TMI Blog2015 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. Amortization of investments under HTM category - Held that:- Issue requires to be examined by the AO afresh in the light of the ultimate decision on the claim of assessee for deduction for amortisation of investments in A.Ys. 2001-02, 2002-03 and 2003-04. If, consequent to appellate orders, amortisation is allowed as deduction in those assessment years, then the assessee will not be entitled to claim deduction in the present assessment year, which is stated to be the year in which the securities were sold. The AO is therefore directed to verify this aspect and consider the claim of assessee afresh, after affording the assessee an opportunity of being heard. - Decided in favour of assessee for statistical purposes. Expenditure incurred on Employee Stock Options (ESOP) disallowed - Held that:- As relying on order of Tribunal for A.Y. 2004-05. in assessee's case wherein the claim of the assessee for deduction has to be allowed in principle it would be just and appropriate to direct the AO to consider the claim of assessee for deduction afresh - Decided in favour of assessee for statistical purposes. Provision for salary arrears disallowed - Held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments Pvt. Ltd. (2008 (2) TMI 23 - SUPREME COURT), the department has to show that change in method of accounting results in distortion of profits. In the absence of such a finding, it has to be necessarily concluded that the change of accounting is revenue neutral. We are of the view that change in method of accounting is bonafide. We therefore hold that the claim of assessee deserves to be accepted - Decided in favour of assessee. Diminution in value of investment under AFS/HFT categories - CIT(A) deleted addition - Held that:- CIT(A) was correct to as concluded the Assessee is entitled to value all the investments, which are part of the trading stock at cost price or market value, whichever is lower under section 145 of the Act. Therefore, the total depreciation in respect of the investment amounting to ₹ 16,99,68,583/- was claimed and that the AO was not correct in adding back the appreciation. - Decided in favour of assessee. Broken period interest - CIT(A) deleted addition - Held that:- The assessee has been following the method of offering interest on securities to tax on receipt basis on maturity and the same has been accepted by the revenue in the past. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax by the AO denying exemption u/s. 10(23G). Sl. No. Party Amount 1 Gujarat Industries Power Co. Ltd. 1,15,25,477 2 Lanco Kondapalli Power Corpn. Ltd 46,26,609 3 Samalpatti Power Co. Ltd 3,06,988 4 BSES Kerala Power Ltd 72,44,263 5 Rajahmundry Express Way 56,52,800 6 Spectrum Power Generation Ltd 32,86,000 7 Samalpatti Power Co. Ltd 2,37,735 7. Even before CIT(Appeals), assessee was not able to file required certificates. 8. Before us, the limited request of the learned counsel for the assessee was hat the necessary approvals from the CBDT is available and will be provided to the Assessing Officer. He prayed that the order of the Assessing Officer may be set aside and the assessee allowed opportunity of providing the necessary approvals for grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us:- 19. The learned counsel for the assessee brought to our notice the decision of the Hon'ble Karnataka High Court in the case of IBM India Ltd., in ITA No.130/2007, dt 10.04.2013. The Hon'ble Karnataka High Court in the aforesaid decision considered the following question of law : Whether the Tribunal was correct in holding that the purchase of software amounting to ₹ 33,14,298/- should be allowed as a revenue expenditure without recording a finding as to the nature of the purchase, its durability and its application before deciding the issue ? The Hon'ble High Court on the aforesaid question of law held as follows : 9. The second substantial question of law relates to application of the amount utilized for projects of Software in a sum of ₹ 33,14,298/-. The Tribunal on consideration of the material on record and the rival contentions held, when the expenditure is made not only once and for all but also with a view to bringing into existence an asset or an advantage for the enduring benefit, the same can be properly classified as capital expenditure. At the same time, even though the expenses are once and for all and may give an advantage for end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid ruling of the Hon'ble Karnataka High Court that the expenditure incurred for acquiring application software has to be treated as revenue expenditure. The learned counsel further pointed out that in the remand report filed by the AO before CIT(A) on the aforesaid issue, the AO did not dispute the fact that the computer software which was claimed as revenue expenditure were not application software as