9911796707
TMI Blog2014 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT(A), the Assessee is now in appeal before us and has raised the following grounds:- 1. The learned CIT(A) has erred in confirming the disallowance of Rs. 2,60,99,875 being the amortization of premium paid on government securities on the ground that the assessee is not trading in such securities in as much as the amortization is to be provided as per RBI Guidelines and that it is allowable as deduction as per Instruction No. 17 dated 26-11-2008. 1.1 The appellant says and submits that the amortization has been provided since years by the bank and that it is consistently allowed as deduction. 2. The learned CIT(A) has erred in holding that the government securities on which is the amortization is claimed is not held to maturity since there are transactions of sale during the year in as much as there is no bar of selling the government securities even if it is held to maturity. 3. The learned CIT(A) has erred in interpreting the guideline issued by the RBI and not following Instruction No. 17 dated 26-11-2008. 4. Though the Assessee has raised various grounds, the only effective ground is with respect to disallowance of Amortization of premium paid on Government securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etail or evidence to show that the securities indicated in the balance sheet were HTM was furnished, therefore, the appellant was once again asked to furnish evidence to prove that the securities shown were HTM. It was also asked to give details of securities in the account/portfolio which has been categorised by it as HTM. On the appointed date a chart indicating the securities held from 31/03/2007 to 31/03/2010 was furnished. A perusal of the chart reflected that complete details about the securities held have not been given. Accordingly the appellant was asked to furnish details of HTM from 01/04/2006 and also the transactions there in. The appellant's AR on the last date of hearing submitted that since the details were old-he was unable to file the same. In order to find out the correct position the details of investment in earlier years were obtained from the AO. The details received show that there is a variation in the investment in state and Government securities in every year. The quanta of investment in various years are as under: - Sr. No. Date Investment (Rs.) 1 31/03/2007 120,00,00,000/- 2 31/03/2008 109,00,00,000/- 3 31/03/2009 74,00,00,000/- 4 31/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1) also restrict the conversion of one type of security to the other esp. the HTM. It also prescribes that the conversion from HTM type of security to other can be done only once in a year, normally at the beginning of the year, whereas the appellant has sold the securities at three different times during the year. First sale was made by the appellant on 30/11/2009, second on 25/03/2010 and two other sales were made on 30/03/2010. This is in clear violation to the guidelines laid down by the RBI. On one side the appellant is claiming that the amortisation expenses are being claimed as per the guidelines issued by the RBI which are acceptable by the Department, on the other hand the RBI guidelines are not being followed. The appellant has expressed its inability to furnish the complete details for last four-five years which would have enabled me to examine whether the appellant had really maintained the securities as HTM or it was a simple investment in security which was not to be kept till maturity and can be sold whenever it is needed. It may be either AFS or HFT. Since the appellant has not cooperated, apparently, to avoid getting exposed it can be concluded that the securitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before us, the ld. A.R. reiterated the submissions made before CIT(A). He further submitted RBI requires the Assessee to maintain statutory Liquidity Ratio (SLR) and for that it is required to invest in Government Securities. The Securities are at times purchased at premium to the face value. RBI guidelines require that the premium paid on the purchase of securities needs to be amortised over the life of security. He further submitted that the premium which has been written off is allowable as deduction as per the Master Circular of RBI. He also placed on record the copy of the aforesaid circular. He further submitted that Assessee has been consistently following the policy of writing of the premium in earlier years and the same was also accepted by the Department. He further submitted that Assessee in the past had purchased certain securities which were Government of India bonds and was classified as "Held to Maturity" (HTM) in accordance with RBI guidelines and the premium paid on the purchase of securities was also amortised as per RBI guidelines. He further submitted that though the Assessee had sold the securities before the maturity date, but the same was not prohibited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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