Law: Income Tax Act, 1961

Section: 256,256(2)

Income-tax----Reference---Business---Tribunal allowing deduction of loss on revaluation of securities ---Tribunals's decision based on High Court where Revenue had taken a contrary stand---Question whether Tribunal's decision was correct could not be referred ---Indian Income Tax Act, 1961, S.256(2). Held, dismissing the application for directing reference, that the Court in T.C. Nos.359 and 360 of 1986 and 1259 of 1987, concluded that the investment made by the bank was in the nature of and forming part of its stock-in-trade and the profit arising out of the redemption of securities was assessable under the head "Business profit" and not under the head "Capital gains". In these petitions, which concerned the assessment year 1988-89, the Tribunal followed the of the Karnataka High Court which had been referred to with approval by the Court, and held that the change in the method of valuation of the investment was permissible, as the assessee had the option of valuing the investment at cost or at market price. The fact that the assessee had adopted the cost price in earlier years, but chose to change that mode of valuation to the market price was not in any way contrary to the requirements of the Act. No exception could have been taken to that finding of the Tribunal. The Revenue sought reference taking contradictory stands in respect of the same assessee, in spite of the fact that its contention to the contrary had been upheld by the Court on the earlier occasion. CIT v. Madras Central Urban Bank Ltd. AIR 1929 Mad. 387; Karnatka Bank Ltd. v. CIT (1978) 114 ITR 421 (Kar.); Punjab Cooperative Bank Ltd, v. CIT (1940) 8 ITR 635 (PC); Sardar Indra Singh & Sons Ltd. v. CIT (1953) 24 ITR 415 (SC); State Bank of Hyderabad v. CIT (1985) 151 ITR 703 (AP) and Union Cold Storage Co. v. Simpson (Inspector of Taxes) (1939) 7 ITR 630 (CA) ref. JUDGMENT R. JAYASIMHA BABU, J.---The Revenue wants to blow hot and cold. It contended in a case concerning the same assessee in respect of an earlier assessment year that the investment held by it is stock-in-trade. It now wants to contend to the contrary and claim that investment made by the assessee-bank is not stock-in-trade. The…

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