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2019 (6) TMI 926 - AT - Income TaxReopening of assessment - original assessment u/s 143(3) - addition on account of Depreciation in the value of investment - AO merely give a reason that the closing stock is valued at cost or market whichever is less and the assessee has not filed security wise details of valuation of investments - HELD THAT:- This claim of the assessee was made in the regular books of accounts and the claim was also appearing in the audited balance sheet. During the course of assessment proceedings u/s 143(3) on 5.11.2012 a letter was submitted along with necessary evidences to the Ld. DCIT, Circle 1(1), Indore in compliance to the notices issued/s 142(1) against specific query raised by the Ld. A.O during the course of assessment proceedings. A.O after considering the submissions of the assessee accepted the claim of diminution in the value of investment at ₹ 16,36,000/- and accepted the returned income of the assessee vide order u/s 143(3) dated 28.12.12. There remains no doubt that proper disclosure of the claim of depreciation in the form of diminution of value of securities was made by the assessee in the regular return of income, specific query was raised by the Ld. A.O for the alleged claim and detailed reply was filed along with necessary evidences in the form of circular issued by RBI and the accounting standards applicable for disclosure of such type of investments. Thus Proviso of Section 147 is not applicable on the assessee and the reopening of the assessment by issuance of notice u/s 148 is bad in law and the assessment made u/s 147 r.w.s. 143(3) dated 13.12.2017 deserves to be quashed. In the result Ground No.1 of the assessee is allowed. Depreciation in the valuation of investment of securities - HELD THAT:- We observe that the assessee is engaged in the business of banking and providing credit facilities. As per the guidelines of RBI the assessee is required to invest in securities to be kept as fluid securities and are available for sale and are to valued every month on periodical basis. As per the RBI guidelines, circular named ‘classification in valuation of investments’ dated 26.11.2008 vide instruction No.17/2008, such security are required to be ‘marked to market’ on the specified dates. Any diminution/increase in the value of the securities on the valuation date are to be debited/credited to Profit & Loss Account as depreciation on investment or increment in investment as the case may be. Thus the investment held by the bank are nothing but in the nature of current assets which are regularly valued at the end of the month and diminution/increase in their valuation is booked as expenditure/income Similar issue came up before various judicial forums and we too have adjudicated similar issue in the case of Jhabua Dhar Kshetriya Gramin Bank, Jhabua [2018 (9) TMI 533 - ITAT INDORE] wherein we have allowed the claim of depreciation of diminution of investment . Thus as in the present case direct the revenue authorities to allow depreciation of diminution in the valuation of investment claimed by the assessee - Decided in favour of assessee.
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