What did the High Court hold?

The High Court dismissed the revenue's appeal, holding that the Tribunal was correct in its decision. The substantial questions of law were answered against the revenue and in favor of the assessee.

The appeal concerns whether investments made by a bank in securities should be treated as stock-in-trade. The assessee bank held securities under the 'held to maturity' category.

What were the issues?

The key issues were whether securities held by the bank as 'held to maturity' constitute stock-in-trade and the reliance on a withdrawn CBDT circular.

PCIT vs M/S Pragathi Gramina Bank | Karnataka High Court 2018

IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 21ST DAY OF FEBRUARY, 2018 PRESENT THE HON’BLE MRS. JUSTICE S. SUJATHA AND THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA I.T.A. NO.100057/2016 BETWEEN

THE PR. COMMISSIONER OF INCOME TAX, SEDAM ROAD, KALABURAGI.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I, BELLARY. ... APPELLANTS (BY SRI.Y.V.RAVIRAJ, ADV.)

AND

M/S. PRAGATHI GRAMINA BANK, HEAD OFFICE, SANGANAKAL ROAD, GANDHINAGAR, BALLARI. ... RESPONDENT (BY SRI.S.PARTHSARTHI & SRI.H.R.KAMBIYAVAR, ADVS.)

THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH – B, BANGALORE, IN ITA NO.1417/BANG/2013, DATED 09.12.2015 AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX OFFICER, CIRCLE 1, BALLARI.

THIS ITA COMING ON FOR ORDERS THIS DAY, S.SUJATHA J., DELIVERED THE FOLLOWING:

: 2 : JUDGMENT

This appeal is filed by the assessees challenging the order of the Income Tax Appellate Tribunal, Bengaluru Bench, ‘B’ in I.T.A. No.1417/Bang/2013 relating to the assessment year 2009-10 raising the following substantial questions of law :

“(i) Whether on the facts and in circumstances of the case, the Tribunal is right in law in dismissing the department’s appeal by confirming the order of the Commissioner of Income Tax (Appeals) who held that the investments made by the bank in security as stock in trade?

(ii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the order of Commissioner of Income Tax (Appeal) with regard to reliance on Circular No.599 even though the Circular No.599 relied upon by the Commissioner of Income Tax (Appeals) has been withdrawn by the Central Board of Direct Taxes vide Circular No.655?

: 3 :

(iii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the order of Commissioner of Income Tax (Appeal) in treating the securities held by the assessee under the category of “held to maturity” as held in the nature of stock in trade without appreciating the fact that these securities shall be held till maturity and are not available for sale readily as in the case of securities held under as “Stock in trade”?

Learned counsel appearing for the parties do not dispute that the issue involved herein is covered by the decision of this Court in I.T.A. No.100030/2014 dated 14.12.2015, whereby this Court has placed reliance on I.T.A. No.100014/2014 and connected matters, and answered the substantial questions of law against the revenue and in favour of the assessee.

: 4 :

In view of the aforesaid, this appeal stands dismissed answering the substantial questions of law against the revenue and in favour of the assessee.

Sd/- JUDGE Sd/- JUDGE

Rsh

THE PR. COMMISSIONER OF INCOME TAX vs. M/S PRAGATHI GRAMINA BANK

What did the High Court hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments