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2013 (5) TMI 875 - AT - Income TaxDisallowance of diminution in the value of securities - securities classified as ‘Held till maturity’ category - Held that:- So far as the securities held under the HTM category the I.T.A.T., Pune has taken a view in the case of Latur Urban Co-operative Bank Ltd. Vs. ACIT [2015 (3) TMI 920 - ITAT PUNE] that all the securities held by the assessee are part of the stock-in-trade irrespective of their classification. So far as the treatment of the assessee in classifying the securities, in our opinion the securities classified under HTM category is also part of the stock-in-trade. There is RBI circular as per which the assessee can amortize the depreciation or loss on the conversion of securities from FST category to HTM category. We, therefore, do not agree with the view taken by the Ld. CIT(A) that the securities held under HTM are capital in nature. We accordingly allow the Ground no. 1 taken by the assessee and direct the Assessing Officer to allow the claim of the assessee in light of the above discussion. U/s 14A petty expenditure which has been proved to have been incurred in relation to earning of tax free income can be disallowed and section cannot be extended to disallow even the expenditure is permitted to have been incurred for the purposes of earning tax free income. In the circumstances, the disallowance cannot be made u/s 14A of the Act. This ground is therefore, allowed in favour of assessee Adhoc disallowances of Telephone expenses, Vehicle expenses, Advertisement expenses and General expenses - Held that:- Admittedly, the assessee is a bank and it is not individual whereby there can be any personal element involve in incurring the expenditure. In our opinion the reason for disallowance given by both the authorities below is not correct. We therefore delete the disallowance made by the Assessing Officer and allow the respective grounds taken by the assessee.
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