was contended by the assessee in his submission before the CIT (A). In other words, the fact that the nature of the expenses as one being licence fees for using MS office and MS windows was not disputed by the Assessing Officer. He also pointed out that the AO did not dispute the contention before CIT(A) that the Assessee had not made double deduction once in the profit and loss account and again in the computation of total income nor has the Assessee claimed depreciation on the capitalized value of the software expenditure incurred on purchase of application software. According to him therefore the claim of the Assessee had to be allowed. The learned DR relied on the order of the CIT(A) and further submitted that the issue may be set aside to the AO for a consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) ought to have appreciated that having disallowed the amortization in the past assessment years, the same should form part of the cost in the year in which such investments are sold. 15. The assessee claimed deduction of amortisation of investments held under HTM category, which were disallowed in A.Ys. 2001-02, 2002-03 and 2003-04 while computing total income. The AO rejected the claim observing as follows:- 12. Amortization of Investments under HTM category disallowed in asst. year 2001-02 2002-03 - ₹ 3.51 or. and pertaining to asst. year 2003-04 - R.s.1.74 cr. 12.1 The above two claims for a deduction of ₹ 5,26,36,981/- are not allowed presently as the assessee is in appeal against the above adjustments. The claim of the assessee would be considered u/s. 154 as and when the appeal is dismissed on these issues or it withdraws its claim on these issues and files a letter suitably. An amount of ₹ 5,26,36,981/- Is therefore disallowed and is added back. 16. The CIT(Appeals) concurred with the view of AO. 17. Aggrieved by the order of CIT(A), assessee has raised ground No.6 before the Tribunal. 18. At the time of hearing, it was brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes. According to the Assessing Officer, the value of the securities would increase with each year and at any point of time the market value would be more than the purchase value and therefore there was no requirement for amortization. The Assessing Officer accordingly rejected the claim of the Assessee. 09. On appeal by the assessee, the CIT (A) confirmed the order of the Assessing Officer. According to the CIT (A), investments made by a banking company which are categorized as HTM are in the nature of investments and cannot be treated as stock-in-trade and the claim of amortization of the assessee was disallowed. Aggrieved by the order of the CIT (A), assessee has raised ground no.2 before the Tribunal. 10. At the time of hearing of the appeal it was brought to our notice that similar issue had come up for consideration in assessee's own case and this Tribunal upheld the plea of the Assessee for deduction on account of amortization of premium paid of securities held in HTM Category. The following were the relevant observations of the Tribunal in ITA No.443/Bang/2012 for AY 02-03 order dated 14.8.2013: 10. We have heard the rival submissions. The issue raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad and doubtful debts which are predominantly revenue in nature or trade related and not for provision for non-performing assets which are of predominantly capital nature. Thus, he was of the view that the assessee was not entitled to deduction of amortization of premium on investments u/s.36(1)(vii). Aggrieved, the assessee is in second appeal before us with this issue. 06. The learned counsel for the assessee submitted that the Commissioner of Income-tax (Appeals) had failed to see the reason that a issue similar to that of the present one had been allowed by various benches of the Hon'ble Tribunals, namely : Catholic Syrian Bank Ltd., v. ACIT - Cochin (2010) 38 SOT 553 ; Khanapur Coop.Bank Ltd., v. ITO in ITA.141/PNJ/2011 (Panaji); Corporation Bank v. ACIT, M'lore in ITA.112/Bang/2008 (Bang) The learned counsel also placed reliance on Board's Instructions No.17 of 2008(vii) and pleaded that the claim of the assessee be allowed as the assessee had the powers to debit in its P L account a sum of ₹ 29,02 lakhs of amortization of premium. 07. Per contra, the learned DR was unable to controvert to the submissions of the learned counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has to be allowed. Accordingly, the AO is directed to allow the claim of the assessee for deduction. 11. It was also brought to our notice that on identical issue the Hon'ble Kerala High Court in CIT Vs. South Indian Bank Ltd., ITA.946 of 2009, dt 9.10.2009 decided similar issue holding as follows : The respondent-assessee is a Bank which purchased securities at market value above the face value. Admittedly when the securities were redeemed, respondent will be entitled to get only face value. Consequently, the loss arising on account of purchase at market value is written off in instalments by spreading over the same equally for every year until date of maturity. We are of the vie hat the Tribunal rightly upheld the assessee s entitlement to write-off of loss in instalments. Consequently the departmental appeal is dismissed. 