciation on investments - others

at Rs.5.15 crores. The plea of the assessee was that the said loss did not relate to

HTM securities, but included two types of loss i.e. one from shifting HFT to AFS

category and the second relating to loss suffered on sale of securities. Since the loss

had arisen on shifting from HFT to AFS category, the same was allowed by the

Assessing Officer.

11. Before the CIT(A), the learned Authorized Representative for the assessee

pointed out that the order passed by the CIT under section 263 of the Act was

challenged before the Pune Bench of the Tribunal and the said appeal was decided

vide order dated 31.05.2013. It was further pointed out by him that the Tribunal had

allowed the assessee to claim depreciation / loss arising on conversion of the

category of securities from AFS to HTM to the extent of 1/5th each year for a period of

five years. The learned Counsel, despite the order of Tribunal, further stressed that

the shifting of securities was as per the guidelines of RBI and the loss on investment

amortized should be allowed in entirely in assessment year 2005-06. With regard to

the other issue of disallowance of amortized premium on HTM investment amounting

to Rs.1,44,31,124/, it was pointed out by the learned Authorized Representative for

the assessee that the Tribunal had disallowed the claim of the assessee in its

entirety. However, the claim was made to allow the said expenditure in entirety. The

CIT(A) in line with the order of the Tribunal in ITA No.819/PN/2010 relating to

assessment year 2005-06 vide order dated 31.05.2013 directed the Assessing Officer

to allow 1/5th of the total depreciation loss of Rs.29.29 crores for the year under

consideration. In other words, depreciation of Rs.5,85,83,066/- was directed to be

allowed in the hands of the assessee. On the other issue of amortization of premium 6 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

on HTM securities, the CIT(A) referred to the ratio laid down by the Hon'ble Apex

Court in Southern Technologies Ltd. Vs. JCIT (2010) 320 ITR 577 (SC) and pointed

out that the RBI guidelines or the prudential norms issued by the RBI were not

intended to regulate the Income-tax laws. Consequently, the disallowance of

amortization of premium on investments of Rs.1.44 crores was upheld by the CIT(A).

12. The assessee is in appeal against both the additions made by the CIT(A).

The Revenue has also challenged the directions of CIT(A).

13. The learned Authorized Representative for the assessee pointed out that the

CIT(A) had applied the ratio laid down by the Tribunal in the order passed under

section 263 of the Act and disallowed 1/5th out of total loss claimed on transfer of

securities from AFS to HTM. In respect of the second issue i.e. amortized premium

on HTM securities, the learned Authorized Representative for the assessee pointed

out that upto assessment year 2006-07, the assessee was valuing the same at face

value or cost, whichever was less and basically the said securities were being valued

at cost. However, from assessment year 2007-08, they were valued at cost of market

value, whichever was less.

14. The learned Departmental Representative for the Revenue placed reliance on

the orders of authorities below.

15. We have heard the rival contentions and perused the record. The first issue

arising in the present appeal is in relation to the loss arisen on shifting of securities

from category of AFS to HTM as per the RBI guidelines issued on this account. The

disallowance has been made in the hands of the assessee pursuant to the directions

of the CIT-I, Pune vide order passed under section 263 of the Act. The assessee had

appealed against the order passed under section 263 of the Act and the Tribunal vide

order dated 31.05.2013 had after considering the issue of claim of loss arisen on the

shifting of securities from AFS to HTM had held that the said depreciation loss is to be

amortized over a period of five years. The directions of the Tribunal were as under:-

"9. We therefore, hold that the method adopted by the assessee for valuing the securities while changing the category i. e. from AFS to HTM is as per the RBI circular and hence this is the accepted method. At the same time, we find that as per RBI circular assessee is to amortize depreciation (loss) for 7 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

the period of five years. In this case the assessee in the P & L A/c, debited l/5th of the depreciation (loss) but by filing revised return the entire depreciation (loss) has been claimed. In our opinion, that is not as per the RBI circular. We therefore, uphold the order of the Ld. CIT to the extent that entire depreciation (loss) claimed by the assessee on conversion at the time of changing category of the securities from AFS to HTM is not as per law but the assessee at the most can claim depreciation (loss) to the extent of 1/5th each year for the period of Jive years. We accordingly direct the AO to allow the depreciation (loss) to the extent of 1/5th of the total depreciation (loss) of Rs.29,29,15,335/- and to the extent we hold that the assessment order is erroneous."

16. In line with the directions of the Tribunal which have not been disturbed by any

of the higher forums, we hold that the assessee is only entitled to the claim to the

extent of 1/5th of the depreciation (loss) arising on transfer of securities from AFS to

HTM. The CIT(A) having followed the directions of the Tribunal, cannot be faulted

with. Accordingly, we uphold the order of CIT(A) in this regard and dismiss the

grounds of appeal Nos.1 and 2 raised by the assessee and grounds of appeal Nos.1

to 3 raised by the Revenue.

