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TMI Blog2017 (1) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal was justified in confirming the addition of Rs. 45 lakhs towards the provision on account of diminution in the value of securities made during A.Y. 200304 to 200607, though the actual claim made by the appellant was the loss of Rs. 40,44,000/on account of sale of the securities during the year under consideration? B. Whether on the facts and in the circumstances of the case as well as in law, the conclusion reached by Income Tax Appellate Tribunal to uphold the addition of Rs. 45 lakhs was perverse and based on irrelevant evidence or such as could be arrived at?" 2. The facts leading to the present petition are in nutshell as under: 2.1. The assessee who at the relevant point of time was a Cooperative Bank registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 55,44,000/as loss on sale of Government Securities available for trade portion and after deducting Rs. 15 lakh towards the depreciation of the Government security for A.Y. 200708, claimed the loss on Government Security at Rs. 40,44,000/. However, considering the fact that, assessee has made provision on certain amounts on account of diminution of value of securities in the relevant assessment years i.e.200304 to 200607 and therefore, the assessee was asked to show cause as to why the above provisions should not be added back to the loss of Rs. 55,44,000/on sale of Government Securities alongwith the addition already made of provision of Rs. 15,00,000/and Rs. 25,00,000/in A.Y. 200708 and A.Y. 200809 respectively. The assessee replied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution in the value of the same. As per the guidelines of the RBI the value of these security has to be taken at the cost price audit is only on their sale that the difference between the cost price and the sale price that has to be offered as capital gain or loss as the case may be. In respect of securities held for trading, being stock in trade, the same have to be valued at cost or market price whichever is lower. Thus the diminution in the value of such stocks has to be taken as the loss in the respective year and cannot be allowed as a loss o the current year. The action of the appellant in not claiming the loss on the securities held for trading which occurred in the earlier years due to the diminution in their value is not correct. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as with regard to the loss of Rs. 40,44,000/suffered on account of sale of the securities during the year under consideration, so that provision in respect of diminution in the value of Government Security had no relevance. It is submitted that, therefore, when the assessee sold the security during the year under consideration, considering the diminution in the value of securities, the loss was required to be considered under the year consideration. It is further submitted that, provision for diminution in the value of securities as per the guidelines issued by R.B.I. for which no deduction was claimed by the assessee in the relevant years and claimed the loss on the basis of depreciation on the value of government security by selling secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT (A) had rightly confirmed the disallowance and confirming in making addition in the current year. While doing so, the learned CIT (A) has observed in Para4.2 as under:" 4.2 I have gone through the order of the AO and submissions of the AR carefully. It is seen that the appellant had made provisions of diminution in the value of securities as under: Assessment Year Provision made 2003-04 500000 2004-05 1000000 2005-06 1500000 2006-07 1500000 4.2 (i) It is also seen that the appellant had on his own disallowed the provision for diminution in the value of securities during assessment year 200304 to 200607. It is to be seen that the entire depreciation which has been claimed is on the depreciation in respect of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat even though the business income of the appellant would increase if the loss on diminution in the value of securities was allowed, the apepllant would not be adversely effected because the entire income was allowable as a deduction u/s. 80 P whereas in the current year the increased business income was fully taxable as deduction u/s. 80 P was not available to the appellant. The appellant is hence not right in claiming such depreciation on securities held for trading in the current year. " 6.1. The aforesaid view has been confirmed by the learned Tribunal by discussing the same in detailed and giving cogent reasons in paragraph8. 7. We are in complete agreement with the view taken by the learned Tribunal for the diminution in the value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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