ITAT deletes rejection of depreciation on securities

ITAT deletes rejection of depreciation on securities

The Coram of judicial and accountant members rules in the bank's favor

In a major relief to the Punjab & Sind Bank, the Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance of depreciation on securities.

The assessee, Punjab & Sind Bank had filed its Income Tax Return (ITR) electronically for the Assessment Year (AY) 2014-15 in November 2014. It declared a loss under the normal provision of the Income Tax Act and Book Profit of the Act.

The ITR was subsequently revised without any change in the income that was filed in the original return. Thereafter, the case was selected for scrutiny and the assessment was framed under the Act vide the order and the total income was determined.

The assessing officer (AO) had noticed that the assessee had claimed the depreciation on securities and was asked to justify the claim. The assessee inter alia submitted that for the income-tax purpose, it was treating all securities irrespective of its category (HTM, AFS & HFT) in the books as 'Stock-in-Trade'.

The assessee said it was, as a generally accepted principle, valued at 'cost' or 'market price' whichever was lower. It further submitted that the classification and valuation of investment were made as per the mandatory Reserve Bank of India (RBI) guidelines.

The submissions of the assessee did not find acceptance with the AO. He was of the view that the investments had not been shown by the assessee as 'Stock-in-Trade'. As a result, the profits and sales were not enhanced by the value of depreciation in subsequent years when those investments were actually sold. Hence, the claim of the assessee was not permissible and the AO denied the claim of depreciation.

The Coram of the judicial member, Narendra Kumar Choudhary and accountant member, Anil Chaturvedi held that even in the previous years the revenue had not placed any material on record to demonstrate that the order of the tribunal (in the assessee's case) had been set aside/overruled or stayed by the higher judicial forum.

Dismissing the appeal of the revenue, ITAT said, "We find that an identical issue arose before the co-ordinate bench of the tribunal in the assessee's case for the AY 2013-14. The bench by following the order in the assessee's AY 2011-12 and AY 2012-13 had deleted the addition."