17. The issue in ground of appeal No.3 raised by the assessee before us is with

regard to non-allowance of premium amortized on HTM securities amounting to

Rs.1,44,31,124/-. The said issue also arose before the Tribunal (supra) and vide

order dated 31.05.2013, it was held as under:-

"10. So far as the second issue is concerned which is also the basis for exercising the revisionary jurisdiction, we find that there is force in the argument of the Ld. CIT (DR). The assessee consistently took the stand that even the securities held in the category of HTM are part of the stock in trade. The assessee's contention that the premium is to be separated from the face value of securities. We are unable to accept the said contention of the assessee. If the assessee has paid premium as a cost of acquisition of the securities, it should remain as a composite cost for acquiring the securities subject to its valuation at the end of each year as prescribed by RBI and no separate treatment can be given to the premium paid by the assessee. For example, if the assessee has acquired securities having face value of Rs.100/-for Rs, 110/- so the cost of acquisition of the said security is Rs.110/- as that will merge with the stock in trade. The assessee can value the securities at the end of the year as per the consistent method followed by the assessee i.e. cost or market price whichever is low but no separate treatment can be given to Rs.10/- which is the price over and above the face value of the security. We therefore, uphold the order of the Ld. CIT on the second issue. The A. O. was wrong in allowing claim of the assessee in respect of amortization of the premium paid for securities to the extent of Rs.1,45,31,124/-. Accordingly the order passed by the Ld. CIT u/s. 263 is modified with a direction to A.O. to implement the order u/s. 263 as directed in this order."

18. The facts relating to the issue are that as per the guidelines of RBI, the banks

are entitled to keep its investments under three categories i.e. Held To Maturity 8 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

(HTM), Available For Sale (AFS) and Held For Trading (HFT). The HTM securities

are in the nature of premium investment and are to be kept by the banks still the date

of maturity. However, the AFS and HFT securities are in the nature of current

investments and can be sold by the banks before the date of maturity. As per the

guidelines of RBI with regard to current and permanent investments issued from time

to time, the banks are permitted to change investments from one category to the

other, subject to the condition that overall ratios of current to permanent investments

are maintained as per the RBI requirements. The guidelines also prescribe that the

investments classified as HTM securities are to be carried at acquisition cost. In the

facts of the present case, the assessee had parked funds in HTM securities and

during the year, the assessee had not shifted the securities to any other category.

The premium paid on government securities were amortized in the books of account

and the plea of the assessee was that the said premium was to be separated from

the face value of the securities and booked as expenditure. The Tribunal in the case

of the assessee had held that even where the assessee had paid premium as cost of

acquisition of the securities, the same should remain as composite cost for acquiring

the securities, subject to valuation at the end of each year as prescribed by the RBI

and no separate treatment could be given to the premium paid by the assessee.

Admittedly, the assessee was following the method of valuing its HTM securities at

face value or cost. In view thereof, we find no merit in the ground of appeal No.3

raised by the assessee in this regard. The CIT(A) had dismissed the claim of the

assessee in line with the order of Tribunal in appeal against the order of revision

passed under section 263 of the Act on this count. Upholding the order of CIT(A), we

find no merit in the ground of appeal No.3 raised by the assessee and the same is

dismissed.

19. As a result, both the appeals of assessee and the Revenue relating to

assessment year 2005-06 are dismissed.

20. The Revenue in ITA No.236/PN/2014 has raised the following grounds of

appeal:-

1 On the facts and circumstances of the case the learned Commissioner of Income-tax (Appeals) erred in cancelling the order passed u/s.154 of the 9 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

Act by the Assessing Officer holding that the mistake sought to be rectified was not a patent mistake apparent from records.

2 On the facts and circumstances of the case the learned Commissioner of Income-tax (Appeals) erred in not appreciating that the assessee had itself added back the premium on investment amortized for the A.Y.2007-08 and A.Y.2008-09 in the computation of income while the Assessing Officer had disallowed it for A.Y.2005-06.

3 On the facts and circumstances of the case the learned Commissioner of Income-tax (Appeals) relying upon the binding decision of the Hon'ble Income-tax Appellate Tribunal in assessee's own case for A.Y.2005-06 allowed the appeal in favour of the assessee rather than cancelling the order u/s.154 of the Act passed by the Assessing Officer.

4 On the facts and circumstances of the case the learned Commissioner of Income-tax (Appeals) erred in holding that merely because the assessee had filed an appeal against such addition which has been allowed in his favour, the issue has become debatable not covered u/ s. 154 of the Act.

5 For these and such other grounds as may be urged at the time of hearing, the order of the learned CIT (Appeals) may be vacated and that of the Assessing Officer be restored.

6 The appellant craves leave to add, alter or amend any or all the grounds of appeal.

21. The brief facts relating to the appeal are that order under section 154 of the

Act was passed by the Assessing Officer, pursuant to the order passed by the

Assessing Officer in assessment year 2005-06 under section 143(3) r.w.s 263 of the

Act, dated 23.12.2010. On verification of the assessment folder, it was noted that the

assessee had debited premium on investment amortized at Rs.3,90,09,806/-. The

Assessing Officer noted that the said premium on investment amortized was

disallowed in assessment year 2005-06 and the same has been added by the

assessee while computing the total income for assessment year 2007-08 and 2008-

09. Consequent thereto, the Assessing Officer passed an order under section 154 of

the Act and added back premium on investment amortized at Rs.3,90,09,806/- to the

total income of the assessee.

