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2008 (12) TMI 745 - AT - Income TaxDisallowance of expenses - investment Portfolio - enhancing the assessment being depreciation in valuation of investment portfolio. HELD THAT:- We are of the considered view that the decision of the Hon'ble Supreme Court in the case of United Commercial Bank vs. CIT [1999 (9) TMI 4 - SUPREME COURT] held that preparation of the Balance sheet in accordance with the statutory provisions would not disentitle the assessee in submitting the Income Tax return on the real taxable income in accordance with the method of accounting adopted by the assessee consistently and regularly. For the purpose of Income Tax, what is to be taxed is real income which is to be deducted on the basis of accounting system regularly maintained by the assessee. Further, the method by which the assessee Bank is valuing securities is in accordance with the accounting principles by treating such securities as stock-in-trade. Moreover, the revenue itself is treating the profit on maturity of such security as business income and, therefore, such securities cannot be treated as capital assets. Therefore, following the decision of the Hon'ble Supreme Court, it is held that the assessee Bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such investment as stock-in-trade. We, therefore, delete the disallowance made by the Ld. CIT(A). In the result, appeal of the assessee Bank is allowed.
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