TMI Blog2014 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant : Shri A. C. Shah For the Respondent : Shri J. P. Jhangid, Sr. D. R. ORDER Per Shri Anil Chaturvedi, A. M. 1. This appeal is filed by the Assessee against the order of CIT(A)-VIII, Ahmedabad dated 28.11.2013 for A.Y. 2010-2011. 2. The facts as culled out from the material on record are as under. 3. Assessee is a Co-operative Society engaged in the Banking business and Insurance agency business. Assessee electronically filed its return of income for A.Y. 2010-2011 on 18.09.2010 showing total income of Rs. 2,25,37,550/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 22.03.2013 and the total income was determined at Rs. 4,86,37,430/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) vide order dated 28.11.2013 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of CIT(A), the Assessee is now in appeal before us and has raised the following grounds:- 1. The learned CIT(A) has erred in confirming the disallowance of Rs. 2,60,99,875 being the amortization of premium paid on government securities on the ground that the assessee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium paid on purchase of the security. Considering the guidelines issued by the CBDT in Circular No. 17(supra) and the preponderance of the judicial opinion on the issue the appellant would be entitled to claim the amortization cost as a deduction in case for the securities held by it are HTM in accordance with the guidelines issued by the RBI. In order to ascertain whether the appellant bank has correctly classified the securities as HTM or the claim that the securities have been 'Held to Maturity', the appellant was asked vide order sheet noting dated 23/10/2013 to prove that securities were classified as 'Held to Maturity'. On the appointed date certain details were furnished indicating the details of securities held in the account as on 31/03/2010. It also furnished an English translation of the balance sheet in which the investment In Central and State Government Security was indicated. However no detail or evidence to show that the securities indicated in the balance sheet were HTM was furnished, therefore, the appellant was once again asked to furnish evidence to prove that the securities shown were HTM. It was also asked to give details of securities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Government of India securities which are maturing in subsequent years. For the sake of understanding, the appellant had a security which is named as '10.03 GOI 2019', the year 2019 show the year of maturity. Similarly there are other securities which were due for maturity in the year 2022, 2023, 2026, 2017 and so on. It is important to note the appellant has sold four securities which were '6.35 % GOI 2020' during the year. It is apparent from the above table that the appellant had been selling the securities in the earlier years as the investment in any of the two years was not constant. The above circumstances clearly show that the appellant's claim that the securities were 'Held to Maturity1 is not borne out by facts. First of all in the balance sheet there is no such indication that the securities were HTM. The ! balance sheet only indicates that it was an investment in Central and State Government securities. The RBI guidelines reproduced above clearly mandates that the investments should be clearly classified. Had it been properly classified the same would have been shown by the bank in the balance sheet also. Secondly, the RBI guidelines(Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ark judgment in the case of Distributors (Baroda)(155 ITR 120) that mistake once committed should not be perpetuated forever. The appellant has also relied on certain judicial pronouncements, which have been reproduced in the relevant pages where the submissions of the appellant are mentioned. I have carefully perused all the judgments however the same are not applicable to the present facts. The facts in the present case are different. In none of the case the factual discussions about the securities held have been made. In the present case it has been demonstrated clearly that the claim of the appellant that the securities were held by it as HTM is factually incorrect. Therefore, the judgments are respectfully distinguished. In view of the above discussion it is held that the amortisation expenses claimed by the appellant on account of the premium paid for purchase of government security, which is claimed to have been held by it as HTM, are not allowable as deduction. It has been clearly demonstrated in the preceding discussion that the securities are not Held to Maturity as claimed by the appellant . 6. Aggrieved by the order of CIT(A), the Assessee is now in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding the order of A.O. He thus supported the order of A.O. and CIT(A). 9. We have heard the rival submissions and perused the material on record. Before us, the issue is about the allowability of amortization of premium of securities which are sold before the maturity date but held under Held to Maturity (HTM) category. Before us the ld. A.R. has submitted that the securities that were purchased were held by it under Held To Maturity category and though the same were sold before its maturity but it had followed the accounting treatment prescribed by RBI and therefore the same is allowable. On the other hand, we find that CIT(A) has noted that certain requirements as stated in the RBI circular is required to be followed by an Assessee for conversion of security from HTM to other category. He has also noted that to ascertain as to whether the Assessee has correctly classified the securities as HTM and followed the guidelines prescribed by RBI, the Assessee was asked to furnish the details, which the Assessee failed to furnish. CIT(A) has noted that the Assessee has failed to follow the RBI guidelines. In view of the contrary submissions of both the parties, we are of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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