12. In view of the aforesaid decisions rendered on identical issue, we are of the view that the claim of the assessee ought to be allowed. Accordingly, ground no.2 raised by the assessee is allowed. 19. Having considered the order of Tribunal and the facts of case for the year under consideration, we are of the view that the issue requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the aforesaid expense on the ground that they are contingent in nature and hence not allowable as revenue expenditure. 69. Before CIT(A), the Assessee submitted that the treatment adopted by the Assessee is in accordance with the SEBI guidelines and that the expenditure is not a contingent liability and allowable revenue expenditure. Further the Assessee placed reliance on the decision of the Madras Tribunal in the case of SSI Ltd. V DCIT (85 ITJ 1049) wherein it was held that such expenditure was allowable as revenue in nature. The CIT(A) however upheld the order of the AO. Aggrieved by the order of the CIT (A), assessee has raised ground no.10 before the Tribunal. 70. The issue raised by the assessee in ground no.10 has since been considered by the Special Bench of the ITAT Bangalore in the case of Biocon (2013) 35 Taxmann.Com 305 (Bangalore - Trib) (SB). The Special Bench in the aforesaid decision held that when an Assessee issues shares under an Employee s Stock Option Plan (ESOP) and claimed difference between market price and exercise price as deduction under section 37(1), spread equally over vesting period of years, on basis of SEBI Guidelines and accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,65,00,270 : Learned CIT(A) has erred in law and on fact by upholding the disallowance made by the Assessing Officer on the ground that provision for salary arrears amounting to ₹ 11,65,00,270 is contingent in nature. Learned CIT(A) failed to appreciate the fact that the provision for salary arrears was an actual and accrued expenditure. 44. During the previous year relevant to AY 2004-05, the assessee had made a provision of ₹ 116,500,000 for employees in the IBA Cadre in anticipation of enhanced wages. During the AY 2005-06, the Assessee made a further provision of ₹ 217,553,603 thereby the total provision amounting to ₹ 334,053,603. The Bank had created a provision for salary arrears totaling to ₹ 334,053,603 as tabulated below: Assessment Year Amount claimed as Provision Amount debited to the P L account Amount actually paid Year of payment On payment Whether debited to P L a/c 2004-05 116500000 116500000 Nil NA NA 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the liability is certain and it was only a question of quantification of the liability and if the quantification of the liability by the assessee is on a reasonable basis, then the deduction claimed has to be allowed and cannot be termed as contingent. Our attention was also drawn to the decision of the Hon'ble ITAT, Bangalore Bench in the case of Syndicate Bank v. DCIT in ITA.709/Bang/2012, wherein the Hon'ble ITAT in the case of a bank which also had to revise its wages on the basis of a bipartite settlement held that the provision for arrears of wages has to be held as a deduction. 49. The learned DR while relying on the order of the CIT (A) submitted that going by the figures set out by the assessee, it is clear that the estimat3 of liability made by the assessee in the books of account was excessive compared to the actual liability consequent to bipartite settlement. It was therefore submitted by him that the ratio of cases relied on by the AR cannot be applied in the facts of the assessee's case. 50. The learned counsel for the assessee pointed out that the excess provision was offered to tax by the assessee in AY 2006- 07. It was his submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be allowed as it cannot be said that the liability in question is a contingent liability. For the reasons given above we allow ground no.7 raised by the assessee. 25. The decision rendered by the Tribunal for A.Y. 2004-05 will apply to the facts and circumstances of the present case also. In fact, in para 44 of the said order of the Tribunal, the provision made on account of wage arrears for A.Y. 2005-06 has also been noted by the Tribunal. We are of the view that the conclusions of the Tribunal in para 52 of the said order will equally apply to the present assessment year also. Respectfully following the aforesaid decision of this Tribunal, we hold that the assessee should be allowed deduction on account of provision for salary arrears. Ground No.9 is accordingly allowed. 