TMI Blog2019 (4) TMI 1779X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 that interest payments and receipts from broken period on purchase of securities must be regarded as stock in trade and that the net interest on securities should be brought to tax as business as business income. This circular was later withdrawn by CBDT and it was clarified that the issue whether a particular investment in security would constitute stock in trade or not is a question of fact. All these issues have not been properly considered by the A.O. or the Ld. CIT-A. The addition under such circumstances cannot be sustained - Decided against reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 21.12.2018 for the Assessment Year 2009-10 passed by the ld. Assessing Officer consequent to this Tribunal order wherein the Assessing Officer had allowed the claim of broken period interest on purchase of Govt. securities as a deduction. The ld. Assessing Officer also placed on record a copy of the Tribunal order in its own case for Assessment Year 2010-11 in ITA No.237/Kol/2016 dated 19.01.2018 wherein this Tribunal upheld the order of the ld. CIT(A) in following the decisions of the Hon ble Bombay High Court in the case of American Express International Banking Corporation v. Commissioner of Income tax [2002] 125 Taxmann 488 (Bom.) and accordingly dismissed the appeal of the Revenue. 5. The ld. DR fairly agreed that this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, FCA, authorized representative of the assessee appeared and the case was heard. Sri Mondal also produced written submissions vide dated 24.05.2018 and clarified the issue before the undersigned. Assessee s submission was duly verified. The assessee in its submission stated that during the year the assessee bank paid broken period (pre-acquisition) interest of ₹ 3,57,66,893/- on purchase of Government Securities and debited to Profit Loss account under the head Interest Paid account. And in the same way broken period interest received was credited to Profit Loss account under the head Interest Received account. The assessee firmly contested that same principal of accounting should be followed for the same nature of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock in trade and that interest payments and receipts from broken period on purchase of securities must be regarded as stock in trade and that the net interest on securities should be brought to tax as business as business income. This circular was later withdrawn by CBDT and it was clarified that the issue whether a particular investment in security would constitute stock in trade or not is a question of fact. All these issues have not been properly considered by the A.O. or the Ld. CITA). The addition under such circumstances cannot be sustained. This is also in line with the decision of Bombay High Court in the case of American Express Investment Banks co-op. Vs. CIT (2002) as the ITAT has stated. Based on the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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