IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1117 OF 2013 Commissioner of Income Tax-II, Thane ..Appellant. V/s. Thane Bharat Sahakari Bank Ltd. ..Respondent. Mr.Suresh Kumar for appellant. None for respondent. CORAM : S.C.DHARMADHIKARI AND A.K. MENON, JJ. DATED : 17TH MARCH, 2015 P.C. :- 1. We have heard Mr.Suresh Kumar, learned counsel appearing on behalf of revenue. 2. revenue has challenged order dated 17 th October, 2012 of Income Tax Appellate Tribunal for assessment year 2008-09. 3. assessee before Tribunal is Co-operative bank. It is functioning under Maharashtra Co-operative Societies Act, 1960 and carries on banking business in terms of licence issued in its favour by Reserve Bank of India. ::: Uploaded on - 20/03/2015 ::: Downloaded on - 05/07/2017 15:42:42 ::: 2 itxa1117-13 bank was aggrieved and dissatisfied with exercise undertaken by assessing officer. He made certain disallowances on loss of shifting classified securities amounting `2,22,25,310/-. 4. assessing officer's order was challenged before Commissioner of Income Tax (Appeals) and bank relied upon circular issued by Reserve Bank of India dated 28th March, 2005. This permitted bank to shift securities from one category to another only once in year and further mandated that on such shifting relative investment would be recorded at market value on date of shifting. Reserve Bank of India also directed that any loss occasioned shall be fully written off in five years. 5. In present case, while so shifting securities, loss was recorded that was because of likely value on date of shifting. Commissioner of Income Tax (Appeals) accepted bank's claim vide his order which was passed on 29th July, 2011. Commissioner in paragraph 5 of his order found that assessing officer sought explanation and bank indicated in explanation that there were certain securities which were purchased at ::: Uploaded on - 20/03/2015 ::: Downloaded on - 05/07/2017 15:42:43 ::: 3 itxa1117-13 ruling price which was higher than their face value. premium so paid indicates difference between purchase price and face value of security which are required to be held until maturity under Reserve Bank of India directives. On date of maturity, bank is entitled to receive amount equal to only face value. Thus, face value to be received at time of maturity date is certain and, therefore, premium needs to be spread over life of security. This explanation given by bank was not accepted by assessing officer. Commissioner referred to RBI policy and guidelines. He also perused order of assessing officer. Reserve Bank of India by guidelines dated 16th October, 2008 which are referred to permitted write off of losses arising from shifting of securities from one category to another in respect of investment in government securities. It is in these circumstances that addition made by assessing officer was deleted. As far as disallowance of `70,63,042/- being proportionate write off, of premium paid on securities held on maturity, bank submitted that it purchased certain securities at price higher than maturity value. excess amount of premium is to be written off on proportionate basis from year ::: Uploaded on - 20/03/2015 ::: Downloaded on - 05/07/2017 15:42:43 ::: 4 itxa1117-13 to year. sum of `70,63,042/- represents such proportionate expenditure written off in year under consideration. Even this argument has been accepted. 6. Tribunal in dismissing revenue's appeal and upholding order of Commissioner found that similar exercise was undertaken by another assessee Latur Urban Co- op. Bank Ltd. for assessment year 2007-08 and same was dealt with in Income Tax Appeal No,.778/PN/2011 decided on 31st August, 2012 by Pune Bench of Tribunal. 7. Once such is nature of material before Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal, then, we are of opinion that view taken by Tribunal cannot be termed as perverse. Tribunal's view is in consonance with banking policy and guidelines issued by Reserve Bank of India. We further feel that different treatment cannot be given to identically situated assessee, namely co-operative bank. In these circumstances, revenue's appeal has no merits. It is accordingly dismissed. No order as to costs. (A.K. MENON, J.) (S.C.DHARMADHIKARI, J.) ::: Uploaded on - 20/03/2015 ::: Downloaded on - 05/07/2017 15:42:43 ::: Commissioner of Income-tax-II, Thane v. Thane Bharat Sahakari Bank Ltd