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2017 (1) TMI 388 - AT - Income TaxClaim of depreciation on AFS and HFT investments - A.O observed that the depreciation of HFT and AFS securities is to be allowed to the extent provided in the books of account, and since the assessee has not made any provision for the depreciation of HFT and AFS securities in its books for the relevant A.Ys, he disallowed the claim of depreciation on these securities - Held that:- Hon'ble jurisdictional High Court in assessee's own case ( 1984 (7) TMI 66 - ANDHRA PRADESH High Court) held that main business of the banking company being to accept deposits to advance loans to appropriate persons, money constitutes its stock in trade. The amount required to kept in India as per section 24 of the Banking Regulation Act, 1949 in the form of cash, gold and unencumbered securities is part of stock in trade of the assessee. While identical issue of claim of depreciation on HTM securities came up before the Income-tax Appellate Tribunal in assessee's own case for the assessment year 2003-04 the Income- tax Appellate Tribunal following the ratio laid down by the jurisdictional High Court in State Bank Of Hyderabad Versus Commissioner Of Income-Tax, AP -I, Hyderabad [1984 (7) TMI 66 - ANDHRA PRADESH High Court ] and CIT V/s. Nedungadi Bank Ltd (2002 (11) TMI 29 - KERALA High Court ) held that when there is no distinction between the three categories of securities viz.,HTM, AFS and HFT. The assessee can provide for depreciation in all the securities on the same footing. In view of the ratio laid down by the co- ordinate bench of this Tribunal, we do not find any reason to interfere with the finding of the CIT (A) on this issue in allowing claim - Decided in favour of assessee. Disallowance of claim of broken period interest paid on purchase of securities - Held that:- As decided in assessee's own case CIT(A) allowed the claim on the ground that the same was in stock in trade and hence the interest for the broken period is an allowable deduction. Issue is covered by the decision of the Mumbai Bench in the case of JCIT Vs. Dena Bank [2013 (3) TMI 326 - ITAT MUMBAI] - Decided in favour of assessee. Disallowance of proportionate expenditure on exempted income u/s 14A - CIT(A) restricted the disallowance to two months salary of the treasury benches as directed by the tribunal in the assessee’s own case for the earlier assessment years - Held that:- We find that in the assessee’s own case for the assessment year 2009-10 no infirmity in the order passed by the CIT(A) on this issue. After introduction of Rule 8D into the Income Tax Rules from A.Y. 2008-09 disallowance of expenditure relating to earning of exempted income under section 14A of the Act, has to be determined as per the method provided under Rule 8D. In fact, as can be noticed from para 7.4 of the CIT(A) Order, the assessee itself during the proceeding before the CIT(A) has worked out the disallowance to be made in terms with Rule 8D(2) which has been accepted by the CIT(A). In these circumstances, we do not find any reason to interfere with the order of the CIT(A) in this regard. - Decided against revenue Claim towards bad and doubtful debts under section 36(1)(vii) in respect of non rural branch advances and deduction under section 36(1)(viia) in respect of rural branch advances - Held that:- We find that this issue is covered by the decision in the case of the State Bank of Patiala Vs CIT cited (2004 (5) TMI 12 - PUNJAB AND HARYANA High Court ), wherein it has been held that the claim u/s 36(1)(viia) can be allowed only to the extent of provision made by the assessee in its books of accounts. The formula on the limit prescribed under section 36(1)(viia) is the maximum provision which can be allowed and is not a standard deduction as claimed by the assessee. We find that the CIT(A) has therefore, restricted the claim u/s 36(1)(viia) to the extent of provision made by the assessee in its books of account. Therefore, we see no reason to interfere with the order of the CIT(A) on this issue. Further, as rightly pointed by the ld DR, the A.O has already allowed the claim of deduction u/s 36(1)(vii) of the Act, and there can be no other grievance of the assessee and therefore the ground of appeal No. 6, raised by the assessee before the CIT(A) is without any basis and the CIT(A)’s observation at Page – 9 of her order is also not warranted.
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