22. In appeal, the CIT(A) held that the issue relating to the admissibility of

amortization of premium as deduction under Income Tax Act was highly debatable

and contentious in nature. Reference was made to the ratio laid down by the Pune

Bench of the Tribunal in assessee's own case in ITA No.819/PN/2010 relating to

assessment year 2005-06, wherein vide order dated 31.05.2013, the Assessing

Officer was directed to allow the expenditure to the extent of 1/5th of the total 10 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

depreciation loss. However, the Tribunal in the case of another assessee in

subsequent order dated 05.08.2013 in the case of Kallappanna Awade Ichalkaranji

Janata Sahakari Bank Ltd. in ITA No.449/PN/2012, relating to assessment year 2008-

09, had taken a contrary view and the addition made on account of amortization of

HTM securities was deleted. The CIT(A) further observed that merely because the

assessee himself had added premium on investment amortized while computing the

total income for assessment years 2007-08 and 2008-09, does not make the issue

plain and not debatable and the same could be subject matter of rectification under

section 154 of the Act. Reliance in this regard was placed on the ratio laid down by

the Hon'ble Supreme Court in Volkart Brothers Vs. ITO reported in 82 ITR 50 (SC).

Thus, the order passed by the Assessing Officer under section 154 of the Act was

cancelled by the CIT(A).

23. The Revenue is in appeal against the said cancellation of the order passed

under section 154 of the Act.

24. The learned Departmental Representative for the Revenue pointed out that

the amendment was made by the Assessing Officer to the original assessment order

passed only in line with the directions of the Tribunal and also because of assessee's

non-claim in assessment years 2007-08 and 2008-09.

25. The learned Authorized Representative for the assessee pointed out that the

order under section 154 of the Act was passed prior to the passing of order of

Tribunal in the assessee's own case. In appeal against order passed under section

263 of the Act, the contention of the learned Authorized Representative for the

assessee was that the issue was debatable as the present issue was pending before

the Hon'ble High Court. With regard to the writing back the said amount in

assessment years 2007-08 and 2008-09 in the computation of income itself, the

learned Authorized Representative for the assessee pointed out that there was

change in the method of valuation and hence the same was added back. Reliance

was placed on the ratio laid down by the Hon'ble Calcutta High Court in 130 ITR 710

(Cal) and also on the ratio laid down by the Hon'ble Supreme Court in Mepco

Industries Ltd. Vs. CIT & Another (2009) 319 ITR 208 (SC). 11

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

26. We have heard the rival contentions and perused the record. Under the

provisions of section 154 of the Act, an order of assessment or an intimation issued

under section 143(1) of the Act or section 200A(1) of the Act or any other order

passed by any income tax authority referred to in section 116 of the Act, can be

amended with a view to rectify any mistake apparent from the record. The first step

to be seen before invoking the provisions of section 154 of the Act is that there is a

mistake apparent from the record which can be rectified by the income tax authority

who had passed the said order under the provisions of the Act. It has been held by

the courts time and again that the debatable issues are not open to rectification under

section 154 of the Act. The Hon'ble Supreme Court in Volkart Brothers Vs. ITO

(supra) had held as under:-

"A mistake apparent from the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. A decision on a debatable point of law is not a mistake apparent from the record. The power of the officers mentioned in s. 154 of the IT. Act, 1961 to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record".

27. The mistake apparent from the record must be obvious and patent mistake.

Further, the decision on a debatable point of law is not a mistake apparent from

record. In the facts of the present case, the Assessing Officer in the original round of

assessment proceedings had allowed the claim of deduction on account of premium

on investment amortized at Rs.3,90,09,806/-. However, pursuant to the order passed

by the Assessing Officer relating to assessment year 2005-06 under section 143(3)

r.w.s. 263 of the Act, the said amount was added back to the income of the assessee

while passing the order under section 154 of the Act. The plea of the assessee in this

regard was that the issue being debatable could not be amended by resorting to the

provisions of section 154 of the Act. The first plea raised by the assessee in this

regard was that though the Tribunal in the appeal filed against the order passed

under section 263 of the Act, had directed the Assessing Officer to allow only 1/5th of

the total expenditure as deduction, but the said order was passed on 31.05.2013,

whereas the Assessing Officer had passed the order under section 154 of the Act on

19.03.2013 i.e. prior to passing of the order by the Tribunal. The second aspect 12 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

raised by the learned Authorized Representative for the assessee was that the

subsequent decision of the Tribunal could not be applied to pass an order of

amendment / rectification under section 154 of the Act. Another aspect raised by the

learned Authorized Representative for the assessee was that the issue was

debatable as the assessee itself was in appeal against the order of Tribunal relating

to assessment year 2005-06, which was pending before the Hon'ble High Court. Our

attention was also drawn to the order of CIT(A) which had referred to the order of the

Tribunal in assessee's own case, wherein only 1/5th of the premium amount

amortized on HTM securities was allowed as a deduction. However, in the case of

another assessee, the Tribunal had allowed the said amount in totality as a

deduction.

