PCIT Vs Karnataka Bank Ltd. (Karnataka High Court)
The Karnataka High Court dismissed the Revenue’s appeal against the order of the Income Tax Appellate Tribunal (ITAT) concerning Assessment Year 2004-05. The appeal arose from the Tribunal’s order dated 8 February 2024, wherein the issues had been decided in favour of the assessee by following its earlier orders.
The Revenue raised substantial questions of law relating to the treatment of diminution in the value of the investment portfolio maintained by the assessee bank. According to the Revenue, during assessment proceedings and while giving effect to earlier orders, the Assessing Officer had observed that the assessee had not effected diminution in the value of investments in its books of account in a manner consistent with the applicable guidelines. It was contended that the assessee had considered the market value only in respect of those securities where the value of investments had diminished, while appreciation in other securities had not been accounted for. The Revenue argued that such treatment violated the RBI guidelines relating to classification and valuation of investments by banks and was also contrary to the CBDT Circular dated 5 October 1993.
Read SC Judgment in this case: SC Dismisses Revenue’s SLP as Issues on Investment Diminution Already Covered by Earlier Ruling
