Kankaria Maninagar Nagarik Sahakari Bank Ltd. Vs DCIT (ITAT Ahmedabad)
In a recent decision by the Income Tax Appellate Tribunal (ITAT) Ahmedabad, the Kankaria Maninagar Nagarik Sahakari Bank Ltd. contested against orders passed by the Commissioner of Income Tax (Appeals) concerning the Assessment Year 2012-13. The bank filed two appeals challenging the disallowance of loss on the sale of Government securities and the disallowance of depreciation on the same securities.
The first appeal (ITA No. 2349/Ahd/2018) focused on the disallowance of a loss amounting to Rs. 38,55,000 incurred from the sale of Government securities. The bank argued that these securities were held in compliance with regulatory guidelines set by the Reserve Bank of India (RBI) and were integral to meeting its liquidity requirements. Additionally, the bank contended that the securities were part of its banking business stock and should be treated as such for tax purposes.
The ITAT ruled in favor of the bank, citing Circular No. 599 issued by the Central Board of Direct Taxes (CBDT), which clarified that securities held by banks must be regarded as stock-in-trade. Therefore, the loss incurred on the sale of Government securities was deemed a business loss and allowable under the Income Tax Act. The tribunal directed the Assessing Officer (AO) to allow the claimed loss as a business deduction.
