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TMI Blog2013 (5) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... stock-in-trade. There is RBI circular as per which the assessee can amortize the depreciation or loss on the conversion of securities from FST category to HTM category. We, therefore, do not agree with the view taken by the Ld. CIT(A) that the securities held under HTM are capital in nature. We accordingly allow the Ground no. 1 taken by the assessee and direct the Assessing Officer to allow the claim of the assessee in light of the above discussion. U/s 14A petty expenditure which has been proved to have been incurred in relation to earning of tax free income can be disallowed and section cannot be extended to disallow even the expenditure is permitted to have been incurred for the purposes of earning tax free income. In the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A and disallowing the same. The appellant submits that, since the facts are similar, the same be allowed as allowed by Tribunal A Bench, Pune in ITAT No. 1844/PN/05 A.Y. 2002/03 order dtd. 26the Sept. 2008, in appellant's appeal. 3. The assessing officer has erred in disallowing part of expenses as under, as "personal nature" on estimate basis- Telephone expenses Rs.17,500/- Vehicle expenses Rs.35,000/- Advertisement expenses Rs.12,500/- General expenses Rs.12,500/- Rs.77,500/- 2. So far as the Ground no. 1 is concerned the facts which are revealed from the record as under. The assessee has claimed the loss on diminution in valuation of the securities Held Till Maturity (HTM) to the extent of ₹ 9.45 crores. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading (HFT). The Assessing Officer was of the opinion that the loss on diminution of the value of the securities cannot be charged to the profit and loss account in the case of securities held under the category of HTM. We find that the assessee bank has followed the RBI guidelines and as per the RBI guidelines the assessee has made the provision of ₹ 9.45 crores on account of diminution in value of securities. In this case, an amount of ₹ 1,48,96,027/- being amortization in respect of diminution in the value of those securities attributable to financial year 2003-04 was added to the income in the computation. The profit on actual realization on sale of the securities of ₹ 23.20 crores had been credited to the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee are part of the stock-in-trade irrespective of their classification. So far as the treatment of the assessee in classifying the securities, in our opinion the securities classified under HTM category is also part of the stock-in-trade. There is RBI circular as per which the assessee can amortize the depreciation or loss on the conversion of securities from FST category to HTM category. We, therefore, do not agree with the view taken by the Ld. CIT(A) that the securities held under HTM are capital in nature. We accordingly allow the Ground no. 1 taken by the assessee and direct the Assessing Officer to allow the claim of the assessee in light of the above discussion. 8. So far as the Ground no. 2 is concerned, the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee is in appeal before us. 15. We have heard the content ions of both the parties. U/s 14A petty expenditure which has been proved to have been incurred in relation to earning of tax free income can be disallowed and section cannot be extended to disallow even the expenditure is permitted to have been incurred for the purposes of earning tax free income. In the circumstances, the disallowance cannot be made u/s 14A of the Act. This ground is therefore, allowed. 11. We therefore following the order of the Tribunal in assessee's own case for the A.Y. 2002-03 delete the addition made by the Assessing Officer by invoking the provision of Section 14A. Accordingly the Ground no. 2 is allowed. 12. Ground no. 3 is in respect of advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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