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2018 (12) TMI 1328 - AT - Income TaxInterest accrued but not due on current investment - taxability under accrual system of accounting - Disallowance of mark to market loss on the value of current investments - Disallowance of realised loss on sale of current investments - Held that:- There is merit in the submissions made by the assessee, as the various points noted down by the assessing officer has rightly been addressed by the assessee. Both the case laws relied upon by D.R have been rendered on different set of facts and hence they cannot be taken support by the Revenue. Accordingly we hold that the assessee has held the securities as its trading assets only. Provision for diminution in the value of investments is allowable as deduction as per the principle laid down by the Hon’ble Supreme Court in CHAINRUP SAMPATRAM VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL [1953 (10) TMI 2 - SUPREME COURT].Accordingly, we set aside the order passed by Ld CIT(A) on this issue in both the years under consideration and direct the AO to allow the claim of the assessee in both the years. Since we have held that the investments held by the assessee as trading assets, the realised loss on sale of investments shall constitute business loss only in the hands of the assessee. Accordingly we set aside the order passed by Ld CIT(A) on this issue in both the years under consideration and direct the AO to allow the deduction of the same in both the years. Revenue is challenging the decision of Ld CIT(A) in holding that the interest accrued but not due as not taxable - CIT(A) noticed that an identical issue has been considered in the case of DIT (International Taxation) vs. Credit Suisse First Boston (Cyprus) Ltd ( [2012 (8) TMI 17 - BOMBAY HIGH COURT] wherein it was held that when an instrument or an agreement stipulates that interest shall be payable at a specified date, interest does not accrue to holder thereof on any date prior thereto. Accordingly, following the above said binding decision of jurisdictional High Court, the Ld CIT(A) deleted the addition made by the AO in both the years on account of interest accrued but not due. The revenue is aggrieved wrongfully - decided in favour of assessee.
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