TaxTMI 
TaxTMI 
2020 (9) TMI 493
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....ject matter of I.T.A.No.26/2013 pertains to assessment year 1999- 2000. Since, common substantial questions of law arise for consideration in these appeals, they were heard analogously and are being decided by this common judgment. I.T.A.No.27/2013 was admitted by a bench of this Court vide order dated 12.07.2013 on the following substantial question of law: (i) Whether the Tribunal was correct in holding that the broken period interest paid by the assessee should not be added to the cost of the securities purchased by including the interest in the closing stock of the securities, when the expenditure towards interest was towards the capital outlay? (ii) Whether the Tribunal was correct in holding that the expenditure incurred towards....
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....eclaring that adjustment on value of securities after considering the broken period interest was required for arriving at the correct value and consequently recorded a perverse finding? 2. Facts leading to filing of these appeals briefly stated are that the assessee is a public sector undertaking. The assessee filed its returns of income for the assessment years 1999-00 and 2000-01 respectively. The assessments were initially completed under Section 143(3) for both the assessment years on 28.03.2002. The assessee apart from deriving income from other sources also derived interest from sale of securities. The Government securities were purchased by the assessee either directly through public auction or in the open market. In the event of pu....
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....roached the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short). The Tribunal by an order dated 14.09.2012 relying on its previous order for the assessment year 1988-89, wherein it had treated the Broken Period Interest paid as an allowable business expenditure as well as decision of the Supreme Court in 'CIT VS. CITIBANK' held that assessee since, its inception has been offering the broken period interest earned from the sale of securities as business income under Section 28 of the Act and not as interest income under het head 'income from other sources'. Therefore, the broken period interest paid to the sellers of securities is an allowable deduction from the business income under th....
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.... Tribunal submitted that assessee has been offering the Broken Period Interest income earned from the sale of securities as business income under Section 28 of the Act and therefore, the same is an allowable deduction from its business income under the Act. It is further submitted that the order passed by the Tribunal does not call for any interference and the substantial questions of law deserves to be answered in favour of the assessee. It is also pointed out that the decision of the Supreme Court in VIJAYA BANK supra was clarified by Supreme Court in COMMISSIONER OF INCOME TAX VS. CITIBANK IN CIVIL APPEAL NO.1549/2006 DECIDED ON 12.08.2008. Learned counsel for the assessee has relied on the decision in the case of CITIBANK supra as well ....
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....t portion could be claimed as revenue expenditure. In the aforesaid context, the Supreme Court held that whatever was the consideration which prompted the assessee to purchase the securities, the price paid for them was in the nature of capital outlay and no part of it could be set off as expenditure against income accruing on those securities. The Supreme Court was not directly concerned with the issue whether the securities form part of stock in trade or capital assets. After the decision of the Supreme Court, in VIJAYA BANK supra, a clarification dated 05.10.1993 was issued vide Circular No.65 with regard to treatment of securities as stock in trade or investment and it was decided that the Assessing officer should determine on the facts....