2012 (5) TMI 625

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.... as claimed by the appellant. b) The ld. CIT(A) ought to have appreciated that the investment though classified as 'held to maturity' for RBI purposes it was a part of business assets of the appellant bank and declared as such for income-tax purposes and the income therefrom was also assessed only under the head 'income from banking business'. c) Accordingly, the ld. CIT(A) ought to have appreciated that the loss on account of investment by way of premium was required o be allowed as claimed by the appellant. d) In the alternative the ld. CIT(A) ought to have directed the assessing authority to allow the deduction on account of depreciation in respect of securities for the relevant assessment year. e)The ld. CIT(A) ought to have appreciate that the unrealized interest in respect of nonperforming assets was liable to be allowed as claimed by the appellant as the same had been written off in the accounts of the appellant by debiting the same to the profit and loss account. f) The ld.CIT(A) ought to have appreciated that the amount was claimed as bad debt and consequently the same was allowable in full. g)The ld. CIT(A) ought to have allowed the claim of bad debt and....

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....sment year i.e 2007-08. 3. Ground no.4, with respect to unrealized interest on non-performing assets made on the directions of the Reserve Bank of India. 3.1 Ground no.5, with regard to allowance of depreciation. Since the issue has not been pressed by the learned counsel for the assessee, this ground of appeal is treated as 'not pressed'' hence, dismissed. 3.2 As the issues raised in these appeals being identical for both the assessment years under dispute, they were heard, considered together and disposed off, for the sake of brevity and convenience, in this common order. Further, the issues raised by the assessee for the AY 2007-08 are taken up for adjudication and the findings recorded here-under shall hold good for the AY 2008-09 as well. 3.3 The grounds raised are dealt with chronologically as below: 4. Ground nos. 1, 2 & 3: The assessee Bank had debited in its P & L account of Rs. 29.02 lakhs towards 'Amortization of premium' during the assessment year under consideration. The AO held that the amortization of premium arrived at by calculating the premium paid on certain investment classified as 'held on maturity' by the assessee is not allowable as deduction. It was, fu....

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....that the CIT (A) had failed to see the reason that a similar issue to that of the present one has been allowed by various Benches of the Hon'ble Tribunals namely.... i) ITAT Cochin Bench (2010) 38 SOT 553 (Cochin) in the case of Catholic Syrian Bank Ltd., Vs ACIT (Page no.4 of 16(para-15) ii) ITAT Panaji Bench, Panaji in the case of Khanapur Cooperative Bank Ltd., Vs ITO in ITA No.141/PNJ/2011-AY: 2007- 08 pra-6 page no.3. iii) ITAT Bangalore Bench in ITA No.112(Bang.)/2008 AY:2004-05 in the case of Corporation Bank Vs ACIT, Mangalore, para-10, page no.6 & para-26, page nos.8 & 9. 4.4 She also placed reliance on the Board's Instruction No.17 of 2008(vii) and pleaded that the claim of the assessee be allowed as the assessee was within its realm to debit in its P & L account a sum of Rs. 29.02 lakhs of amortization of premium. 4.5 The learned D R was unable to controvert the submissions of the learned AR. 4.6 We have carefully considered the rival submissions and diligently perused the relevant case records. We have also duly perused the findings of various Benches of the Tribunals which are considered as under: (i) Catholic Syrian Bank Ltd v. ACIT - (2010) 38 SOT 553 (....

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....ld that the provision was a kind of a reserve which was maintained by different business entities to sustain future losses and, thus, the provision of Rs. 1.66 lakhs was contingent in nature and, therefore, was not available as revenue expenditure. 5.2 Aggrieved, the assessee took up the issue with the learned CIT (A) for relief. After due consideration of the assessee's contention and also extensively quoting the ruling of the Hon'ble Madras High Court reported in 280 ITR 491, (Mad) and findings of the Spl. Bench of Delhi Tribunal 112 TTJ 917, the CIT (A) held that the provision being unrealizable interest on NPAs was not allowable as deduction. 5.3 Before us, it was argued by the learned AR that in case, the accrued interest account in respect of the borrowal account is not actually realized and the account has become NPA as at the end of the financial year, interest accounted or accrued and credited to income account should be provided for (reversed) to Overdue Interest Reserve A/c [OIR]. It was, further, submitted that in case the accrued interest in respect of the borrowal account is not actually realized and the account has become NPA as at the close of subsequent year, int....