TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 1088
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....er or to amend the above grounds of appeal. 4. The Revenue in ITA No. 1981/PN/2013 has raised the following grounds of appeal:- 1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in deleting the addition of Rs. 22,69,144/- made by the Assessing Officer by disallowing the assessee's claim of deduction on account of premium paid on investment in Government Securities. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in holding that as the assessee had made investment in the "Held to Maturity" securities in accordance with the RBI guidelines to carry on the business of banking, amortization of the premium paid on such securities has the element of revenue expenditure. 4. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that "Held to Maturity" Securities, being investments, are in the nature of capital assets and not in the nature of stock-in-trade; and, therefore, any expenditure incurred thereon could only be capital expenditure not admissible as deduction. Even in the Ma....
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....out calling for any details or evidences in support of the above claim. 11. The learned Commissioner of Income-tax (Appeals) grossly erred in not taking cognizance of the fact that even in the Master Circular issued by the Reserve Bank of India on the subject "Prudential norms for classification, Valuation and Operation of Investment Portfolio by Banks" dated July 01, 2013, it has been clearly stated that the accounting treatment in respect of broken period interest prescribed in the said circular does not take into account the tax implications and, hence, the banks should comply "with the requirements of Incometax Authorities in the manner prescribed by them". 12. For these and such other grounds as may be urged at the time of the hearing, the order of the learned Commissioner of Income-tax (Appeals) may be vacated and that of the Assessing officer be restored. 13. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of the appellate proceedings before the Hon'ble Tribunal. 5. The only issue raised by the assessee in its appeal is against the addition made by the Assessing Officer of Rs. 26,39,605/- on account of....
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.... 31 CCH 300 Del HC, for the proposition that the transactions between the branches account result in an income to the bank and no person can make profit by transacting with self. It was further pointed out by the learned Authorized Representative for the assessee that the said liability is being recognized by the assessee and consequently, the ratio laid down by the Chennai Bench of the Tribunal in ACIT Vs. Karur Vysya Bank Ltd. (2013) 35 CCH 348 ChenTrib is squarely applicable. Another reliance was placed on the ratio laid down by the Hon'ble Supreme Court in CIT vs. Sugauli Sugar Works (P) Ltd. (1999) 236 ITR 518 (SC). 10. The learned Departmental Representative for the Revenue placed reliance on the order of CIT(A). 11. We have heard the rival contentions and perused the record. The assessee bank in the Balance Sheet filed for the year under consideration had shown unclaimed liability of Rs. 27,57,051/-. The explanation with regard to the nature of said liability by the assessee before the authorities below was that the same represented the unclaimed Demand Drafts purchased by the customers, which have not been presented for clearing for more than six months. The said liabilit....
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....by disallowing the assessee's claim of deduction on account of premium paid on Government securities. The Revenue vide grounds of appeal Nos.9 to 11 has raised the issue of deletion of addition made on account of Broken Period Interest. 13. Briefly, the facts relating to the issue are that the assessee in its Profit & Loss Account had debited a sum of Rs. 22,12,817/- as premium paid on investment in Government securities and had also paid broken period interest on investment on Government securities. The Assessing Officer show caused the assessee to explain as to why both the said amounts should not be treated as capital expenditure by the assessee. The assessee had claimed the amortization on HTM securities, which was rejected by the Assessing Officer as the said securities were held by the assessee as investment and not as stock in trade. Further, the Assessing Officer also treated the broken period interest paid to other banks of Rs. 22,12,817/- in respect of investments in Government securities, which were held by the assessee for part of the financial year as income of assessee and added the same to the total income of the assessee. 14. The CIT(A) allowed the claim of assess....
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....n of ITAT Pune Bench in the case of Latur Urban Co-op. Bank Ltd. in ITA No. 778 and 792/PN/2011, order dated 31-8-2012. The relevant discussion and finding of the Tribunal on the issue is as under. "13. So far as Ground No. 2 is concerned, it is in respect of the disallowances on the loss on sale of surplus of Rs. 14,70,000/-. The A.O has observed that an amount of Rs. 14,70,000/- is debited to the Profit & Loss A/c on account of loss on sale of securities. The A.O has further observed that the assessee in its submission has stated 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 (2003) 262 ITR 334 (Bom), the issue before their Lordship was whether the assessee was entitled ....
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....essee." 2.1 Facts being similar, so following the same reasoning, we hold that amortization premium paid on Govt. Securities of Rs. 23,13,525/- debited to Profit and Loss Account, as per RBI guidelines has to be allowed being expenses incurred during the course of business of banking, Assessing Officer is directed accordingly." 19. The issue arising before us is similar to the issue before the Tribunal in assessee's own case in assessment year 2009-10 and following the same parity of reasoning, we uphold the order of CIT(A) in allowing the deduction on account of amortization premium paid on Government securities. The grounds of appeal Nos.1 to 8 raised by the Revenue are thus, dismissed. 20. The second issue raised by the Revenue vide grounds of appeal Nos.9 to 11 vis-à-vis the allowability of broken period interest. The bank in the course of carrying on its business had acquired certain securities, on which interest was due. However, since the assessee was holding the said securities for part of the accounting period, the interest due on the said securities for the period when the said securities were held by the several banks were claimed as deduction as the said amou....
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....ent, profit on sale of security, which ought to be taxed, was Rs. 9,857.64. There is no difference in the amount in tax, whether one adopts the assessee's method or the Department's method. Under either method, the same amount is offered for tax. The Department has not been able to show in this case as to why the method adopted by the assessee-bank ought to be rejected. On the other hand, the Department has not been able to explain as to why broken period interest received should be taxed whereas broken period interest payment should be disallowed. In the circumstances, the order of the Tribunal is upheld. 10. The amount which the assessee received has been brought to tax under the head "Business" under s.28. The amount is not brought to tax under s. 18 of the IT Act. After bringing the amount to tax under the head "Business", the Department taxed the broken period interest received on sale, but at the same time, disallowed broken period interest payment at the time of purchase and this led to the dispute. Having assessed the amount received by the assessee under s. 28, the only limited dispute was-whether the impugned adjustments in the method of accounting adopted by th....