2016 (5) TMI 1311

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....made by the A.O vide order dated 09.12.2010 made u/s. 143(3) of the Act. 3. Briefly stated the facts of the case are that the assessee is engaged in Co-Operative Banking Activities and in furtherance of its business activities. The assessee is holding investment in Government Securities which have been earmarked as:   (a) HELD TO MATURITY and (b) AVAILABLE FOR TRADE. 4. As per the Reserve Bank of India guidelines vide circular DBOD No. BP.BC.32/31.04.048/2000-2001, all banks were directed to classify their investments into three categories namely held to maturity, available for sale, and held for trading. 5. Investments classified under 'held to maturity' were required to be carried at acquisition cost, while in the case....

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....ade 2003-04 500000 2004-05  1000000 2005-06 1500000 2006-07 1500000   4.2(i) It is also seen that the appellant had on his own disallowed the provision for diminution in the value of securities during assessment year 2003-04 to 2006-07. It is to be seen that the entire depreciation which has been claimed is on the depreciation in respect of securities held for trading and not on securities held to maturity. In respect of securities held for trading it is clear that the same constitute stock in trade of the appellant. Only the securities which are held to maturity are classified as investments of the appellant. In so far as the value of securities held to maturity is concerned, there is no diminu....

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.... available to the appellant. The appellant is hence not right in claiming such depreciation on securities held for trading in the current year. In view of the above the action of the A.O in making the addition is justified. The same is confirmed. 8. Aggrieved by this, the assessee is before us. Rival contentions were heard at length, orders of the lower authorities have been carefully perused. The entire dispute revolves around the provisions on account of diminution of value of securities in earlier financial years which can be understood by the following chart:- Assessment Year Provision made 2003-04 500000 2004-05 1000000 2005-06 1500000 2006-07 1500000   9. Undisputedly, in the aforemention....