TMI Blog2019 (12) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnataka High Court in the case of Karnataka Bank Ltd. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] AMC charges AND License fee for oracle database, antivirus software etc .- HELD THAT:- It is nobody's case that assessee is dealing with computer softwares or is in the business of any related services. Rather it uses specific customized software, which is specific to its banking activities. But for the use of such software, the nature of expenditure otherwise incurred for streamlining its functions i.e. towards fee payable to the consultants for systems and employment of special professionals to carry on the tasks that the software in fact performs, would have fallen undoubtedly in the revenue stream. Taking these into account and the further circumstance that the software itself would have run its course or life span as it were, given that the earlier assessment year in question is 2008-09, we are of the opinion that the question of law framed is to be answered in favour of the assessee and against the revenue. - ITA No. 5845/DEL/2016, ITA No. 5846/DEL/2016 - - - Dated:- 11-12-2019 - Shri N.K. Billaiya, Accountant Member, And Ms. Suchitra Kamble, Judicial Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherein the coordinate bench has decided the issue in favour of the assessee as under : 13. We have carefully considered the rival contentions. During the year, assessee has debited the loss of ₹ 205.43 crores arising of on account of transfer of securities of ₹ 1664.32 crores from available for sale category to held to maturity category in terms of resolution of the Board of Directors of the appellant. Claim has arisen because of the circular issued by Reserve Bank of India on prudential norms for classification, valuation and operation of investment portfolio bank dated 1st July, 2006. According to that circular the banks are allowed to transfer securities from one category to another category once every year at the least value of following :- (a) Acquisition cost (b) Book value and (c) Market value. It is further provided that if because of such transfer any depreciation arises, it should be fully provided for. The claim of the assessee is that this loss should be allowed as deduction because of transfer of securities from one category to another category. Therefore, the issue in appeal is that whether a banking company claims the loss, based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said order, Karnataka Bank Ltd. preferred an Appeal to the Karnataka High Court under section 260A of the Act. After discussing various judgments of the Supreme Court, the Karnataka High Court held as under :- From the aforesaid judgments of the apex court, now it is clear that a method of accounting adopted by the taxpayer consistently and regularly cannot be discarded by the Departmental authorities on the view that he should have adopted a different method of keeping the accounts or on valuation. Financial institutions like bank, are expected to maintain accounts in terms of the RBI Act and its regulations. The form in which, accounts have to be maintained is prescribed under the aforesaid legislation. Therefore, the account had to be in conformity with the said requirements. The RBI Act or the Companies Act do not deal with the permissible deductions or exclusion under the Income Tax Act. For the purpose of the Income Tax Act, if the Assessee has consistently been treating the value of investment for more than two decades the investments as stock-in-trade and claimed depreciation, it is not open to the authorities to disallow the said depreciation on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view thereof, we find no infirmity in the order passed by the ITAT. The present Appeal does not raise any substantial question of law as projected by the learned counsel appearing for the Appellant. The Appeal is therefore dismissed. 14. Therefore, we find that the issue raised in this appeal squarely covered by the decision of Hon ble Karnataka High Court as well as Mumbai High Court in favour of asssessee. Therefore, respectfully following those judicial precedents, we reverse the order of CIT (A) and delete the disallowance of ₹ 205.43 crores on account of claim of loss of transfer of security from available for sale category to held to maturity category by the appellant bank in accordance with direction/ circular of Reserve Bank of India. This decision has been confirmed by the Hon ble High Court in appeal of the Revenue No. 306/2016 vide order dated 11.05.2016 holding as under : 3. The ITAT found that the Assessee has been consistently reflecting the investment as stock-in-trade in its balance sheet. The ITAT has noted that the Assessee had in compliance with the direction of the Reserve Bank of India (RBI) transferred SLR securities appreciating to ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the Tribunal has dismissed the appeal of the assessee and upheld the disallowance by holding as under: 8. We have heard the submissions of both the sides and perused the material available on record and we find that the ld. CIT(A) has made an elaborate discussion on this issue. The ld. AR had submitted the details of AMC charges which has been allowed by the ld. CIT(A) as revenue expenditure, but in case of license fee for oracle database, antivirus software etc., the appellant could not establish that the same were for a particular period. The case laws relied upon by the appellant has rightly been distinguished by the ld. CIT(A). We, therefore, find that the ld. CIT(A) has passed a good order which needs no 20 ITA No.6795 6796/D/13 and 242 243/D/14 interference on this issue. Accordingly, grounds No. 7 in both the appeals of the assessee are dismissed. 8. The matter travelled upto the Hon'ble High Court and the Hon'ble High Court, in ITA Nos.129 of 2018 and 415 of 2017 and 56 of 2018 has held as under: 7. The mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act in our op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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