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2015 (11) TMI 1386 - ITAT PUNE

2015 (11) TMI 1386 - ITAT PUNE - TMI - Disallowance of amortization of premium on investment in Government Securities Held to Maturity (HTM) - CIT(A) allowed claim - whether the securities under the categories of HTM are in the nature of capital asset and hence premium paid thereon is also a capital expenditure and therefore is not allowable revenue expenditure? - Held that:- As held in the case of Catholic Syrian Bank Ltd. Vs. ACIT [2013 (1) TMI 129 - ITAT COCHIN] that amortization on purchase .....

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JM For The Assessee : Shri Subodh Ratnaparkhi For The Revenue : Shri Hitendra Ninave ORDER PER VIKAS AWASTHY, JM : This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-I, Thane dated 13-12-2013 for the assessment year 2010-11. The only issue raised by the Revenue in appeal is against allowing the amortization of premium on investment in Government Securities Held to Maturity (HTM). The ground raised by the Revenue in appeal is as under: On the facts an .....

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41,520/-. During the course of scrutiny assessment, the Assessing Officer made addition of ₹ 24,57,800/- on account of amortization on Government Securities Held to Maturity (HTM). Aggrieved by the assessment order dated 16-10-2012, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by placing reliance on the decision of Pune Bench of the Tribunal in the case of ACIT Vs. Pune Peoples Co-operative Bank Ltd. in ITA No. 1 .....

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wn case in ITA No. 2173/PN/2012 for the assessment year 2009-10 decided on 23-09-2013. The ld. AR placed on record a copy of the order of Tribunal in ITA No. 2173/PN/2012. 4. The ld. DR vehemently supported the findings of Assessing Officer. However, when confronted with the order of Co-ordinate Bench of the Tribunal in assessee s own case for assessment year 2009-10, the ld. DR fairly admitted that the issue in appeal has been decided in favour of the assessee in assessee s own case in the earl .....

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dentical issue had come up before the Pune Bench of the Tribunal in the case of ACIT Vs. Pune Peoples Cooperative Bank Ltd. We find the Tribunal vide ITA No.1413/PN/2011 order dated 08-08-2013 has rejected the appeal filed by the Revenue wherein the CIT(A) had allowed the claim of the assessee on account of amortization of premium on investments to the tune of ₹ 45,67,178/-. The relevant observations of the Tribunal read as under : 8. We have considered the rival arguments made by both the .....

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the advent of section 80P(4) w.e.f. A.Y, 2007-08 has closed the doors for cooperative banks for claiming the benefit of deduction u/s.80P(2)(a)(i) from this total income. However, the cooperative society should now be entitled to be assessed as normal banking company. The clause (4) inserted in section 80P has taken away the benefit of the erstwhile deduction available to cooperative society in carrying on business of banking or providing credit facility to its members. The new clause (4) insert .....

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cultural Credit Societies (PACS) and Primary Cooperative Agricultural and Rural Development Bank (PCARDB) stand on a special footing and will continue to be exempt under section 80P of the Income Tax Act. However, I propose to exclude all other co-operative banks from the scope of that section". Accordingly, section 80P is to be amended to give effect to the above proposal. It is also proposed to amend section 2(24) to provide that profits and gains of business of banking (Including providi .....

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pecifically provided under the Act. This is irrespective of accounting treatment provided by the assessee in its books 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 (HF .....

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the investment. 2. AFS The individual scrips in the Available for Sale category will be marked to market at quarterly or at more frequent intervals. These investments are considered to form stock-in-trade of a bank and therefore are to be valued at cost or NRV, whichever is less. Fall in value below cost, therefore, is to be provided immediately, however any net appreciation in value is ignored and not recognized as income on the basis of conservatism. 3. HFT The individual scrips in the Held f .....

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FT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortised over the period remaining to maturity. In the case of HFT and AFS securities forming stock in trade of the bank, the depreciation/ appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. The latest g .....

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