28. In the totality of the above said facts and circumstances, we find merit in the

plea of the assessee in this regard. In order to resort to the provisions of section 154

of the Act, the first step to be considered is whether the amendment sought for is

patent and glaring mistake apparent from the record. The admissibility of

amortization of premium on HTM securities as a deduction or not under the Income

Tax Act is a debatable issue as is clear from the fact that the Pune Bench of the

Tribunal in assessee's own case vide order dated 31.05.2013 had directed the

Assessing Officer to allow 1/5th of the said expenditure. Further, the Tribunal in

another decision dated 05.08.2013 had allowed the said expenditure in totality. The

assessee is also in appeal against the order passed by the Tribunal in order passed

under section 263 of the Act and the matter is pending before the Hon'ble High Court

and hence, the issue became debatable. Further, in any case, the Assessing Officer

had exercised the powers under section 154 of the Act prior to the passing of order of

the Tribunal dated 31.05.2013. Such exercise of the power by the Assessing Officer

under section 154 of the Act is invalid. Even otherwise, in order to give effect to the

finding of Tribunal in a year different from the year under consideration, the Hon'ble

Supreme Court in Mepco Industries Ltd. Vs. CIT (supra) had held that the right to

rectify mistakes under section 154 of the Act could not be invoked in a case of mere

change of opinion. In the facts of the case before the Hon'ble Supreme Court, the

said power was exercised under section 154 of the Act subsequent to the decision of 13 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

Hon'ble Supreme Court on the issue of subsidiary received after commencement of

production, was revenue receipt, which was originally held to be not taxable on the

ground that it was capital receipt. The Hon'ble Supreme Court in Mepco Industries

Ltd. Vs. CIT (supra) further held that a rectifiable mistake was a mistake which was

obvious and not something which had to be established by a long drawn process of

reasoning or where two opinions were possible. A decision on a debatable point of

law could not be treated as a "mistake apparent from the record."

29. Following the said proposition laid down by the Hon'ble Supreme Court, we

hold that the order of rectification passed by the Assessing Officer in the present case

under section 154 of the Act was not valid. Upholding the order of CIT(A), we dismiss

the grounds of appeal raised by the Revenue.

30. In ITA Nos.522 and 523/PN/2013, the assessee has raised the common

grounds of appeal, which read as under:-

1. The learned CIT(A) erred in upholding the action of the learned A.O. in disallowing the depreciation of Rs. 37,11,50,795/- in the value of 'Held to Maturity' securities claimed by the assessee bank.

2. The learned CIT(A) erred in holding that the 'HTM' securities were in the nature of capital assets of the bank and hence, the same were to be valued at cost of acquisition and not at cost or market value, whichever is lower.

3. The learned CIT(A) erred in holding that the 'HTM' securities were in the nature of investments and not stock in trade by stating the following reasons -

a. The 'HTM' securities held by the assessee bank were in the nature of investments having regard to the principles laid down by CBDT Circular No. 4 of 2007 dated 15.06.2007.

b. There were only a few occasions where the assessee bank had sold the HTM securities before maturity in the earlier years and holding of the same till maturity had resulted in handsome profits for the assessee bank and hence, the intention of the assessee bank was to hold the HTM securities till maturity.

c. In view of the decision of Hon'ble Karnataka High Court in the case of ING Vyasya Bank Ltd. [ITA No. 2886 of 2005], the HTM securities held by the assessee bank were in the nature of capital assets.

d. The decision of Hon'ble Supreme Court in the case of UCO Bank Ltd.

vs. CIT [240 ITR 355] was distinguishable on facts and hence, not applicable to the instant case.

4. The learned CIT(A) failed to appreciate that the HTM securities held by the assessee bank were in the nature of stock in trade and not capital assets and hence, for Income Tax purposes, the same were to be valued at cost or market value, whichever is lower.

14

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

5. The learned CIT(A) ought to have appreciated that -

a. All the securities purchased by a bank are to be considered as part of the stock in trade for Income Tax purposes.

b. The entries in the books of accounts were not determinative of the correct nature of the securities purchased by the bank and hence, the classification of the securities made by the assessee in the books was not relevant.

c. The activity of purchase and sale of securities was in the course of the normal banking business of the assessee bank and hence, the said securities were in the nature of stock in trade.

d. Even though the securities were classified in HTM category, the bank was permitted to sell them before the maturity date and hence, it was not correct to hold that HTM securities were capital assets of the assessee bank.

e. The issue involved was covered in favour of the assessee bank by various decisions and the decisions relied upon by the learned CIT (A) were distinguishable on the facts of the present case.

6. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.

31. The assessee also raised additional ground of appeal, which reads as under:-

"The assessee submits that without prejudice to its grounds of appeal raised in A.Y. 2005-06, it is submitted that in this year, 1/5th of the loss incurred of Rs.29,29,15,335/- in A.Y. 2005-06 on account of conversion of securities from AFS to HTM category should be allowed in accordance with the decision of Hon'ble ITAT, Pune for A.Y. 2005-06 in the assessee's own case."

32. The assessee vide grounds of appeal Nos.1 to 5 has raised the issue of

allowance of depreciation loss of Rs.37,11,50,795/- in assessment year 2007-08 and

Rs.5,19,40,000/- in assessment year 2009-10 on account of amortization of premium

on HTM securities.

