9911796707
TMI Blog2015 (9) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... government securities under HTM category have been held as stock-in-trade by assessee. As held by Hon’ble Supreme Court in case of UCO Bank (1999 (5) TMI 3 - SUPREME Court), securities on which premium is paid, if held under HTM category are to be treated as stock-in-trade. ITAT Mumbai Bench in case of ACIT Vs. the Bank of Rajasthan Ltd. [2011 (9) TMI 961 - ITAT MUMBAI] while deciding the issue relating to allowability of deduction claimed towards amortization on premium paid on excess face value of securities held under HTM category has allowed assessee’s claim - Decided in favour of assessee. Disallowance of deduction claimed u/s 36(1)(viia) - Held that:- Undisputedly, assessee has not made any provision for bad and doubtful debts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 relates to deletion by ld. CIT(A) of addition made by AO on account of disallowance of broken period interest. 4. Briefly the facts relating to this issue are, assessee a regional rural bank is doing banking activity in the state of undivided AP. For the AY under consideration, assessee filed its return of income on 25/09/2009 declaring total income of ₹ 36,33,59,291. During the assessment proceeding, AO noticed that assessee has claimed an amount of ₹ 1,58,65,512 as broken period interest paid on purchase of securities. When AO called upon assessee to explain whether the broken period can be allowed as business expenditure, assessee submitted that RBI had advised banks that they should not capitalize broken period inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies and perused the materials on record as well as the orders of revenue authorities. Both the counsels agreed before us that the issue in dispute is squarely covered by the decision of the Tribunal in assessee s own case for AY 2010-11 in ITA No. 1742/Hyd/2014 dated 25/03/2015. On perusal of the said order of ITAT, a copy of which is placed before the Bench, it is noticed that Tribunal while deciding the issue in assessee s own case for AY 2010-11 has held as under: 21. With regard to the issue of broken period of interest for an amount of ₹ 3,73,12,444/- the issue is covered by the orders cited above and also in the case of United Commercial Bank vs. CIT (1994) 240 ITR 355 (S.C), CIT vs. South Indian Bank Ltd (2000) 241 ITR 374 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961 the premium paid on government securities is an intangible asset whose life can be ascertained and accordingly the same should be amortized and written off over the useful life of interest. AO, however, did not find merit in the submissions of assessee. Referring to the provisions of section 35D, AO ultimately, held that as the claim of amortization is not in accordance with the provisions of the said section, assessee s claim is not allowable. Being aggrieved of such disallowance, assessee preferred appeal before ld. CIT(A). 9. In course of hearing of appeal before ld. CIT(A), it was submitted by assessee that all the investments in government securities were held as stock-in-trade and not as investment and the securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sides have agreed that this issue is also squarely covered in favour of the assessee by the various orders of the Tribunal passed in assessee s own case for earlier years. Copies of the said orders are placed on record before us and a perusal of the same shows that in one of such orders dated 22nd Dec., 2010 passed in assessee s own case for assessment years 2002-03 to 2006-07, the coordinate bench of this Tribunal has directed the AO to allow the premium amortized by the assessee over the period remaining to maturity holding that the same was claimed as per the relevant RBI guidelines and even the CBDT has issued instructions to allow the same. Respectfully following the said order of the Tribunal in assessee s own case for earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) can be allowed, upheld the disallowance since assessee has not made any provision in the books of account. Being aggrieved, assessee is before us. 15. Ld. AR submitted before us, the issue is covered by the decision of the Tribunal in assessee s own case for AY 2010-11 in ITA No. 1742/Hyd/14 dated 25/03/2015. 16. Ld. DR, on the other hand, submitted that the said decision has not taken into consideration the judgment of the P H High Court in case of State Bank of Patial (supra), which is directly on the issue. 17. We have considered the submissions of the parties and perused the materials on record. Undisputedly, assessee has not made any provision for bad and doubtful debts in the books of account as required u/s 36(1)(viia). O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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