PRINCIPAL COMMISSIONER OF INCOME TAX - 1 vs. TEXTILE TRADERS CO-OP BANK LTD.

C/TAXAP/695/2018 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 695 of 2018

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE A.Y. KOGJE

====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ====================================== PRINCIPAL COMMISSIONER OF INCOME TAX - 1 Versus TEXTILE TRADERS CO-OP BANK LTD. ====================================== Appearance: MRS MAUNA M BHATT(174) for the APPELLANT(s) No. 1 for the RESPONDENT(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE A.Y. KOGJE

Date : 26/06/2018

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 4

C/TAXAP/695/2018 JUDGMENT [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal “A” Bench, Ahmedabad (hereinafter referred to as “the learned Tribunal”) in ITA No.175/Ahd/2015 for the Assessment Year 2011-12 by which the learned Tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) deleting the addition of Rs.1,00,52,000/-, which was made by the learned Assessing Officer, revenue has preferred the present Tax Appeal. [2.0] The facts leading to the present Tax Appeal are as under; [2.1] The respondent – assessee – Corporation Bank filed the return of income declaring the total income of Rs.5,36,636/-. The assessee claimed the deduction /expenses of loss security on maturity of Rs.1,86,32,000/-. The assessee also filed the bifurcation /working of the loss of Rs.1,86,32,000/- (Rs.1,00,52,000/- of earlier years + Rs.85,80,000/- of current year) The current year loss of Rs.85,80,000/- has been added back to the total income. A show cause notice came to be issued upon the assessee by the learned Assessing Officer by which the assessee was called upon to show cause why the amount of Rs.1,00,52,000/- should not be added back to the total income. In response to the show cause notice, assessee filed its reply dated 16/12/2013. It was submitted on behalf of the assessee that the loss of security at the time of sale /settlement (i.e. repay on or before maturity) is different than the Notional loss Page 2 of 4

C/TAXAP/695/2018 JUDGMENT generated at the time of amortization at the year end. However, the learned Assessing Officer did not accept the explanation and made the addition of Rs.1,00,52,000/ mainly on the ground that the loss claimed was notional loss and not actual loss. According to the learned Assessing Officer, if the securities /bonds are sold on the date of maturity and any loss is occurred /sustained then and then only such loss could have been allowed. Feeling aggrieved and dissatisfied with the addition of Rs.1,00,52,000/- made by the learned Assessing Officer by disallowing the loss claimed, the assessee preferred the Appeal before the learned CIT(A). Learned CIT(A) on appreciation of evidence and considering the fact that the securities /bonds were in fact sold prematurely and the loss was suffered, and therefore, it cannot be said that the loss was notional loss, the learned CIT(A) allowed the Appeal and deleted the addition made by the learned Assessing Officer. On an Appeal, learned Tribunal has dismissed the Appeal preferred by the revenue. Hence, revenue is before this Court with the aforesaid proposed question of law. [3.0] We have heard Mrs. Mauna Bhatt, learned advocate appearing on behalf of the revenue. We have considered and perused the factual matrix and the orders passed by the learned Assessing Officer, learned CIT(A) as well as the learned Tribunal. On facts, it is required to be noted that learned CIT(A) as well as learned Tribunal has specifically observed that the loss, which was claimed was, as such, actual and not notional loss as opined by the learned Assessing Officer. The loss had occurred on sale of the securities /bonds, which were prematurely withdrawn /encashed. Considering the aforesaid Page 3 of 4

C/TAXAP/695/2018 JUDGMENT facts and circumstances of the case, learned Tribunal as well as the learned CIT(A) have rightly come to the conclusion that the loss claimed was actual loss and not notional loss and thereafter when the learned CIT(A) as well as the learned Tribunal have deleted the addition made by the learned Assessing Officer, it cannot be said that the learned Tribunal has committed any error. No substantial question of law arises, as suggested. Hence, present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) (A.Y. KOGJE, J.) siji Page 4 of 4