COMMISSIONER OF INCOME TAX GANDHINAGAR vs. CHANASAMA NAGRIK SAHAKARI BANK LTD

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TAXAP/353/2018HC GujaratGJHC24011250201816 April 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court agreed with the view taken by the Income Tax Appellate Tribunal. The Tribunal had found merit in the assessee's claim that the loss on sale of securities/bonds, which were initially categorized as "available for sale" (AFS), was of a trading nature. This was despite the securities being grouped under the head "investment" due to RBI prescribed formats. The Tribunal considered this consistent with CBDT instructions and the facts of the case, thus declining to interfere with the CIT(A)'s order. The High Court found no question of law arising from the ITAT's decision.

What were the facts?

The Revenue, Commissioner of Income Tax, Gandhinagar, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dated September 4, 2017. The appeal concerns the assessment year(s) not explicitly stated in the provided text. The core of the dispute is whether a loss incurred by the assessee, Chanasama Nagrik Sahakari Bank Ltd, on the sale of securities and bonds should be treated as a business loss. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which allowed the assessee's claim.

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts in upholding the order of the CIT(A) in treating the loss on security as business loss? Assessee's Contention: The loss arose on the sale of securities and bonds which were initially classified under the "available for sale" (AFS) category at the time of purchase. Therefore, the loss is of a trading nature, even if grouped under "investment" due to RBI prescribed formats. Revenue's Contention: The judgment does not record any specific contentions made by the Revenue before the High Court. However, the appeal itself indicates disagreement with the ITAT's decision to treat the loss as a business loss.

AI-generated summary — verify with the full judgment below

C/TAXAP/353/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 353 of 2018 ============================================================= COMMISSIONER OF INCOME TAX GANDHINAGAR Versus CHANASAMA NAGRIK SAHAKARI BANK LTD ============================================================= Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 16th April 2018

ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad Bench dated 4th September 2017 raising following question for our consideration :- “Whether the Appellate Tribunal has erred in law and on facts of the case in upholding the order of the CIT [A] in treating the loss on security as business loss ?” We notice that the Tribunal, while confirming the view of the CIT [A], held and observed as under :- “8. We have considered the rival submissions and perused the orders of the authorities below. It is the case of the assessee that the impugned loss arose on sale of securities and bonds emanated from investments which were sub-classified under “available for sale” [AFS] category Page 1 of 2

C/TAXAP/353/2018 ORDER at the time of purchase. In view of the aforesaid facts, we find merit in the claim of the assessee that the loss arising on sale of securities/bonds area of trading nature notwithstanding the fact that the securities were grouped under the head “investment” owing to the prescribed format of the RBI. We find that the order of CIT [A] dealing with the issue is consistent with the CBDT instruction as well as the fact of the case and does not require any elaboration. Accordingly, we decline to interfere with the order of the CIT [A].” We are broadly in agreement with the view taken by the Tribunal. No question of law arises. Tax Appeal is dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 2 of 2

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