33. The brief relating to the issue are that during the year under consideration, the

assessee claimed that it has changed its method of valuation of HTM securities and

the same were valued at cost or market value, whichever was less, principle. The

Assessing Officer was of the view that HTM securities had to be valued at cost only

and not cost or market value, whichever was less or any other principle. However,

AFS and HFT securities were to be valued at cost or market value, whichever was

less. The plea of the assessee that the claim was made as per the RBI guidelines

was rejected as the same was not allowable under Income Tax Act, as all the capital

assets were to be valued at cost only and no part thereof could be claimed as 15 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

revenue expenditure in computing the total income. Pursuant thereto, the Assessing

Officer disallowed the loss from depreciation on HTM securities at Rs.37,11,50,795/-

in assessment year 2007-08 and Rs.5,19,40,000/- in assessment year 2009-10.

34. The CIT(A) vide consolidated order decided the issue holding that the

guidelines of RBI were issued for the purpose of considering management and

control of the monetary and credit system of the country, but such guidelines had

nothing to do and could not over write the method of computation of taxable income.

Reliance in this regard was placed upon the ratio laid down by the Hon'ble Supreme

Court in Southern Technologies Ltd. Vs. JCIT (supra). The CIT(A) considered the

fact that the said judgment related to non-banking financial company, but there was

no reason as to why the same rationale would not apply to the banking companies.

The CIT(A) further deliberating upon the issue observed that where the investment in

question comprised of stock in trade of the assessee, the assessee was entitled to

value the same at cost or market value, whichever was lower and such valuation

could be made irrespective of the necessary entries being made in the books of

account. However, where the investments were not stock in trade, but were held as

an investment by the assessee, then the same had to be valued at cost and the

depreciation in the value of investment in question was not allowable as a deduction

in computing business income of the assessee.

35. The assessee is in appeal against the order of CIT(A).

36. It was pointed out by the learned Authorized Representative for the assessee

that assessment year 2007-08 was the first year of change in the method of

accounting and the HTM securities were valued at cost or market value, whichever

was lower. The learned Authorized Representative for the assessee further pointed

out that as per the RBI guidelines, the HTM securities had to be valued at cost or

market value, whichever was less and in the return of income after valuing the HTM

securities at cost or market value, whichever was less, the assessee had claimed

depreciation on value of securities. It was the plea of learned Authorized

Representative for the assessee that it was a bonafide change and this change in

method of valuing the securities was an accepted method of accounting. It was 16 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

further pointed out by the learned Authorized Representative for the assessee that all

the securities were stock in trade and even the HTM securities could be shifted to

HFT or AFS securities. The learned Authorized Representative for the assessee

placed reliance on the ratio laid down by Pune Bench of the Tribunal in ACIT Vs.

Bank of Maharashtra in cross appeals filed by the assessee in ITA No.1505/PN/2008

and Revenue in ITA No.1618/PN/2008, both relating to assessment year 2005-06,

ITA Nos.1135 to 1138/PN/2013 and ITA Nos.1219 to 1222/PN/2013, relating to

assessment years 2006-07 to 2009-10, wherein the Tribunal had allowed the claim of

assessee in turn, relying on the ratio laid down by the Hon'ble Karnataka High Court

in Karnataka Bank Ltd. Vs. ACIT (2013) 356 ITR 549 (Kar). Another reliance was

placed upon the ratio laid down by Pune Bench of the Tribunal in the Cosmos Co-op

Bank Ltd. Vs. DCIT in ITA Nos.460 & 461/PN/2012, relating to assessment years

2007-08 and 2008-09 and in Latur Urban Co-Op. Bank Limited Vs. DCIT in ITA

No.778/PN/2011 & ACIT Vs. Latur Urban Co-op. Bank Limited in ITA

No.792/PN/2011, both relating to assessment year 2007-08.

37. In respect of additional ground of appeal filed by the assessee, the learned

Authorized Representative for the assessee fairly pointed out that a similar issue was

considered by the Pune Bench of the Tribunal in ACIT Vs. Bank of Maharashtra

(supra) and the issue was set-aside to the file of Assessing Officer for necessary

verification.

38. The learned Departmental Representative for the Revenue placed reliance on

the orders of authorities below.

39. We have heard the rival contentions and perused the record. The issue

arising before us relates to the allowance of amortization of premium on HTM

securities. The assessee from assessment year 2007-08 had changed the method of

accounting for valuing its HTM securities. As per the banking norms, the assessee

was to hold its investments in three categories i.e. HTM, AFS and HFT. The

assessee upto assessment year 2006-07 was valuing the HTM securities at face

value or cost, whichever was less as per the RBI guidelines. However, AFS and HFT

investments were being valued at cost or market value, whichever was less. There is 17 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

no dispute with regard to the valuation of AFS and HFT securities or the loss arising

on the amortization of the respective premiums. During the year under consideration,

after adopting the change in method of accounting for valuing its HFT securities at

cost or market value, the assessee had claimed depreciation on value of securities

amounting to Rs.37,11,50,795/- in assessment year 2007-08 and Rs.5,19,40,000/- in

assessment year 2009-10. This change was adopted by the assessee in return of

income filed for the year under consideration as is evident from the computation of

income filed at pages 1 to 3 of the Paper Book. The assessee had booked the

deduction on account of investment at cost price or market price, whichever was less

on account of all securities i.e. HTM, AFS and HFT at Rs.55,40,28,096/- in

assessment year 2007-08. Admittedly, the Assessing Officer had allowed the claim

of the assessee vis-à-vis depreciation on value of securities relating to AFS, HFT in

the assessment order passed under section 143(3) of the Act. However, the

depreciation (loss) arising on account of valuation of the HTM securities at cost or

market price, whichever was less, amounting to Rs.37,11,50,795/- was not allowed by

the Assessing Officer while completing assessment for assessment year 2007-08.

