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TMI Blog2017 (5) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue is squarely covered in favour of assessee by the decision of the Hon’ble Gujarat High Court in case of CIT vs. Rajkot District Co-operative Bank Ltd.[2014 (3) TMI 110 - GUJARAT HIGH COURT] - Decided in favour of assessee. Claim of loss towards provision of standard assets - Held that:- Hon’ble Apex Court in the case of Southern Technologies Ltd.(2010 (1) TMI 5 - SUPREME COURT OF INDIA ) has clearly observed that by way of special provision under s.36(1)(viia), the banks are allowed to claim deduction subject to a ceiling or a limit. As per section 36(1)(viia), the banks are entitled to claim deduction certain prescribed percentages of the average advance made by the rural branches of such banks. However, relevant facts about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be shown investment. 2.2. Your appellant submits that such depreciation in value is allowable as business expenditure/business loss u/s.28 r.w.s.37 of the Act. It is submitted that it be so held now. 2.3. The learned CIT(A) as well as AO erred in disregarding Instructions and Circulars issued by CBDT for assessment of banks in making above disallowances. 3. The learned CIT(A) erred in law as well as on facts in confirming the disallowance made by AO with respect to premium amortization expenses on government securities as per guidelines of RBI for a sum of ₹ 4,57,920/-. 4. The learned CIT(A) as well as AO erred in disallowing the provision on Standard assets of ₹ 1,50,000/- u/s.3691)(vii) r.w.s.36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, banks are showing gain or loss arises from sale of security as business income/loss rather than capital gain. The above position has also been clarified by Circular no. 665 dated 05-10-1993. The question whether a particular item of investment in securities constitutes stock-in-trade or a capital asset is a question of fact In fact, the banks are generally governed by the instructions of the Reserve Bank of India from time to time with regard to the classification of assets and also the accounting standards for investments. The Board has, therefore, decided that the Assessing Officers should determine on the facts and circumstances of each case as to whether any particular security constitutes stock-in-trade or investment tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed from year to year. Such claim has been allowed by various judicial pronouncements. Hon'ble Mumbai High court in case of CIT vs Bank of Baroda (2003) 262 ITR 334 has held that Depredation in value of investment held by bank was allowable as deduction more so when the loss was debited to P L A/c which was reflected as provision for liability in the balance sheet and the share and securities were valued at cost on the asset side Similar view has been taken by Hon ble Kerala High Court in case of CIT vs Nedungadi Bank Ltd (2003) 130 TAXMAN 93 (Ker). Therefore, depreciation in value was allowable even if specific instructions of the board were not there. Circular and instruction of the CBDT being squarely applicable on facts of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that the purpose of creating the provisions on the standard assets is to provide for bad debts components in it. 8.2. The Ld.AR for the Assessee relied upon the decision of the Coordinate Bench of Tribunal in its own case in assessment years 2007-08 and 2009-10. 8.3. The Ld.DR for the revenue, on the other hand, relied upon the decision of the Hon ble Supreme Court in the case of Southern Technologies Ltd. vs. Jt.CIT 320 ITR (2010)577 (SC) to support the order of the CIT(A). 8.4. In rejoinder, the Ld.AR pointed out the aforesaid decision concern Non-Banking Financial Companies (NBFCs) to which such incentive of deduction under s.36(1)(viia) has not been provided. It was submitted that the line of business operations of NBFC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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