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Facts
The assessee claimed an investment loss of Rs. 10.85 Lacs on securities held under the 'Available for Sale' (AFS) category. The Assessing Officer (AO) treated this as a capital loss and disallowed it, a view upheld by the CIT(A).
Held
The Tribunal held that since the investments were made as part of the banking business and the securities were classified as AFS, the loss arising from market fluctuations should be allowed as revenue expenditure.
Key Issues
Whether the loss on investment in securities held as 'Available for Sale' in the course of banking business is a capital loss or a revenue loss.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year (AY) 2010-11 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 31-03- 2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 18-03-2013. The sole issue as urged before us is disallowance of investment loss for Rs.10.85 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
The assessee claimed investment loss on certain securities. It was stated that the securities were held as ‘Available for Sale’ (AFS) category which shall be valued at market price. The difference in book value and market value would be revenue loss to the assessee. However, Ld. AO held that loss in investment was a capital loss and accordingly, disallowed the same. The Ld. CIT(A) confirmed the action of Ld. AO against which the assessee is in further appeal before us.
It emerges that the assessee has invested in securities as per statutory provision to carry on banking business. The assessee has suffered loss of Rs.10.85 Lacs on account of fluctuation in the market value of the securities since the investment in securities was made as per norms fixed to carry on the banking business. The securities are classified in ‘AFS’ category which are to be valued at market price and differential as arising there-from would be allowable as revenue expenditure considering the fact that these investment are made while carrying out banking business. Therefore, this loss would be allowable in the course of carrying out of banking business. Accordingly, we direct Ld. AO to delete the impugned addition. No other ground has been urged in the appeal.
The appeal stand partly allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.