2019 (4) TMI 1779

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....entical issues are involved in both these appeals, they are taken together and disposed off by this common order for the sake of convenience. 3. The only issue involved in these appeals is as to whether the ld. CIT(A) was justified in deleting the disallowance of broken period interest paid by the assessee on deposits and borrowings etc. in the facts and circumstances of the case. 4. The ld. AR at the outset stated that this issue is already covered in favour of the assessee in Assessment Years 2009-10 & 2010-11. He placed on record a copy of the Tribunal order for Assessment Year 2009-10 in ITA No.746/Kol/2013 dated 30.11.2017 wherein the impugned issue was remanded to the file of the ld. Assessing Officer by the Tribunal with certain ....

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....ating it as capital expenditure in its order u/s 143(3) of the Income Tax Act, 1961 dated 23.11.2011." The assessee has preferred appeal before Ld. CIT(A). Ld. CiT(A) vide order no.- 358/CIT(A)-XXXVI/Ko1./R.-59/11-12 dated 21.01.2013 confirmed the disallowance of interest paid on purchases of securities. Aggrieved by the order of Ld. CIT(A), the assessee preferred an appeal before ITAT. The Ld. ITAT, vide order no. ITA no.- 746/Kol/2013 dated 30.11.2017 set aside the order of Ld. CIT(A) and remitted the matter back to the file of the AO to examine the issue and directed the AO to make an order afresh. During the course of fresh assessment proceedings, letter dated 15.05.2018 was issued to the assessee. In response to the letter, Sr....

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....ction of the A.O. is contradictory and hence is not correct. If pre acquisition interest on purchase of a Govt. Security is the cost of purchase of such security, then pre acquisition interest on sale of the same security should be treated as sale price of security. Otherwise in both cases the pre acquisition interest should be treated as revenue transactions. The assessee is consistently follow the method of accounting wherein, pre-acquisition interest of security is treated as revenue expenditure and preacquisition interest on sale of a govt. security is taken as income. The Central Board of Direct Taxes in circular no.559 dated 24.04.1999 189 ITR (ST) 126 has clarified that securities held by bank must be regarded as stock in trade and t....