PCIT Vs Karnataka Bank Ltd. (Supreme Court of India)
The Supreme Court dismissed the Special Leave Petition filed by the Revenue against the judgment of the Karnataka High Court in the case relating to Assessment Year 2004-05. The Supreme Court condoned the delay but observed that it did not find any good ground to interfere with the impugned judgment in exercise of its jurisdiction under Article 136 of the Constitution of India. Consequently, the Special Leave Petition was dismissed and all pending applications stood disposed of.
The High Court proceedings had arisen from the Revenue’s appeal against the order of the Income Tax Appellate Tribunal (ITAT), Bengaluru, dated 8 February 2024. The Revenue had challenged the Tribunal’s decision on several questions concerning the valuation of the assessee bank’s investment portfolio and the allowability of diminution in the value of investments.
Read HC Judgment in this case: Revenue Appeal Rejected as Investment Valuation Issue Already Settled: Karnataka HC
The Revenue contended that, during assessment proceedings and while giving effect to earlier orders, the Assessing Officer had noticed that the assessee had not effected diminution in the value of investments in its books of account in accordance with the applicable guidelines. According to the Revenue, the assessee had considered market value only in respect of securities where the value of investments had diminished, while appreciation in other securities had not been taken into account. It was argued that this approach violated the RBI guidelines dated 16 October 2000 relating to classification and valuation of investments by banks and was contrary to CBDT Circular No. 665 dated 5 October 1993.