Similarly, in assessment year 2009-10, the Assessing Officer disallowed

Rs.5,19,40,000/-.

40. The assessee is in appeal before us against the said non-allowance of

depreciation on the value of HTM securities. We find that similar issue arose before

the Pune Bench of the Tribunal in ACIT Vs. Bank of Maharashtra (supra), wherein the

facts of the case were similar, as to the assessee therein upto previous year ending

31.03.2004 was valuing the HTM securities at cost only and AFS, HFT securities

were valued as per RBI guidelines. However, during the assessment year 2005-06,

the assessee changed its method of portfolio of securities / investment for the

purpose of income tax at lower of the cost or market value, which method was

consistently followed by the assessee in the subsequent years. The assessee

therein claimed a loss of Rs.359.24 crores on valuation of closing stock or securities

by way of filing a revised return, which was not allowed by the Assessing Officer. The

Tribunal after deliberating upon the issue vide paras 14 and 15 observed as under:- 18

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

"14. Now, we may consider the claim of the assessee of loss on valuation of closing stock of securities at Rs.359,24,58,508/- on account of the change in the method of valuation of securities undertaken for the first time during the year under consideration. The assessee has valued all the securities, including the HTM securities, as on the last day, i.e. 31.03.2005 at lower of cost or market value. So far as the valuation of AFS and HFT securities is concerned, the Revenue has accepted the stand of the assessee because according to the Revenue such securities represent stock-in-trade of the assessee bank and thus the valuation of such securities at the year end at the lower of cost or market value is acceptable. However, the Revenue has not accepted the changed method of valuation with respect to the HTM securities. The reason advanced for the same is that the HTM securities are in the nature of long term permanent investments since they are Held upto Maturity. The learned CIT-DR has defended the aforesaid stand of the Revenue by pointing out that due to its nature, the HTM securities are to be understood as permanent investments and the same should be valued at cost, which is the basis adopted by the assessee in its books of account.

In the books of account, as we have noted earlier, assessee bank continues to value the HTM investments at cost, following the RBI guidelines. As per the learned CIT-DR, the HTM securities cannot be considered as stock-in-trade since they are to be held till maturity and are not available for sale or trading thereof. The learned CIT-DR asserted that in the account books, following the RBI guidelines, the HTM Securities are treated differently than the AFS / HFT securities. It is explained that wherever the cost of acquisition of HTM securities is higher than its face value, the premium is amortized over the remaining period of maturity and where the cost prize is less than the face value, the difference is ignored as per the RBI guidelines. However, securities in AFS Category are marked to market price and the securities in HFT category are held at original cost and are valued at monthly intervals at market rates. In sum and substance, the RBI guidelines have been pressed into service by the learned CIT-DR to emphasize that the HTM securities stand on a different footing than the AFS/HFT securities.

It has also been submitted before us that assessee has not furnished any details to show that the securities under the HTM category have been sold prematurely prior to its maturity either during the year or in the past years. Therefore, according to the learned CIT-DR, there was no justification for effecting change in the method of valuation of closing stock of HTM securities.

15. Apart from explaining the difference in the nature of HTM and the other securities, namely, AFS/HFT the learned CIT-DR pointed out that the assessee has also not justifiably explained the reasons and the circumstances in which it has changed the method of valuation of securities from the method adopted in the past years. The learned CIT-DR emphasized that the change in the method of valuation of closing stock has been effected only for the purpose of income-tax and not for the regular books of account, which are being maintained as per the RBI guidelines. It has also been pointed out that the assessee has not referred to any resolution passed by the Board of Directors of the assessee-bank regarding the change in the method of valuation of the securities.

41. The Tribunal further held as under:-

"17. We have carefully considered the rival submissions. The crux of the controversy before us relates to the method of valuation of the closing stock of securities/investments adopted by the assessee in the current assessment year. The assessee is a nationalized bank and therefore it is operating within the purview of the RBI guidelines. In the books of account, the investments/securities held by the assessee bank are classified as per the RBI guidelines into three categories, namely, HTM, AFS and HFT. Not only the classification, it is also an accepted position that, the manner of valuation of such securities is also prescribed in the RBI guidelines, which the assessee 19 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

is adhering to. In the earlier paragraphs, we have noted the RBI guidelines which prescribe the manner of valuation of the investments. Thus, in the books of account following the RBI guidelines HTM investments are valued at cost and in respect of AFS and HFT investments, the valuation is carried out basket-wise and within the prescribed basket any appreciation in security is adjusted against the depreciation of other any security. Up to the assessment year 2004-05, the method of valuation of closing stock of securities adopted in the books of account following the RBI guidelines, was also adopted by the assessee for the purposes of income-tax. It is in the instant assessment year of 2005-06 and in subsequent years, that assessee has changed the method of valuation for the purposes of its income-tax computation whereby assessee has valued the closing stock of securities / investments at lower of cost or market value. The resultant effect of such change in the assessment year 2005-06 amounting to Rs.359,24,58,508/- is not accepted by the Revenue, and hence the impugned addition of Rs.359,24,58,508/-.

