2018 (3) TMI 1777

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..... e same parity of reasoning, we hold that the assessee is entitled to the claim of broken period interest. As in case of CIT vs. Citi Bank [ 2008 (8) TMI 766 - SUPREME COURT] held that broken period interest expenses are allowable expenses. We have noted that the order passed by ld. CIT(A) is based on the decision of Hon ble Bombay High Court in American Express International Banking Corporation (supra) and the decision of Hon ble Supreme Court in Citi Bank (supra). The decision relied by ld. DR was distinguished by Hon ble Apex Court in Citi Bank (supra). No other contrary decision is brought to our notice. Thus, no infirmity in the order passed by ld. CIT(A) in deleting the disallowance of broken period expenses. In the result, grounds .....

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..... o the notice under section 148, the assessee requested to treat the revised return filed on 12.03.2010 as return in response to the said notice. The re-assessment was completed on 26.03.2015 under section 143(3) r.w.s 147. The Assessing Officer while passing assessment order made the disallowance of broken period interest expenditure of ₹ 30,51,30,523/- incurred on purchase of securities. The Assessing Officer made the disallowance holding that assessee bank is not trader in securities and not entitled for claim of broker period interest expenditure. The Assessing Officer was also of the view that the Government Securities held by assessee cannot be treated as a part of trading asset. On appeal before the ld. CIT(A), the disallowance .....

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..... supra) and held that the decision in Vijaya Bank (supra) have no application, thus the decision relied by ld DR has been reversed by Hon ble Supreme Court in Citi Bank (Supra). 4. We have considered the rival submission of the parties and have gone through the order of lower authorities. The Assessing Officer made the disallowance on the basis of decision of Vijaya Bank Ltd. vs. ACIT [197 ITR 541 SC)] on his observation that broken period interest is a part of capital outlet for acquisition of securities and also on the basis of decision of CIT vs. Bank of Rajasthan that expenses made by Bank towards broken period interest on securities purchased by it is not allowable business deduction. The Assessing Officer also conclud .....

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