Amortization of security premium on held-to-maturity investments upheld as revenue expenditure under binding circular-based precedent.

Amortization of premium paid on investments classified as held to maturity is allowable as revenue expenditure where the claim is covered by an earlier Division Bench ruling of the same High Court and supported by paragraph (vii) of CBDT Circular No. 17 of 2008. In the absence of any contrary authority, that binding view was applied, and the amortization of security premium was held allowable in favour of the assessee.

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Issues: Whether amortization of premium paid on investments under the held to maturity category is allowable as revenue expenditure.

Analysis: The issue was treated as concluded by an earlier Division Bench decision of the same Court, which had accepted the assessee's claim for amortization of security premium by relying on paragraph (vii) of CBDT Circular No. 17 of 2008. No contrary decision was shown to displace that binding view.

Conclusion: The amortization of security premium is allowable, and the question is answered against the Revenue and in favour of the assessee.

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