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TMI Blog2012 (9) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... Pulickal, the ld.representative for the taxpayer submitted that the only issue arises for consideration is disallowance of loss on revaluation of the securities. The ld.representative for the taxpayer submitted that the taxpayer banking company invested funds in the securities. During the year under consideration the securities were revalued as per the norms prescribed by Reserve Bank of India (RBI) and the loss was claimed as deduction. However, the assessing officer disallowed the claim of the taxpayer. On appeal by the taxpayer in original round of litigation this Tribunal directed the assessing officer to reconsider the matter on the ground that the judgment of the jurisdictional High Court in the case of Nedungadi Bank Ltd (2003) 264 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative, in the absence of balance-sheet of the respective companies, the taxpayer cannot claim any loss. 4. We have considered the rival submissions and also perused the material available on record. The only question arises for consideration is whether the notional loss said to be suffered by the taxpayer on revaluation of the securities is allowable as deduction or not. This issue was considered by the jurisdictional High Court in Commissioner of Income-tax vs Nedungadi Bank Ltd (supra) and after considering the judicial pronouncements on the subject found that security held by the bank constitute their stock in trade or investment. Consequently, the loss claimed by the bank in valuation of their securities should be allowed as ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a settled position through various decisions including that of this court in COMMISSIONER OF INCOME-TAX VS.NEDUNGADI BANK LTD. reported in (2003) 264 ITR 545 THAT FOR THE PURPOSE OF ASSESSMENT COST PRICE OR MARKET VALUE WHICHEVER IS LOW SHOULD BE ADOPTED. Admittedly market value is not known and so much so, some method has to be adopted to fix the market value and thereafter only the lower of the cost price or the market value has to be taken for the purpose of computation of profit or loss in respect of the unsecured securities. Senior counsel appearing for the assessee ITA No.234/2009 produced RBI guidelines before us wherein the RBI has suggested Banks to value unquoted Central Government securities on the basis of the prices / YTM r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal is of the considered opinion that the law laid down by the jurisdictional High Court in the cases of Nedungadi Bank Ltd (supra) and Lord Krishna Bank Ltd (supra) is applicable in the case of the present tax payer also. Therefore, by respectfully following the judgment of the Kerala High Court in the case of Nedungadi Bank Ltd (supra) and Lord Krishna Bank Ltd (supra) and for the reasons stated therein the orders of the lower authorities are set aside and the assessing authority is directed to allow the notional loss claimed by the taxpayer on revaluation of the securities as deduction while computing the total income. 7. In the result all the appeals of the taxpayer stand allowed. Order pronounced in the open court on this 18th Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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