High Court of Karnataka · Judgments and reasoned final orders
Joint Commissioner of Income Tax (LTU), Bangalore v. Bank of Baroda (Erstwhile Vijaya Bank)
Income Tax Appeal No. 102 of 2025 ·
Allowability of deduction for depreciation on investment portfolio classified as Held-to-Maturity (HTM) securities held by a banking company for AY 2014-15.
1. FACTS OF THE CASE
The Revenue appealed under Section 260A against the ITAT Bengaluru Bench order for AY 2014-15 allowing the claim of erstwhile Vijaya Bank (merged with Bank of Baroda) for deduction of depreciation on securities classified under the Held-to-Maturity (HTM) category.
2. DISCUSSION BY THE COURT
The Division Bench noted that the identical question of law had already been decided in favour of banking assessees and against the Revenue by coordinate benches of the Karnataka High Court in Karnataka Bank Ltd. v. ACIT (2013) 356 ITR 549 (Kar) and CIT v. ING Vysya Bank Ltd., holding that securities held by a banking company—regardless of RBI classification into HTM, AFS, or HFT—partake the character of stock-in-trade and depreciation on their valuation is allowable.
3. JUDICIAL DECISION
Answering the substantial questions of law in favour of the assessee and against the Revenue, the High Court dismissed the appeal.
4. OUTCOME
Assessee - Revenue appeal dismissed; deduction for depreciation on HTM securities upheld.
5. AKHB REVIEW POINT
For banking companies assessed in Karnataka, RBI accounting classification of securities as Held-to-Maturity (HTM) does not bar the bank from valuing those securities as stock-in-trade at lower of cost or market value for income-tax computation.
Source and verification
4-page official High Court of Karnataka judgment PDF (20260205_KAHC010314252025.pdf, 84,014 bytes).
Original PDF: 4 pages · SHA-256: fa3d78e350c97fc7b9fc3754707ca4cb56b10712575ed461ad8ab70e33c9c1cf
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Sections 28, 37(1), and 145 of the Income-tax Act, 1961 for AY 2014-15. Income-tax Act, 2025 equivalence is not verified.
Full 4-page primary judgment PDF text read and verified page-by-page. Follows CIT v. Karnataka Bank Ltd. (2012) 349 ITR 705 (Kar) and CIT v. ING Vysya Bank Ltd. (2020) 422 ITR 116 (Kar).
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