26. Thus the two contested grounds viz., Ground No.2 and 4 in Assessee s appeal alone are left to be adjudicated. Ground No.2 raised by the Assessee reads as follows:- 2. Interest paid to MMRDA amounting to ₹ 30,72,52,362 2.1 The learned CIT (A) has erred on facts and in law in confirming the disallowance made by the learned Assessing officer [ learned AO ] of interest paid to MMRDA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000-01 7,88,17,501 2001-02 7,54,62,407 2002-03 6,79,35,432 2003-04 5,52,79,892 2004-05 Upto July 2004 1,98,30,502 TOTAL 48,72,12,084 29. The proceedings before the Hon'ble Bombay High Court ultimately ended in a compromise between the assessee and MMRDA. The terms of compromise recorded by the Hon'ble High Court in the order passed on 24.8.2004 specifically mention that the assessee was to pay the balance installment of ₹ 50,10,24,108 together with interest of ₹ 19,77,32,295. This interest was calculated at 5% on the balance lease amount premium for the period 29.9.1996 to 24.8.2004. 30. The assessee claimed as a deduction a sum of ₹ 10,95,20,067 paid on 30.10.96 as interest for delayed repayment of balance installment and further sum of ₹ 19.77 crores being the interest payable for the delayed payment of balance of installment of lease premium, pursuant to the order of Hon'ble High Court. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease premium payable in respect of Plot No. C-12. G-Block International Finance and Business Centre, Bandra-Kurla Complex (hereinafter the said plot ) aggregating to ₹ 69,87,56,403.00 (Rupees Sixty Nine Crores Eighty Seven Lakhs Fifty Six Thousand Four Hundred and Three only) (by Bank Pay Order No. 094677 dated August 18, 2004 ) being the balance 1ease premium amount of ₹ 50,10,24,108 (Rupees Fifty Crores Ten Lakhs Twenty Four Thousand One Hundred and Eight only) together with interest thereon of ₹ 19,77,32,295.00 (Rupees Nineteen Crores Seventy Seven Lakhs Thirty Two Thousand Two Hundred and Ninety Five only) computed at the rate of 5% per annum for the period from 29th September, 1996, till date hereof in full and final satisfaction of all the claims of Respondent No.1 in respect of the lease premium payable to it for allotment of the said plot, (the receipt whereof Respondent No.1 does hereby admit and acknowledge); (ii) Respondent No.1 has no further claim against Petitioner No.1 in respect of the lease premium for allotment of the said Plot; AGREED AND DECLARED that the sum of ₹ 10,95,20,067/- (Rupees Ten Crores Ninety Five Lakhs Twenty Thousand an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1999) 137 ITR 400 (Guj) Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. (1999) 237 ITR 254 (Bom) Coimbatore Pioneer Mills Ltd. (1999) 236 ITR 69 (Mad) 36. The ld. counsel for the assessee also brought to our notice that the assessee had offered to tax interest income on deposit of the balance lease premium in IDBI Bank, pursuant to the orders of Hon'ble Bombay High Court of ₹ 48,72,12,084 for the A.Ys. 1998-99 to 2004-05. It was submitted by him that revenue cannot tax the interest income on the amount deposited pursuant to the order of Court which was balance lease premium payable and refuse to allow deduction of interest paid on balance lease premium as a revenue expenditure. 37. The ld DR, on the other hand, while placing reliance on the order of the CIT(A), submitted that Explanation 8 to section 43(1) has been brought into statute by the Finance Act of 1986 w.r.e.f. 1.4.1974. It was his submission that by virtue of aforesaid Explanation, interest paid on deferred purchase consideration cannot be included as part of cost of asset. According to him, the decisions relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining sum had to be paid by the assessee within a period of six months. The assessee did not pay the balance installment of lease premium. The lease was for a period of 80 years. Assessee was granted time for making payment till 28.3.1997, subject to the condition that assessee pays interest on the delayed payment of balance premium of ₹ 10.95 crores on or before 31.10.1996. The assessee paid ₹ 10.95 cores on 30.10.1996. The same was shown as advance paid to MMRDA and was not claimed as revenue expenditure. Subsequently, assessee wanted to surrender the leasehold land and take back the amounts paid to MMRDA and in this regard filed a Writ Petition before the Hon'ble Bombay High Court. The Bombay High Court passed an interim order on 27.3.1997 directing the assessee to deposit a sum of ₹ 54,72,28,140 which includes balance premium payable of ₹ 50,10,24,108. The said amount was kept in deposit with IDBI Bank. Ultimately, the issue was compromised by assessee and MMRDA. As per compromise, the assessee had to pay interest of ₹ 19,77,32,295, which was the interest paid at 5% p.a. for the period 29.9.1996 to 24.8.2004, on the balance lease premium unpai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Gwalior Rayon Silk Manufacturing Weaving Co. Ltd. (supra) has taken the view that interest on unpaid cost of price of land and bank guarantee commission should be allowed as a revenue expenditure. 