18. Factually speaking, the change in the method of valuation has been partly accepted by the Revenue and we say so for the reason that qua the investments classified as AFS and HFT there is no dispute and, the valuation of such closing stock at lower of cost or market value, has been accepted. The dispute is only with regard to the closing stock of HTM securities, which according to the Assessing Officer, should continue to be valued 'at cost' only for the purposes of income-tax computation.

19. In the present context, the judgement of the Hon'ble Karnataka High Court in the case of Corporation Bank Ltd. (supra) is relevant. The issue before the Hon'ble High Court was with regard to the method of valuation of stock-in-trade adopted by the assessee. The assessee bank had all along valued the investments 'at cost' but for the assessment year 1975-76, which was before the Hon'ble High Court, assessee changed the method and instead valued the stock at lower of the cost or market value. The Revenue objected to the change on the ground that the change was not bona-fide, as it was done only in the return of income and not in the account books. The Hon'ble Karnataka High Court held that it was permissible for the assessee bank to value the closing stock either at market value or the cost price, whichever is lower. As per the Hon'ble High Court, irrespective of the basis adopted for valuation in earlier years, the assessee had the option to change the method of valuation of the closing stock to lower of cost or market value, at any time, provided the change was bona-fide and followed regularly thereafter. Similar proposition has also been upheld by the Hon'ble Madras High Court in the case of Karur Vysya Bank Ltd. (supra) following the ratio of the judgement of the Hon'ble Supreme Court in the case of United Commercial Bank Ltd. vs. CIT, (1999) 240 ITR 355 (SC)."

42. The issue raised before us is identical to the issue before the Tribunal in ACIT

Vs. Bank of Maharashtra (supra) and following the same parity of reasoning, we hold

that the change in method of accounting adopted by the assessee for valuing its HTM

securities at lower of cost or market price is a bonafide change and the assessee is

entitled to the claim of depreciation on value of HTM securities. The loss arising on

account of AFS and HFT securities have already been accepted by the Assessing

Officer. Consequently, we direct the Assessing Officer to allow the claim arising on

account of depreciation on value of HTM securities. However, the change in method

of valuation in HTM securities and its effect on the computation of income would be 20 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

verified by the Assessing Officer. Accordingly, we direct the Assessing Officer to

consider the plea of the assessee and re-work the income in line with the

observations of Tribunal in the case of ACIT Vs. Bank of Maharashtra (supra) vide

para 24, which reads as under:-

"24. In-principle, we have already upheld the stand of the assessee to value the stock of its investments / securities at lower of cost or market value. By application of such method of valuation of its stock of securities / investments in assessment year 2005-06 assessee claimed deduction for a loss of Rs.359,24,58,508/-. The effect of the change in method of valuation on the computation of income for the purposes of income tax is a matter of factual appreciation, which is liable to be verified by the Assessing Officer appropriately. For the aforesaid purpose, we therefore direct the Assessing Officer to consider the stand of the assessee stated aforesaid and thereafter re-work the income of the assessee accordingly. Needless to mention, the assessee shall provide necessary workings to the Assessing Officer, including the Investment Trading Account and / or such other workings which would enable the Assessing Officer to re-work the income of the assessee in accordance with our decision in the earlier paragraphs. The Assessing Officer shall allow the assessee an appropriate opportunity of being heard and thereafter re-work the computation of income as per law and keeping in mind the aforesaid directions. Thus, on Ground of Appeal No.1 assessee succeeds."

43. In view of the directions of the Tribunal in the case of ACIT Vs. Bank of

Maharashtra (supra), in order to give the effect of the change in the method of

valuation on the computation of income, the Assessing Officer is directed to verify the

claim of the assessee after considering the factual aspects and compute the

deduction in line with the directions of the Tribunal in the case of ACIT Vs. Bank of

Maharashtra (supra). Reasonable opportunity of hearing in this regard shall be

afforded to the assessee. The grounds of appeal raised by the assessee are thus,

allowed for statistical purposes.

44. Now, coming to the additional ground of appeal filed by the assessee in

assessment years 2007-08 and 2009-10. The plea of the learned Authorized

Representative for the assessee pursuant to the order of Tribunal in assessment year

2005-06 in the appeal against the order passed under section 263 of the Act, 1/5th of

the amortized amount of loss incurred of Rs.29,29,15,335/- in assessment year 2005-

06 on account of conversion of securities from AFS to HTM should be allowed in

accordance with the decision of the Hon'ble Tribunal in assessment year 2005-06.

