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TMI Blog2020 (7) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... unt so as to satisfy the RBI norms, which provide for valuing the securities as such without any diminution in their value at the year end. RBI guidelines mandate reflection of certain transactions in a certain way and do not supersede the taxing principles. Treatment of the securities as investment or stock-in-trade - AR has relied on the judgment in Pr.CIT Vs. Bank of Maharashtra [ 2018 (3) TMI 316 - BOMBAY HIGH COURT] in which, in identical circumstances held that the securities held by the assessee bank as `Held till Maturity will not be treated as investment. No contrary point of view has been brought to our notice by the ld. DR. Respectfully following the precedent, we overturn the impugned order on this score and hold that suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Decided against assessee. - ITA No.1060/PUN/2017 - - - Dated:- 17-7-2020 - Shri R.S. Syal, Vice President And Shri S.S. Viswanethra Ravi, Judicial Member For the Assessee : Shri Sanket Joshi For the Revenue : Shri Ajay Dhoke ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 15.02.2017 passed by the CIT(A)-1, Nashik in relation to the assessment year 2012-13. 2. The first three grounds are against the confirmation of disallowance of ₹ 2,65,85,821/- made by the Assessing Officer in respect of deduction claimed by the assessee on account of diminution in the market value of Government securities classified under the category Held to Maturity . 3. Briefly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he market value of securities as at year end, say at ₹ 80/- and claimed the difference of ₹ 20/- as deductible in the computation of total income, which has not been allowed. We will analyze the reasons given by the authorities below for making and confirming of this disallowance. The first such reason assigned by the AO is that the assessee did not record the diminution value of securities to the extent of ₹ 2.65 crores in the books of account. In our considered opinion, this fact is of no significance. The essence of the matter is to examine as to whether a particular expenditure/loss is deductible and not whether the same is recorded in the books of account. If a particular amount is deductible as per law, the same has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stock-in-trade and not investments. 6. The next point is the computation of amount of diminution value on securities. In the above hypothetical example, we noticed that the securities with face value of ₹ 100/- had market value of ₹ 80/- as at the end of the year and the assessee claimed deduction in respect of ₹ 20/-, being, difference between the two. Ordinarily, there can be no difficulty in valuing securities at cost or market price, whichever is less and allowing deduction accordingly. But, the question that arises in the instant case is that how profit will be computed at the time of their sale when such securities are not reflected on market value in the books of account. In this regard, the ld. AR was requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Moreover, the AO has not made any separate disallowance towards write off of premium on these securities. We, therefore, order to delete the addition of ₹ 2.65 crores and odd. Thus, these three grounds are allowed. 8. The only other surviving issue in this appeal is projected through ground No.4, being, confirmation of disallowance u/s 36(1)(viia) of the Act amounting to ₹ 37,56,718/-. 9. Succinctly, the facts of this ground are that the assessee claimed deduction of ₹ 44,25,718/- on account of 10% average of advances for rural branches. The AO observed that the provision on account of bad and doubtful debts was made in the Profit and Loss Account to the tune of ₹ 6,69,000/-. Considering the mandate of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athma Bank in ITA No.4090/Del/2013. We have also gone through this order which has allowed deduction on the amount of provision which was not debited to the Profit and Loss Account by, primarily, relying on the order in that assessee s own case passed u/s 263 of the Act. It goes without saying that the parameters for revision u/s 263 of the Act are quite distinct from those of assessment u/s 143(3) of the Act. In view of the fact that the issue under consideration is directly covered by the direct judgment of Hon ble High Court of Punjab Haryana in the case of State Bank of Patiala Vs. CIT (2005) 272 ITR 54 (P H) and two other decisions of Pune Benches of Tribunal, respectfully following the same, we uphold the disallowance. This groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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