42. We are also of the view that reliance placed by the ld. DR on Explanation 8 to section 43(1) of the Act is not applicable for the reason that the asset involved in the present case is a land, which is not a depreciable asset. Section 43(1) of the Act defines cost of acquisition of capital asset for the purpose of allowing depreciation. When land is not a depreciable asset, provisions of section 43(1) of the Act are not relevant. The argument of the ld. DR, therefore, cannot be accepted. 43. It is also to be noticed that the deposit of the balance lease premium by the assessee in the IDBI Bank, pursuant to the directions of the Bombay High Court pending disposal of the writ petition filed by the assessee, yielded interest income which was duly offered by the assessee to tax. All the cumulative facts and circumstances clearly go to point out that expenditure in question was revenue expenditure and it has to be allowed as deduction in computing total income. We hold a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that it was a bona fide change. Though in their elaborate submissions the necessity for change of accounting method, the same are not justified. The appellant relied on various decisions on the ground that, when an assessee changes the method of accounting for bona fide reasons, the same should be accepted. However, I am not convinced with the appellant s arguments in the absence of justifiable reasons for change in the method of account. In view of this, the AO s action is upheld. 48. Aggrieved by the order of CIT(Appeals), the assessee has raised ground No.4 before the Tribunal. 49. The ld. counsel for assessee submitted that the change in accounting policy was a bonafide change and that the effect will be tax neutral. Our attention was drawn to the decision of Hon'ble Supreme Court in CIT v. Bilahari Investments Pvt. Ltd., [2008] 168 taxman95 (SC), wherein the Hon ble Supreme Court held that every assessee is entitled to arrange its affairs and follow method of accounting, which department has earlier accepted, and it is only in those cases where department records a finding that method adopted by assessee results in distortion of profits, that it can insist o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that there were no justifiable reasons for change in method of accounting. In our view, the reasons assigned by the revenue authorities for rejecting the claim of assessee are without any basis. As has been observed by the Hon'ble Supreme Court in the case of Bilahari Investments Pvt. Ltd. (supra), the department has to show that change in method of accounting results in distortion of profits. In the absence of such a finding, it has to be necessarily concluded that the change of accounting is revenue neutral. We are also of the view that the expenditure in question is purely revenue expenditure and the fact that assessee in the past was deferring the expenditure and claiming it over a period of time cannot be the basis to hold that the same method of accounting should be followed. In other words, we are of the view that change in method of accounting is bonafide. We therefore hold that the claim of assessee deserves to be accepted. Accordingly, ground No.4 raised by the assessee is allowed. 53. In the result, appeal by the assessee is partly allowed. ITA 318/B/13 (Revenue's appeal) 54. Ground Nos. 1, 8 9 are general in nature and calls for no specific adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has ignored the appreciation of ₹ 8,82,48,583/- and claimed the total depreciation of ₹ 16,99,68,583/-. Therefore, the AO added the amount of depreciation of ₹ 8,82,48,583/-. The CIT(A) noticed the argument of the Assessee on the ground that the Assessee was regularly and consistently following the same accounting treatment in all the years. The CIT(A) noticed the argument that the Assessee is entitled to value all the investments, which are part of the trading stock at cost price or market value, whichever is lower under section 145 of the Act. Therefore, the total depreciation in respect of the investment amounting to ₹ 16,99,68,583/- was claimed and that the AO was not correct in adding back the appreciation. The Assessee relied on various decisions in their submissions including the decision of the Hon ble ITAT, Bangalore in the case of Corporation Bank, Mangalore (ITA.No.794 795/Bang/2011 dt. 18/6/2012). The Hon ble ITAT discussed the issue and various other decisions on the subject and held that the depreciation on account of valuation of the said securities is an allowable deduction. The CIT(A) following the said decision of the ITAT di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with