THE PR. COMMISSIONER OF INCOME TAX vs. M/S KARNATAKA BANK LTD.,

This appeal by the Revenue is directed against the order of the Income Tax Appellate Tribunal, Bengaluru (hereinafter referred to as the 'Tribunal'), in ITA No.878/Bang/2023, dated 8th February 2024, for the Assessment Year 2004-05.

The Revenue has raised the following substantial questions of law for consideration : 1. Whether the ITAT is justified in ignoring the fact that while verifying during the assessment proceedings as well as order giving effect the AO has noticed that the assessee has not effected the diminution in value of investment portfolio in the books of accounts. The assessee considered the market value for the purpose of valuation of investments only in those scrips where the value of investments has diminished and not in those scrips where the value of investments has appreciated, which is in violation of RBI Guidelines for classification and valuation of investments by banks dated 16-10-2000 and also contrary to CBDT Circular No.665 (F.No.201/3/92-ITA-II dated 05-10-1993)?

Whether the ITAT is justified in ignoring that the assessee ought to have netted off the depreciation against the appreciation in other investments?

Whether the ITAT is justified in not considering that in order to arrive at the real income for the income tax purpose, the assessee should follow suitable adjustments with suitable accounting practices as per section 145 of the IT Act as per Apex Court decision in the case of UCO Bank Vs. CIT reported in 240 ITR 355?

Whether ITAT is justified in not considering the fact that the Special Leave Petition to the Supreme Court filed by the Department on the decision of Hon'ble High Court of Karnataka on identical issue involved in the assessee's case for the AY 2008-09 is still pending and the decision can be made only after analysing the merits of that case?

At the outset, Smt. Tanmayee Rajkumar, learned counsel appearing for the respondent, submits that the Tribunal, in the impugned order, has followed its earlier order in the case of the assessee for the Assessment Year 2014-15 and has held the issues in favour of the assessee. It is further submitted that the substantial questions of law raised in the present appeal have already been answered by this Court in favour of the assessee in the case of Karnataka Bank Ltd. v. Assistant Commissioner of Income-tax, Circle 2(1) reported in [2013] 356 ITR 549 (Karnataka), relating to the Assessment Year 2004-05.

Sri M. Thirumalesh, learned Senior Standing Counsel appearing for the Revenue, opposing the submissions of the learned counsel for the respondent-assessee, submits that the assessee has claimed a deduction for diminution in the

We have perused the impugned order passed by the Tribunal and the judgment of this Court in the case of Karnataka Bank Ltd. (supra). The Tribunal, in the impugned order, has extracted the grounds raised by the Revenue. The issue canvassed by the learned Senior Standing Counsel regarding netting of appreciation was not raised for consideration before the Tribunal. An issue not raised before the Tribunal cannot form the subject-matter of an appeal before this Court.

Insofar as the other questions are concerned, we find that they are squarely covered by the judgment of this Court in the case of Karnataka Bank Ltd. (supra). In view of