Commissioner of Income Tax vs Agricultural Market Committee

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ON THE 18TH DAY OF DECEMBER, 2018

BEFORE

THE HON'BLE MR. JUSTICE RAVI MALIMATH

AND

THE HON’BLE MR.JUSTICE K.NATARAJAN

INCOME TAX APPEAL NO.230 OF 2011

BETWEEN:

COMMISSIONER OF INCOME TAX-III CENTRAL REVENUE BUILDINGS QUEENS ROAD, BENGALURU-560 001.

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2(1), BENGALURU.

...APPELLANTS

(BY SRI E. I. SANMATHI, ADVOCATE)

AND:

M/S. KARNATAKA BANK LIMITED, HO NEAR MAHAVEERA CIRCLE, PUMPWELL, MANGALURU.

... RESPONDENT

(BY SRI K. P. KUMAR, SENIOR ADVOCATE ALONG WITH SRI BALRAM R. RAO, ADVOCATE)

2 THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME-TAX ACT 1961, ARISING OUT OF ORDER DATED 25/02/2011 PASSED IN INCOME TAX APPEAL NO.427/BANG/2010, FOR THE ASSESSMENT YEAR 2001-2002, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; SET ASIDE THE COMMON APPELLATE ORDER DATED 25/02/2011 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BENGALURU IN APPEAL PROCEEDINGS INCOME TAX APPEAL NO.427/BANG/2010, AS SOUGHT FOR IN THIS APPEAL, IN THE INTEREST OF JUSTICE AND EQUITY.

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THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING:

JUDGMENT

The appeal was admitted to consider the following two substantial questions of law: “i. Whether on the facts and circumstances of the case, the Tribunal was correct in holding that depreciation on valuation of investment portfolio is allowable by treating the investments held by the assessee’s bank as stock-in-trade once the RBI Master Circular

3 read with CBDT Circular No.665 came into force and even when under the provisions of the IT Act depreciation on valuation of investment portfolio was not allowable?

ii. Whether, the Income tax Appellate Tribunal was justified in dismissing the appeal preferred by the revenue by holding that the depreciation on valuation of investment portfolio is allowable by treating the investments held by the assessee – bank as stock in trade even when the same was not permitted under the provisions of the I.T. Act and, as such, whether the order of the Tribunal can be said to be perverse in nature?”

Both learned counsels appearing for the parties submit that the aforesaid substantial questions of law are covered by the judgment of this Court in the case of KARNATAKA BANK LIMITED VS. ASSISTANT COMMISSIONER OF INCOME TAX, reported in (2013) 356 ITR 549 (KAR), wherein the very same questions of law was answered in favour of the assessee and against the

4 revenue. Hence, following the aforesaid judgment, the substantial questions of law is answered accordingly.

The writ petition stands disposed off.

The writ petition is delinked from the connected writ petitions.

Sd/-

Sd/- JUDGE

JUDGE

Commissioner of Income Tax vs. Agricultural Market Committee