identical issue as to whether the CIT(A) was correct in deleting the addition made by the AO on account of profit on sale of investments of ₹ 200,77,13,662/- and deleting the action of the AO in disallowing loss claimed on treating investments as stock-in-trade by drawing the investment trading account of ₹ 775,96,55,047. The Tribunal held 16. We have heard both sides and find that the Supreme Court in the case of UCO Bank in 240 ITR 355 has held as under : In our view, as stated above, consistently for 30 years, the assessee was valuing the stock-in-trade at cost for the purpose of statutory balance-sheet, and for the income-tax return, valuation was at cost or market value, whichever was lower. That practice was accepted by the Department and there was no justifiable reason for not accepting the same. Preparation of the balance-sheet in accordance with the statutory provision would not disentitle the assessee in submitting the Income-tax return on the real taxable income in accordance with the method of accounting adopted by the assessee consistently and regularly. That cannot be discarded by the departmental authorities on the ground that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Karnataka High Court has to be followed. 62. We have given a careful consideration to the rival submissions and are of the view that the contentions put forth on behalf of the assessee deserve to be accepted. The Tribunal in assessee s own case on an identical issue for the A.Y. 2005-06 has upheld the claim of the assessee. The later decision of the Hon ble High Court of Karnataka is also in favour of the assessee. In such circumstances, we are of the view that the issue raised by the revenue in its appeal is without merit. Consequently, the same is dismissed. 22. The above decision squarely covers the issue in favour of the Assessee. Respectfully following the same, we uphold the order of the CIT(A) and dismiss the relevant grounds of appeal of the Revenue. 60. Respectfully following the aforesaid decision of the Tribunal, we uphold the order of the CIT(A) and dismiss the relevant ground of appeal of the Revenue. 61. Ground Nos. 5 to 7 raised by the revenue read as follows:- 5. The CIT(A) erred in deleting the addition of ₹ 6,07,37,240 made on account of broken period interest without appreciating the fact that the interest on government securities doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that contention of the Assessee that interest for the broken period does not accrue on a day to day basis but only on the coupon date mentioned in the instrument and that before that date the Assessee has not right to claim interest. The Assessee also relied on various decisions including the decision of the jurisdictional ITAT, Bangalore in the case of State Bank of Mysore in ITA.No.1401/Bang/03 dated 17/4/2009. As per the said decision, the Hon ble ITAT has examined the issue of taxability of broken period interest income by considering various decisions on the subject. The Hon ble Tribunal concluded that the broken period interest income cannot be included in the computation of income for the purpose of income-tax. The CIT(A) was of the view that in view of the binding nature of the decision of Hon ble Tribunal, the broken period interest income is not chargeable to tax in the assessment year 2005-06 and the addition made by the AO was deleted. 64. Aggrieved by the order of the CIT(A), the revenue has raised the aforesaid grounds of appeal before the Tribunal. We have heard the submission of the learned DR who relied on the order of the AO. The learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, holding that after the omission of section 18 of the Act, i.e., after July 8, 1988, interest is to be assessed under the head Business or Other Sources as the case may be, and therefore, the interest which accrued up to the end of the accounting year became taxable as the income of the previous year. The Commissioner of Income-tax (Appeals) held that the Assessing Officer was not justified in holding that the interest accrued up to the last day of the accounting year should be subjected to tax. This was upheld by the Tribunal. On appeal to the High Court: Held, dismissing the appeal that even though section 18 of the Act was deleted, the assessee was taxable for interest on securities only on specified dates when it became due for payment, in view of the third proviso to section 145(1) of the Act, which was in force during the relevant assessment years. 66. It is not in dispute before us that identical decision has also been rendered by the Hon ble High Court of Kerala in the case of CIT v. Federal Bank, 301 ITR 188 (Ker) and the Hon ble Karnataka High Court in the case of Karnataka Bank Ltd. in ITA No.433/2005 dated 12.9.2013. 67. In the present case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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