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2021 (11) TMI 40 - AT - Income TaxDisallowance u/s.14A r.w.r. 8D - investment was made out of own surplus fund - HELD THAT:- As decided in SOUTH INDIAN BANK LTD. VERSUS COMMISSIONER OF INCOME TAX [2021 (9) TMI 566 - SUPREME COURT] proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds/securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments. With this conclusion, we unhesitatingly agree with the view taken by the learned ITAT favouring the assessee. The above conclusion is reached because nexus has not been established between expenditure disallowed and earning of exempt income. The respondents as earlier noted, have failed to substantiate their argument that assessee was required to maintain separate accounts. Their reliance on Honda Siel [2011 (7) TMI 275 - SC ORDER] to project such an obligation on the assessee, is already negated. The learned counsel for the revenue has failed to refer to any statutory provision which obligate the assessee to maintain separate accounts which might justify proportionate disallowance. - Decided in favour of assessee. Disallowance of amortization of premium paid at the time of purchase of securities over the remaining period of securities - HELD THAT:- As decided in THE CHANASMA NAGRIK SAHAKARI BANK LTD. AND VICE-VERSA [2017 (10) TMI 478 - ITAT AHMEDABAD]at the aforesaid amount represents the excess of acquisition cost over the face value of Government securities taken under HTM category. We find that the issue is squarely covered in favour of assessee by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Rajkot Dist. Co-op Bank Ltd.. [2014 (3) TMI 110 - GUJARAT HIGH COURT] - reliance upon the CBDT Circular No. 17 of 2008 and held that loss on account of premium paid on the face value of the security is required to be amortized for the remaining period of maturity - claim of the assessee towards amortization of security premium requires to be accepted. - Decided in favour of assessee.
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