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2014 (2) TMI 932

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....acts and in the circumstances of the case, the Ld. CIT(A) erred in allowing amortization of premium paid on Government Securities purchased by the assessee. All capital assets are to be valued at cost only and no part thereof can be claimed as revenue expenditure in computing total income. This principle has been upheld by the Hon'ble Supreme Court in the case of Vijay Bank Ltd. Vs. Addl. CIT (187 ITR 541)". 3. After hearing both the sides, we find that the AO disallowed an amount of Rs.21,47,607/- on account of amortization of premium paid on Government Securities debited to the P& L Account. We find the Ld. CIT(A) following his order in the case of Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. for A.Y. 2008-09 decided the issu....

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....an agricultural credit society or primary cooperative agricultural and rural development bank". 5. The intention of the provision may be derived more precisely from relevant Para 166 of the budget speech which stated that : "Co- operative banks, like any other bank, are lending institutions and should pay tax on their profits, Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agricultural and Rural Development Bank (PCARDB) stand on a special footing and will continue to be exempt under section 80P of the Income Tax Act. However, I propose to exclude all other co-operative banks from the scope of that section". Accordingly, section 80P is to be amended to give effect to the above proposal. It is also proposed to amend se....

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....part, any permanent diminution in value shall FV shall go on to reduce cost of the investment. 2. AFS The individual scrips in the Available for Sale category will be marked to market at quarterly or at more frequent intervals. These investments are considered to form stock-in-trade of a bank and therefore are to be valued at cost or NRV, whichever is less. Fall in value below cost, therefore, is to be provided immediately, however any net appreciation in value is ignored and not recognized as income on the basis of conservatism. 3. HFT The individual scrips in the Held for Trading category will be marked to market at monthly or at more frequent intervals and provided for as in the case of those in the Available for Sale category. 7. In ....

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....tion. In view of above, assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition of Rs.17,91,659/- made by the Assessing Officer by disallowing amount towards amortization of Government Securities (HMT) was deleted. This reasoned factual and legal finding of the CIT(A) needs no interference from our side. We uphold the same. 9. As a result, the appeal filed by the Revenue is dismissed". 10.1 Respectfully following the decision of the Coordinate Bench of the Tribunal and in absence of any contrary material brought to our notice against the above cited decision we find ....