In a recent order of Income Tax Appellate Tribunal Kolkata held that, securities held by banks running co-operative society constitute their stock-in-trade and consequently the notional loss claimed by the assessee-banks on valuation of such securities at the close of the year is allowable as deduction in computing the taxable profits.
The Burdwan Central Co-operative Bank Ltd, is a cooperative society engaged in the business of banking.
The Counsel for the assessee conteded that, the securities held by the assessee in the present case were admittedly in the category of “available for sale” and therefore even as per the CBDT instruction the claim of the assessee has to be allowed.
The Tribunal relied on a case of Kerala High Court CIT vs Nedungadi Bank Ltd, held that, it is now settled by a series of decisions that the securities held by the banks constitute their stock-in-trade or investment and consequently the loss claimed by the banks on the valuation of their securities should be allowed as a deduction in computing the taxable profits
The Tribunal also referred to CBDT Circular and has held that same view has been taken by the CBDT in Circular No. 599, dt. 24th April, 1991.
While the partly allowing the appeal, the tribunal also observed that, the securities held by the assessee-bank in all these cases are the stock-in-trade of the business of the assessee-banks and the notional loss suffered on account of the revaluation of the said securities at the close of the year is an allowable deduction in the computation of the profits of the appellant.
Read the full text of the order below.
