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2019 (2) TMI 715 - AT - Income TaxAddition on account of loss on valuation of securities - Held that:- In the absence of any clarity on the computation of amount of loss arising due to change in the valuation of securities under the new method of “cost or market price, whichever is less”, we set-aside the impugned order and remit the matter to the file of AO for determining the amount of loss arising by the application of method “cost of market price, whichever is less” to the securities held by the assessee bank as stock in trade. It is only after determining such a loss on valuation of securities that the ultimate figure of loss will be determined. AO will give a reasonable opportunity of hearing to the assessee. Before parting with the matter, we would like to clarify on an issue concerned with the change in the method of valuation of securities. On a specific query, AR submitted that the assessee was earlier valuing such securities as per a method prescribed by the RBI, resulting into some loss to be amortized over certain number of coming years. Once we have held that the new method of valuation has to be followed, which would account for loss on decline in the market value of securities in the concerned year itself, there can be no rationale in continuing to allow losses in subsequent years under the old method of valuation of securities as per RBI, which admittedly resulted into amortization of loss in some subsequent years. The AO is directed to examine this aspect also, which is connected with the determination of loss on valuation of securities under the new method of Cost or market price, whichever is less. It should be ensured that the assessee does not get double deduction. Factual matrix for the A.Y. 2012-13 is mutatis mutandis similar to that of the preceding year except for the amount of disallowance of ₹ 5,35,47,228/- made by the AO and sustained in the first appeal. Following the view taken hereinabove, we set-aside the impugned order and direct the AO to determine the issue as ordered supra. Both the appeals are allowed for statistical purposes.
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