TMI Blog2015 (4) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of taxable income as the dividend is declared out of the profits remaining after taxation. It cannot be anybody’s position that the unclaimed dividend is a receipt by the assessee in the course of its trading transactions. In-fact, the unclaimed dividend amount, does not reflect any receipt at all. Therefore, in our view, the reliance placed by the CIT(A) on the decision of the Hon’ble Supreme Court in the case of TVS Sundaram Iyengar and Sons Ltd. [1996 (9) TMI 1 - SUPREME Court] is erroneous. - Decided in favour of assessee. The issue arising in the present appeal is identical to the issue decided by the Pune Bench of the Tribunal in the case of Pune District Central Co. Operative Bank Ltd.[2015 (4) TMI 662 - ITAT PUNE]and also the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT],and following the same parity of reasoning, we hold that the assessee is entitled to the deduction of ₹ 11,38,000/- being the premium on Amortization of Securities. Accordingly, we hereby affirm the action of CIT(A) in deleting the disallowance of ₹ 11,38,000/- representing amortization of premium paid on Government Securities under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is relevant :- 5. Ground No.2 by the Revenue reads as under : 2. Whether on the facts and in the circumstances of the case, the CIT(A) is correct in holding that the forfeited amount of dividend is not an income of the assessee u/s.28 of the Act. 6. The issue is in respect of the treatment of the forfeited dividend which is credited to the General Reserve. The AO has observed that the assessee has forfeited an amount of ₹ 10,30,2180/- on account of dividend payable which is shown in the Liability side of the Balance sheet by reversing the entry and credited to the General Reserve Fund. The AO has observed that the dividend is declared by the Assessee bank out of its profit as per its regulations. The AO made addition to the extent of ₹ 10,30,218/- which was in respect of the amount of the forfeited dividend by holding that the same is income liable to tax u/s.28 of the Act. 6.1 Identical issue has come for consideration before this Bench in case of ACIT, Circle-1, Aurangabad Vs. M/s. Sunderlal Swaji Urban Co-op Bank Ltd. - ITA No.2353/PN/2013 order dated 24-09-2013. The operative part of the decision is as under : 7. We have heard the parties. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case before the Hon ble Supreme Court, assessee had received deposits in the course of his business which were originally treated as capital receipt. Some of the deposits were neither claimed nor returned to the depositors. Such unreturned and unclaimed deposits were taxed by the Revenue, which was upheld by the Hon ble Supreme Court. As per the Hon ble Supreme Court, by lapse of time, the claim of deposits became time-barred and the amounts attained a totally different quality. According to the Hon ble Supreme Court, such surplus became a trade surplus because the amounts were received originally in the course of trading transactions, though treated as a capital receipt originally. Quite clearly, the fact-position before the Hon ble Supreme Court was quite different from the issue before us. 7. It cannot be anybody s position that the unclaimed dividend is a receipt by the assessee in the course of its trading transactions. In-fact, the unclaimed dividend amount, does not reflect any receipt at all. Therefore, in our view, the reliance placed by the CIT(A) on the decision of the Hon ble Supreme Court in the case of TVS Sundaram Iyengar and Sons Ltd. (supra) is erroneous. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Hon ble Bombay High Court in the case of CIT Vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom), wherein the Hon ble Bombay High Court on similar issue, held as under: As far as question (C) is concerned, we find that an identical question of law was framed and answered in favour of the assessee by this court in its judgment dated July 4, 2014, in Income Tax Appeal No.1079 of 2012, CIT v. Lord Krishna Bank Ltd. (now merged with HDFC Bank Ltd.) (2014) 366 ITR 416 (Bom). Mr. Suresh Kumar fairly stated that question (C) reproduced above is covered by the said order. In view thereof, we are of the view that even question (C) does not arise any substantial question of law that requires an answer from us. And a similar view has been taken by ITAT, Pune A Bench in the case of Dy.CIT vs. Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. in ITA No.449/PN/2012 and another by observing as under: 10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find an identical issue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts. But at the same time it was well settled that deduction expressly mentioned under the Act are not exhaustive and profit is to be derived according to ordinary commercial principles. As per the extant RBI guidelines dated 01- 07-2009 the investment portfolio of the banks is required to be classified under 3 categories viz., Held the maturity HTM), Held for Trading (HFT) and Available for Sale (AFS). The value of each kind of investment is to be done in the following manner: Sr.No. Classification Valuation Norms of Investment. 1 .. 2 .. 3 .. 7. In para (vii) of the CBDT Instruction No.17 of 2008 dated 26.11.2008, on 'Assessment of Bank - check list for deduction, states as under: As per RBI guidelines .. 8. The ITAT, Mumbai Bench, in the case of ACIT vs. The Bank of Rajasthan Ltd. (2011) TIOL-35-ITATMumbai, has held that in case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period till maturity is allowable as revenue expenditure since the claim is as per RBI Guidelines and CBDT also has directed to allow such premium. It has also been held in the case of Cathol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 and Hon ble Bombay High Court in CIT Vs. HDFC Bank (supra). We hold that amortization of premium expenditure for securities Held To Maturity in view of RBI guidelines are allowable business expenditure in the case of assessee. The grounds of appeal No.1 and 2 raised by the assessee are thus, allowed. 13. We further find that the Hon ble Bombay High Court in case of HDFC Bank Ltd. (supra) in Income Tax Appeal No.330 of 2012 vide order dated 23.07.2014, on a similar issue on account of deduction with respect to diminution in the value of investment and amortization of premium on investment (Held To Maturity) after referring to the mandate of the RBI Guidelines, and the decision of the Hon ble Supreme Court in the case of Southern Technologies vs. JCIT, (2010) 320 ITR 577 (SC) had dismissed the appeal filed by the Revenue. 14. The issue arising in the present appeal is identical to the issue decided by the Pune Bench of the Tribunal in the case of Pune District Central Co. Operative Bank Ltd. (supra) and also the Hon ble Bombay High Court in the case of HDFC Bank Ltd. (supra), and following the same parity of reasoning, we hold that the assessee is entitled to the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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