Pursuant to the order of Tribunal in assessee's own case against order passed under

section 263 of the Act, where the Tribunal had directed that the expenditure claimed 21 ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

in assessment year 2005-06 is to be amortized and allowed for the years starting

from assessment year 2005-06 to the extent of 1/5th in each year, we find merit in the

plea of the assessee in this regard. Accordingly, we direct the Assessing Officer to

allow 1/5th of the amortized amount of loss incurred in assessment year 2005-06 for

the years under appeal, consequent to the order of Tribunal passed in appeal against

order passed under section 263 of the Act relating to assessment year 2005-06. The

additional ground of appeal raised by the assessee is thus, allowed.

45. Now, we take up ITA No.1872/PN/2013 filed by the assessee against the

order of CIT(A)-I, Pune relating to assessment year 2010-11.

46. The assessee has raised the following grounds of appeal:-

1. The learned CIT(A) erred in upholding the action of the learned A.O. in disallowing the depreciation of Rs. 37,11,50,795/- in the value of 'Held to Maturity' securities claimed by the assessee bank.

2. The learned CIT(A) erred in holding that the 'HTM' securities were in the nature of capital assets of the bank and hence, the same were to be valued at cost of acquisition and not at cost or market value, whichever is lower.

3. The learned CIT(A) erred in holding that the 'HTM' securities were in the nature of investments and not stock in trade by stating the following reasons -

a. The 'HTM' securities held by the assessee bank were in the nature of investments having regard to the principles laid down by CBDT Circular No. 4 of 2007 dated 15.06.2007.

b. There were only a few occasions where the assessee bank had sold the HTM securities before maturity in the earlier years and holding of the same till maturity had resulted in handsome profits for the assessee bank and hence, the intention of the assessee bank was to hold the HTM securities till maturity.

c. In view of the decision of Hon'ble Karnataka High Court in the case of ING Vyasya Bank Ltd. [ITA No. 2886 of 2005], the HTM securities held by the assessee bank were in the nature of capital assets.

d. The decision of Hon'ble Supreme Court in the case of UCO Bank Ltd.

vs. CIT [240 ITR 355] was distinguishable on facts and hence, not applicable to the instant case.

4. The learned CIT(A) failed to appreciate that the HTM securities held by the assessee bank were in the nature of stock in trade and not capital assets and hence, for Income Tax purposes, the same were to be valued at cost or market value, whichever is lower.

5. The learned CIT(A) ought to have appreciated that -

a. All the securities purchased by a bank are to be considered as part of the stock in trade for Income Tax purposes.

22

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

b. The entries in the books of accounts were not determinative of the correct nature of the securities purchased by the bank and hence, the classification of the securities made by the assessee in the books was not relevant.

c. The activity of purchase and sale of securities was in the course of the normal banking business of the assessee bank and hence, the said securities were in the nature of stock in trade.

d. Even though the securities were classified in HTM category, the bank was permitted to sell them before the maturity date and hence, it was not correct to hold that HTM securities were capital assets of the assessee bank.

e. The issue involved was covered in favour of the assessee bank by various decisions and the decisions relied upon by the learned CIT (A) were distinguishable on the facts of the present case.

6. The learned C.I.T Appeals has erred in law and facts in not allowing the additions of Rs.7,40,292/- made by the Assessing Officer on account of non reconciliation of transactions reflected in international transactions of the Appellant Bank with the entries in the books of account and instead directing the Assessing Officer to examine the claim and delete the additions after verification.

7. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.

47. The issue in grounds of appeal Nos.1 to 5 is identical to the issue raised by

the assessee in assessment years 2007-08 and 2009-10. Following our decision in

ITA Nos.522 & 523/PN/2013, we remit the issue back to the file of Assessing Officer

to allow the claim of the assessee after verifying the stand of the assessee in line with

the directions hereinabove.

48. The issue raised in the ground of appeal No.6 is against the addition of

Rs.7,40,292/-. The said addition was made in the hands of the assessee on account

of non reconciliation of transactions reflected in international transactions of the

assessee with the entries in the books of account. The CIT(A) had directed the

Assessing Officer to examine the claim of the assessee and delete the addition after

verification. We find no merit in the ground of appeal No.6 in this regard as the

CIT(A) had directed the Assessing Officer to carry out the verification exercise and

after reconciliation, the Assessing Officer may decide the issue. We uphold the

directions of CIT(A) in this regard and direct the Assessing Officer to carry out the

reconciliation exercise and after verification decide the issue. 23

ITA Nos.21, 235, 236/PN/2014 ITA Nos.522, 523 and 1872/PN/2013 Janata Sahakari Bank Ltd.

49. In the result, appeal of the assessee in ITA No.21/PN/2014 and appeal of the

Revenue in ITA No.235/PN/2014 relating to assessment year 2005-06 are dismissed,

appeal of Revenue in ITA No.236/PN/2014 relating to assessment year 2006-07 is

dismissed, appeals of the assessee in ITA Nos.522 & 523/PN/2013 relating to

assessment years 2007-08 & 2009-10 are partly allowed and appeal of the assessee

in ITA No.1872/PN/2013 relating to assessment year 2010-11 is allowed as indicated

above.

Order pronounced on this the 25th day of February, 2015.

Sd/- Sd/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated: 25 t h February, 2015. GCVSR

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT(A)-I, Pune; 4) The CIT-I, Pune; 5) The DR "B" Bench, I.T.A.T., Pune; 6) Guard File. By Order //True Copy// Assistant Registrar I.T.A.T., Pune