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2014 (2) TMI 932 - AT - Income TaxAmortization of premium paid on Government Securities - revenue or capital expenditure – Held that:- As per RBI guidelines dated 16th October, 2000, the investment portfolio of the banks is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortised over the period remaining to maturity. In the case of HFT and AFS securities forming stock in trade of the bank, the depreciation/ appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. Decisions in DCIT Vs. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. [2014 (1) TMI 754 - ITAT PUNE] and ACIT vs. The Bank of Rajasthan Ltd. [2010 (12) TMI 894 - ITAT, Mumbai] followed.- In case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period till maturity is allowable as revenue expenditure since the claim is as per RBI Guidelines and CBDT also has directed to allow such premium - Nothing contrary was brought to our notice against the order of the Tribunal, therefore, we find no infirmity in the order of the CIT(A) and Tribunal deleting the disallowance – Decided against Revenue.
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