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TMI Blog2012 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... ) addition of Rs. 26,40,237/- being amortization of premium on investment in government securities ; (ii) disallowance of claim of bad and doubtful debts to the extent of Rs. 6,52,319/- ; and (iii) confirmation of interest u/s.234B and 234C of the Act. 03. Let us first take up the issue relating to amortization of premium on investment in government securities. Relevant grounds read as under : " i) The learned Commissioner (Appeals) ought to have appreciated that the appellant has to invest surplus fund in Government Securities as per RBI guidelines and the premium paid while investing in Government Securities that are bought in open market would have to be amortized till the maturity date of the security and thus the premium was wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) which stipulate for deduction not exceeding 5 per cent of the total income only in respect of the provision for bad and doubtful debts which are predominantly revenue in nature or trade related and not for provision for non-performing assets which are of predominantly capital nature. Thus, he was of the view that the assessee was not entitled to deduction of amortization of premium on investments u/s.36(1)(vii). Aggrieved, the assessee is in second appeal before us with this issue. 06. The learned counsel for the assessee submitted that the Commissioner of Income-tax (Appeals) had failed to see the reason that a issue similar to that of the present one had been allowed by various benches of the Hon'ble Tribunals, namely : * Catho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial Bank v. CIT (1999) 156 CTR (SC) 380 ; (1999) 240 ITR 355 (SC) and South Indian Bank Ltd., (ITA No.126/Coch/2004, dated.___ Sept, 2005 followed." (ii) The Khanapur Co-op Bank Ltd v. ITO - ITA No.141/PNJ/2011, dated.8.9.2011 : The Hon'ble Bench of Panaji Tribunal had recorded its findings that "6. Likewise, the premium amortized at Rs. 1,78,098/- is claimed to be in respect of securities held under the category 'held to maturity'. The Assessing Officer has taken them as long term investments. In other words, he has accepted the assessee's claim that the securities are 'held to maturity'. That being so and having regard to the CBDT Instruction No.17 of 2008 dated.26.11.2008 as reproduced herein above, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him in the light of Section 36(1)(viia) of the IT Act, the first appellate authority was of the view that the deduction allowable u/s.36(1)(viia) is in respect of provisions made. According to him,making of a provision for bad and doubtful debts equal to the amount mentioned in the section is a must for claiming such deduction. He noticed that an amount of Rs. 36 lakhs is debited to the P&L account under the head "Provision for bad and doubtful debts" and however, the assessee had claimed deduction of Rs. 42,52,319- while computing the taxable income. Thus, he found that in the books of account, provisions were made only for Rs. 36 lakhs. Hence, relying on the decision of the P&H High Court cited supra, he was of the view that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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