आदेश/ORDER 

PER RAJPAL YADAV, JUDICIAL MEMBER:

Present two appeals are directed at the instance of the assessee against orders of the ld.CIT(A)-10, Ahmedabad dated 10.3.2016 and 25.1.2017 passed for the Asstt.Years 2011-12 and 2012-13. Since common issue is involved in both the appeals, therefore we heard them together and deem it appropriate to dispose of them by this common order.

2. A perusal of the ground would indicate that they are verbatim same except variations of figures in both the assessment years. Sole grievance of the assessee is that the ld.CIT(A) has erred in law as well as on facts in confirming disallowance of the claim for deduction of Rs.3,16,00,000/- and Rs.3,03,14,000/- in respect of investment depreciation reserve in the Asstt.Year 2011-12 and 2012-13.

3. Facts on all vital points are common. Therefore, for the facility of reference, we take up the facts mainly from Asstt.Year 2011-12. Brief facts of the case are that the assessee is a cooperative society engaged in the business of banking. It has filed its return of income for the Asstt.year 2011-12 on 29.9.2011 declaring total income at Rs.10,68,73,920/-. Similarly, in the Asstt.Year 2012-13, it has declared taxable income of Rs.12,40,78,520/-. The case of the assessee was selected for scrutiny assessment in both the assessment years. Notice under section 143(2) dated 1.8.2011 and 6.8.2013 were issued and served upon the assessee in both these assessment years. On scrutiny of the accounts, it revealed to the AO that the assessee has debited an amount of Rs.3,16,00,000/- and Rs.3,03,14,000/- as provision in investment depreciation reserve. The ld.AO has confronted the assessee as to how this claim is admissible. According to the AO, it was contended by the assessee that depreciation reserve is required to be created to disclose true and correct value of its investment in the balance sheet. If the investment is less than the cost, the depreciation reserve in respect of such shortfall in the cost is to be reflected by way of crediting the reserve, and therefore, bank has to make a provision for investment depreciation reserve. It has claimed on the basis of guidelines issued by Reserve Bank of India as well as CBDT. The ld.AO was not satisfied with the explanation of the assessee. He rejected the claim of the assessee. Finding recorded by the AO in the Asstt.Year 2011-12 on this issue, reads as under:

“5.3 The contention of the assessee have been carefully gone through. However, the same is not found acceptable. In the Income tax Act, there is no provision for allowing investment depreciation reserve. The depreciation of assets governed by Section 32, in which in respect of block assets, the depreciation is allowed at specified rate of depreciation. The block of assets is defined u/s. 2(11) of the Act in which it is provided as under:

"Block of assets means a group of assets falling within a class of assets comprising

a) Tangible assets, being buildings, machinery, plant or furniture,

b) Intangible assets, being known how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature ".

Investment does not cover under the definition of block of assets and hence the assessee is not entitled to claim depreciation on it. Further, there is no provision in the Income tax Act to allow investment depreciation reserve on account of diminishing the value of investment. Though, the assessee has specifically asked to explain how the same is allowed in the computation of the total income. But the assessee has not explained under which section the same is allowable. Moreover, in the earlier year, though there was investment, the assessee has not created any investment depreciation reserve and claims the same in the profit and loss account. Further, at the time of sale of investment naturally the income may be considered being difference between face value of investment and safe consideration because the investment is not cons