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TMI Blog2017 (9) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co–ordinate Bench allowed depreciation claimed on AFS and HFT categories of securities by holding them as stock–in–trade. Further, in case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT) while dismissing the Revenue’s appeal on the issue has upheld the decision of the Tribunal in allowing deduction claimed on diminution in value of securities. Learned Departmental Representative has not brought any contrary decision to our notice to defer from the ratio laid down in the decisions relied upon by the learned Commissioner (Appeals). In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the grounds raised. - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, the interest which has accrued till the date of purchase from the last coupon date is debited to expenses account and on the next due date of coupon, the interest for the en/ire period is credited to income account as the holder of Government security becomes eligible // entitled to full interest. This eventually reflects the proper accounting effect of the income / interest earned by the Bank. There is no impact of broken period interest paid at the time of purchase of securities on the Profit & Loss Account over the period and that it is revenue neutral. Similarly, wherever security is bought and sold within the same year, there is no impact on the Profit and Loss Account as broken period interest is deductible as cost of acquisition in the same year." 5. Further, it was submitted by the assessee, as per the method of accounting mandated by the Reserve Bank of India, the assessee has debited broken period interest to the Profit & Loss account and the same method of accounting is being followed by the assessee consistently. The Assessing Officer, however, did not find merit in the submissions of the assessee. Relying upon the decision of the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully following these decisions, it is held that the broken period interest paid by the appellant is allowable as deduction in computing the total income of the assessee. The ground is, accordingly allowed." 7. The learned Departmental Representative though, relied upon the observations of the Assessing Officer, however, he agreed that the disputed issue stands decided in favour of the assessee by virtue of decisions referred to by the learned Commissioner (Appeals). 8. Learned Authorised Representative strongly relied upon the finding of the learned Commissioner (Appeals). 9. We have heard rival contentions and perused the material available on record in the light of the decisions relied upon. Undisputedly, the Assessing Officer relying upon the decision of the Hon'ble Supreme Court in Vijaya Bank Ltd. (supra), has disallowed assessee's claim of deduction on account of broken period interest on the reasoning that it is capital in nature. However, Hon'ble Jurisdictional High Court in American Express International Banking Corp. v/s CIT, [2002] 258 ITR 601 (Bom.), after analyzing the concept of broken period interest held that broken period interest is allowable as revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its claim of depreciation on securities held under Approved For Sale (AFS) and Held For Trading (HFT) category. In response, it was submitted by the assessee that the claim of depreciation is confined to AFS category of securities which are nothing but stock-in-trade of the assessee. The Assessing Officer, however, did not find merit in the submissions of the assessee and held that AFS and HFT categories of securities will form part of investment, hence, depreciation claimed on such securities is not allowable. The assessee challenged the disallowance of depreciation before the first appellate authority. 12. The learned Commissioner (Appeals) allowed assessee's claim holding as under:- "6.2 I have carefully considered the facts of the case and submission made by the Ld. ARs. I have also gone through the decisions relied on by the AO and the Ld.AR. The appellant has stated that all investments are treated as stock-in-trade right from A.Y. 2001-02. The investment under the category of AFS and HFT are treaed as stock-in-trade in accordance with the RBI guidelines. The appellant has relied on the decision of the Hon'ble Tribunal in the case of Yes Bank Ltd. v/s DCIT, ITA no.5910 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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