TaxTMI 
TaxTMI 
2013 (11) TMI 1584
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....,333/-debited to P & L A/c. That the Amortization of premium paid on Govt. Securities Rs. 15,11,333/- debited to P & L A/c as per RBI guidelines be allowed in full as being the expenses incurred during the course of business of banking. 2. That the learned Commissioner of Income Tax (Appeal)l has erred in confirming the additions made by the A.O who has disallowed provision for depreciation on Govt. Securities debited to P & L A/c Rs. 51,06,000/- as per RBI guidelines. That the depreciation on Govt. Securities debited to P & L A/c as per RBI guidelines be allowed in full as being the expenses incurred during the course of business of banking. 3. That the learned CIT (A) has erred in confirming the addition made by A.O. on account of Suspe....
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....d that securities of the Bank are held under the head "to maturity category" and, therefore, loss arising on the sale of investment is in the nature of capital loss and therefore, the same is not allowable expenditure. The A.O made the addition to the extent of Rs. 14,70,000/-. The Ld CIT(A) confirmed the addition. 14. We have heard the parties. The Ld Counsel placed his heavy reliance on the decision of the Hon'ble High Court of Bombay in the case of CIT Vs. Bank of Baroda and in the case of UCO Bank Vs. CIT, 240 ITR 355 (SC). In the case of Bank of Baroda (Supra), the issue before their Lordship was whether the assessee was entitled for deduction on account of depreciation in the value of investments. The method of valuation followe....
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.... which the Securities are held. In our considered view, nomenclature cannot be decisive for the assessee Bank. We, therefore, hold that the loss on the sale of the Securities is revenue in nature and same is allowable. Accordingly, Ground No. 2 is allowed". 2.1 Moreover, the said issue is also decided in favour of the assessee by other co-ordinate Bench in the following cases: i) Decision of Bangalore Bench of the Tribunal in the case of Krishna Grameena Bank Vs. Addl. CIT (ITA No. 146/Bang/2011 and 224/Bang/2011 order dated 15-6- 2012. ii) Decision of Bangalore Bench of the Tribunal in the case of National Co-op. Bank Ltd. Vs. Jt. CIT Range 3 Bangalore (ITA No. 1090/Bang/2010 and 7/Bang/2011, order dated 11-5-2012). We therefore set as....
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....as per guidelines of RBI. The Circular No. 599, dt. 24th April, 1991 also declared such securities as stock-in-trade of the banks, though the later circular has left it open for the decision of the AO to decide whether they are stock-in-trade or not. The assessee is following the system of valuation regularly from asst. yr. 1977-78 and claiming depreciation in its IT return and same are being accepted by the Department-in some cases by the ITO and in some other cases by the CIT(A). Therefore, the attempt to file further appeal to the Tribunal has failed because even COD has not permitted to proceed with the matter. In these circumstances, the CIT(A) was justified in allowing the claim of the assessee." 3.1 Nothing contrary was brought to o....