Supreme Court Confirms Deductibility of Broken Period Interest for Stock-in-Trade Securities, Not Investment Assets.

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....Banks are required to maintain a Statutory Liquidity Ratio (SLR) by purchasing government securities. RBI guidelines categorize securities as Held-to-Maturity (HTM), Available-for-Sale (AFS), and Held-for-Trading (HFT). For AFS and HFT securities, the broken period interest paid during acquisition is allowed as a deduction, as these are treated as stock-in-trade. However, for HTM securities, the treatment depends on whether they are held as investments or stock-in-trade, based on the facts of each case. If held as investments, the broken period interest is capitalized; if held as stock-in-trade, it is allowed as a deduction. The Supreme Court upheld the Tribunal's decision that when securities are treated as stock-in-trade, the broken perio.........