TMI Blog2006 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... .P.S. Janarthana Raja J.-At the instance of the assessee, the Income-tax Tribunal has stated a case and referred the following questions of law to this court for its opinion: "1. Whether, on the facts and in the circumstances of the case the Tribunal was correct in holding the Government securities held by the applicant as investments/capital asset and not circulating capital/stock-in-trade? 2. Whether on the facts and in the circumstances of the case the Tribunal was correct in holding that the decision of the Supreme Court in the case of Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT and Madhya Pradesh Rajya Sahkari Bank Maryadit v. CIT [1996] 218 ITR 438 (SC) and the various decisions referred to in its order for the assessment years 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt securities as investments and not as stock-in-trade and thus allowed the Department's appeals. Learned counsel for the assessee contended that once the assessee had been holding the investments as trading stock, the assessee is entitled to the loss on account of revaluation, whether written off in the books or not the same has to be allowed. Learned counsel relied on the decision of this court in CIT v. Karur Vysya Bank Ltd. [2005] 273 ITR 510. Learned senior standing counsel for the Department submitted that the assessee-bank held the Government securities only as investment and therefore they are not entitled to any relief. We have given careful consideration to the submissions of both sides. It is brought to the notice of this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02; [2003] 11 SCC 193, wherein it has been consistently held that after having refrained from challenging the adverse decision of the Tribunal/High Court, the Revenue is not entitled to challenge the same. The Revenue relied on the decision of the Supreme Court in Madhya Pradesh Co-op. Bank Ltd. v. Addl. CIT and Madhya Pradesh Rajya Sahkari Bank Maryadit v. CIT [1996] 218 ITR 438. In that case, the bank was holding Government securities as investments and not stock-in-trade. Based on this fact, the Supreme Court came to the conclusion that the fall in the market value of the Government securities is not an allowable deduction and hence, the same would not apply to the facts of this case. The said Supreme Court judgment was later on consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Madhya Pradesh Co-operative Bank Ltd. [1996] 218 ITR 438 (SC) does not set down the correct law and that the law is as we have put it above." Learned counsel for the assessee relies on the recent judgment of the Supreme Court in United Commercial Bank v. CIT [1999] 240 ITR 355, wherein the apex court, after reiterating that the principles applicable in valuation of stock are: "(1) That for valuing the closing stock, it is open to the assessee to value it at the cost or market value, whichever is lower; (2) in the balance-sheet, if the securities and shares are valued at cost, from that no firm conclusion can be drawn. A taxpayer is free to employ for the purpose of his trade, his own method of keeping accounts, and for that purpose, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. From the form of the prescribed balance-sheet under the Banking Regulation Act it was evident that scheduled nationalised banks were directed to put the value of shares and securities at cost and if the market value was lower, it was to be shown separately in brackets. Preparation of the balance-sheet in accordance with the statutory provision would not disentitle the assessee in submitting income-tax return on the real taxable income in accordance with a method of accounting adopted by the assessee consistently and regularly. That could not be discarded by the Departmental authorities on the ground that the assessee was maintaining the balance-sheet in the statutory form on the basis of the cost of the investments. In such cases, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided the case on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confiden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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