Tribunal Upholds Disallowance of Broken Period Interest & Allows Depreciation on Govt Securities

The Tribunal upheld the CIT(A)'s decision to disallow broken period interest on securities purchase, treating them as stock-in-trade. Similarly, the Tribunal supported the CIT(A)'s allowance of depreciation on Govt Securities held by the bank as stock-in-trade. The Revenue's appeals were dismissed, with the Tribunal citing previous decisions in favor of the assessee. The judgments were pronounced on 17th March 2021.

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Issues:
1. Disallowance of broken period interest on purchase of securities.
2. Treatment of Govt Securities held by the bank as Stock in Trade for depreciation.

Analysis:
1. The Assessing Officer challenged the order deleting the disallowance of broken period interest on the purchase of securities, arguing it should be treated as capital expenditure. The CIT(A) allowed the appeal, following a decision of the Madras High Court. The Tribunal upheld the CIT(A)'s decision, emphasizing that the nature of securities as stock-in-trade should not change despite being classified as investments for regulatory compliance. The Tribunal dismissed the Revenue's appeal, citing a previous decision in favor of the assessee on a similar issue.

2. The second issue pertained to the treatment of Govt Securities held by the bank as Stock in Trade for depreciation. The AO rejected the claim, considering the securities as investments. However, the CIT(A) allowed the depreciation claim, treating the securities as stock-in-trade. The Tribunal, following its previous decision in the assessee's case, upheld the CIT(A)'s decision, emphasizing that since the securities were stock-in-trade, depreciation should be allowed. The Tribunal dismissed the Revenue's appeal, as the issues were found to be covered by previous decisions in favor of the assessee.

In conclusion, the Tribunal dismissed the Revenue's appeals, upholding the decisions of the CIT(A) on both issues. The Tribunal found no reason to interfere with the conclusions reached, as the issues were previously adjudicated in favor of the assessee by a coordinate bench. The judgments were pronounced on 17th March 2021.

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