TMI Blog2010 (2) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee. The Tribunal was justified in holding that recourse to the power under section 263 was not warranted in the facts and circumstances of the case. - 2308 of 2009 - - - Dated:- 26-2-2010 - DR. D. Y. CHANDRACHUD and J. P. DEVADHAR JJ. Suresh Kumar for the appellant. Satish R. Mody with Aasifa Khan for the respondent. JUDGMENT The judgment of the court was delivered by 1. DR. D. Y. CHANDRACHUD J. - Admit 2. The appeal under section 260A of the Income-tax Act, 1961, arises out of an order passed by the Income-tax Appellate Tribunal on January 15, 2009, by which the Tribunal held that the jurisdiction under section 263 had not been validly exercised by the Commissioner of Income-tax. Hence, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to classification of their assets and by accounting standards for investments The Central Board of Direct Taxes therefore decided that the Assessing Officers should determine on the facts and circumstances of each case as to whether any particular security constitutes stock-in-trade or investment, taking into account the guidelines issued by the Reserve Bank of India in this regard from time-to-time The Assessing Officer concluded that according to the guidelines of the Reserve Bank of India banks were permitted to provide depreciation on investments category-wise after considering the appreciation, if any, in that category Following the said direction devaluation in the value of securities was computed at Rs 6 22 crores and provided in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and current investments held by the bank. The permanent investments were regarded as those being "held to maturity" (HTM). The current investments were those which constitute the stock in trade. Consequently, during the course of the assessment proceedings, the assessee supplied to the Assessing Officer, in response to a specific query in that regard, details of investments which were held as permanent investments or those held to maturity on the one hand and those which on the other hand constitute current investments or stock-in-trade. 5. On March 26, 2007, the Commissioner of Income-tax passed an order under section 263(1), by which he set aside the assessment order and directed the Assessing Officer to reframe the assessment de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or those investments held as stock-in-trade as claimed by the assessee. The assessee, it may be noted, had con tended that the capital gain of Rs. 1.26 crores was earned from transactions relating to investments held to maturity and was, therefore, required to be treated as a long-term capital gain. The assessee had also urged that depreciation of Rs. 622.39 lakhs was incurred on investments held as stock-in- trade. Consequently, the case of the assessee was that capital gain and depreciation was referable respectively to two different classes of investments. 7. The Tribunal, on an appeal being filed by the assessee against the order of the Commissioner of Income-tax, held that the Assessing Officer had specifically called upon the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as stock-in-trade was concerned, the assessee had similarly supplied to the Assessing Officer details of the current investments in response to the query of the Assessing Officer. In addition, it would also have to be noted that, in pursuance of the order passed by the Commissioner of Income-tax under section 263, an assessment order came to be passed on December 28, 2007. During the course of the assessment order, the Assessing Officer noted that the assessee has explained depreciation claimed against the investments held and classified as stock-in-trade. The explanation of the assessee in this connection was accepted and the Assessing Officer came to the conclusion that depreciation of Rs. 622.39 lakhs has been claimed towards investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the revisional authority was not justified in exercising the jurisdiction under section 263 with reference to the aforesaid issues (i) and (ii) in the directions of the Commissioner of Income-tax noted earlier, the other issues are consequential to the enquiry which was directed in respect of the first and second issues. This has not been disputed. 9. In these circumstances, for the reasons which we have set out herein above, we are of the view that the Tribunal was justified in coming to the conclusion that recourse to the powers under section 263 was not warranted the facts and circumstances of the case. The question of law which has been formulated shall stand answered in the aforesaid terms. The appeal shall accordingly stand di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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