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TMI Blog2019 (2) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the disallowance of Rs. 97,57,794.00 made by the learned Assessing Officer on account of loss on valuation of securities. The said disallowance being bad in law, patently illegal, arbitrary, perverse and devoid of merits the same may please be deleted and the claim of the appellant bank may please be accepted." 3. Briefly stated, the facts of the case are that the assessee filed its return declaring total income of Rs. 14.68 crore and odd which was subsequently revised to Nil income. The Assessing Officer (AO) observed that the assessee had made adjustment of Rs. 97,57,794/- in the revised return on account of valuation of securities. It was noticed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had denied its liability to pay the amount and had not made provision for such an amount in its books of account. This view came to be echoed by the Hon'ble High Court. When the matter came before the Hon'ble Supreme Court, their Lordships observed that "if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the ITO", the assessee will not be debarred from such deduction. It was further held that "whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was entitled to value its securities under the method : "Cost or market price, whichever is less". It is trite law that if a method of valuation has been changed from one recognized method to another recognized method, then such a change cannot be rejected if it is consistently followed. Nothing has been brought on record to demonstrate that the new method of valuation was not consistently followed by the assessee. Ergo, we do not see any embargo in the assessee switching over to the new method of valuation of securities, "Cost of market price, whichever is less". 6. Now comes to quantum of the amount of loss claimed by the assessee under the new method of valuation of securities. It is seen from the assessment order that the AO has mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8. Factual matrix for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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