TMI Blog2013 (8) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... is directed against the order dated 10-08-2011 of the CIT(A) II, Pune relating to assessment year 2008-09. 2. Facts of the case, in brief, are that the assessee is a Cooperative Bank engaged in the business of banking activities. During the course of assessment proceedings the Assessing Officer noticed that the assessee has claimed expenses on account of amortization of premium on investments to the tune of ₹ 45,67,178/- in the profit and loss account. On being questioned by the Assessing Officer to justify the same the assessee explained that as per Banking Regulation Act and Guidelines of RBI, investment held in Government Securities are to be categorised as per the principles and guidelines of RBI and any premium paid on acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost unless it was more than the face value, in such case premium should be amortized over the period remaining to the maturity. 5. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in allowing the assessee's appeal instead of confirming the Assessing Officer's order. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in holding that the amortization of the premium paid on securities was an allowable expenditure u/s 37 of the Income-tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hsik Merchant Cooperative Bank Ltd. (Supra). We find the Tribunal has discussed the issue and dismissed the grounds raised by the Revenue by holding as under : 4. After going through rival submissions and material on record we find that with 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) inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 (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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 guidelines of the RBI may be referred to for allowing any such claims. 8. The ITAT, Mumbai Bench, in the case of ACIT vs. The Bank of Rajasthan Ltd. (2011) TIOL-35-ITAT-Mumbai, 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 sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
