PRINCIPAL COMMISSIONER OF INCOME-TAX - 7 vs. M/S ORIENTAL BANK OF COMMERCE

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ITA/33/2017HC DelhiDLHC01340281201614 March 2017Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that since the Income Tax Appellate Tribunal (ITAT) had followed the High Court's own previous decision concerning the treatment of assets/stock-in-trade for the assessee, Oriental Bank of Commerce, for Assessment Year 2007-08, no substantial question of law arose in the present appeal. The Court had previously decided in favor of the assessee in ITA 306/2016, dated May 11, 2016, finding the assessee's treatment of assets persuasive, even though it differed from the Karnataka High Court's ruling in Karnataka Bank Ltd. v. ACIT. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) that upheld the deletion of a penalty imposed on the assessee, Oriental Bank of Commerce. The Assessing Officer (AO) had rejected the assessee's reclassification of assets from 'Available for Sale' (AFS) to 'Held to Maturity' (HTM), a change made pursuant to a Reserve Bank of India circular dated September 2, 2004. This reclassification led to the imposition of a penalty. The ITAT, in its decision, relied on a previous judgment of the Delhi High Court concerning the same issue for Assessment Year 2007-08, which had decided in favor of the assessee.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in upholding the deletion of penalty imposed on the assessee, Oriental Bank of Commerce, when the Assessing Officer had rejected the assessee's reclassification of assets from 'Available for Sale' (AFS) to 'Held to Maturity' (HTM) pursuant to an RBI circular. The Revenue contended that the ITAT's decision was based on a previous ruling of this Court for AY 2007-08, which it found persuasive. The assessee did not present any arguments as none were recorded in the judgment. The Court's prior decision, referenced by the ITAT, had favored the assessee despite a contrary view from the Karnataka High Court in Karnataka Bank Ltd. v. ACIT.

AI-generated summary — verify with the full judgment below

$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 33/2017

PRINCIPAL COMMISSIONER OF INCOME-TAX - 7..... Appellant Through : Sh. Dileep Shivpuri, Sr. Standing Counsel with Sh. Sanjay Kumar, Jr, Standing Counsel and Sh. Vikrant A. Maheshwari, Advocate.

versus

M/S ORIENTAL BANK OF COMMERCE ..... Respondent

Through : None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

O R D E R %

14.03.2017

The Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) which has the effect of upholding the deletion of penalty imposed upon the assessee. The Assessing Officer (AO) had rejected the assessee’s contention with respect to treatment of its assets which was changed from the classification – Available for Sale (AFS) to Held to Maturity (HTM). This was done pursuant to the Reserve Bank of India’s (RBI) circular dated 02.09.2004. Resultantly, the penalty was imposed. The ITAT upheld the deletion of penalty based upon the judgment of this Court for AY 2007-08, (Pr. Commissioner of Income Tax v. Oriental Bank of Commerce, ITA 306/2016, decided on Page 1 of 2

11.05.2016). This Court has gone through the order dated 11.05.2016 which reveals that the issue with regard to treatment of such assets/stock-in-trade was contentious. This persuaded the Court to decide in favour of the assessee, unpersuaded by the decision of the Karnataka High Court in Karnataka Bank Ltd. v. ACIT 2013 (356) ITR 549.

Since the ITAT has followed the decision of this Court, in the present instance, no question of law arises. The appeal is accordingly dismissed.

S. RAVINDRA BHAT, J

NAJMI WAZIRI, J MARCH 14, 2017/ajk

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