TMI Blog2012 (5) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Borkar, Advocate For the Respondent : Shri B. Saravanan, JCIT ORDER PER SHRI GEORGE GEORGE, K. JM These two appeals of the assessee are directed against the orders of the learned CIT (A)-II, Bangalore dated 29.3.2010 and 14.10.2010 respectively. The relevant assessment years are 2007-08 and 2008-09. 2. For the AY 2007-08, the assessee had initially raised eleven grounds and subsequently came up with revised grounds numbering identical grounds. The grounds raised are reformulated, for the sake of convenience and clarity, as below: 2.1 In this appeal, the assessee has raised the following grounds of appeal; a) On the facts and circumstances of the case, the ld. CIT(A) ought to have accepted the submissions of the appellant and allowed the deduction under the head amortisation of Premium as claimed by the appellant. b) The ld. CIT(A) ought to have appreciated that the investment though classified as held to maturity for RBI purposes it was a part of business assets of the appellant bank and declared as such for income-tax purposes and the income therefrom was also assessed only under the head income from banking business . c) Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nrealized interest in respect of nonperforming assets was liable to be allowed as claimed by the appellant, as the same had been written off as bad debt in the accounts of the appellant by debiting the same in the profit loss account and thus the conditions required u/s 36(1)(vii) had been satisfied. e) The ld.CIT(A) ought to have directed the assessing officer to allow the deduction on depreciation in respect of securities for the relevant assessment year. f) Without prejudice the disallowances are arbitrary, excessive and ought to be reduced substantially. g) The ld. CIT(A) erred in confirming the levy of interest u/s 234A,234B 234C of the IT Act. 2. Grounds Nos.1,6 8, being general and no specific issue involved, they do not survive for adjudication. Ground Nos.2 3 relate to deduction under the head amortisation of premiums as in the last assessment year i.e 2007-08. 3. Ground no.4, with respect to unrealized interest on non-performing assets made on the directions of the Reserve Bank of India. 3.1 Ground no.5, with regard to allowance of depreciation. Since the issue has not been pressed by the learned counsel for the assessee, this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras and the Special Bench of the ITAT, Delhi (supra), so long as the income is computed as per the provisions of the Income-tax Act the income is computed as per the provisions of the Income-tax Act is concerned, the Income-tax Act is a Special Act and the provisions contained therein need to be complied with if deduction permissible is claimed as allowable and not under the provisions of RBI Act or any direction issued there under. In view of this matter, the AO has rightly held that the securities are classified are long term investment and these cannot be treated as stock-in-trade , available for sale and held for trading category. However, while disposing of such securities, they are exigible for capital gains for loss. In my considered view, I do not find infirmities in the AO s observation .. 4.3 Aggrieved, the assessee bank is in appeal before us. The learned AR submitted that the CIT (A) had failed to see the reason that a similar issue to that of the present one has been allowed by various Benches of the Hon ble Tribunals namely . i) ITAT Cochin Bench (2010) 38 SOT 553 (Cochin) in the case of Catholic Syrian Bank Ltd., Vs ACIT (Page no.4 of 16(para-15) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d over the period remaining to maturity (iii) In the case of Corporation Bank v. ACIT in ITA No.112/Bang/2008 for the assessment year 2004-05, the earlier Bench had also held a similar view. 4.61 Taking into account the totality of the issue as discussed above and in conformity with the findings of the Hon ble Benches of the Tribunals cited supra, we are of the considered view that the assessee is entitled to claim deduction. It is ordered accordingly. 5. The other issue (ground No.5) was that the AO noticed in the P L account, a sum of ₹ 1,66,678/- was debited on account of unrealized interest. It was contended before the AO that in respect of NPAs, interest debited on such advances may not get realized. 5.1. However, the AO was not satisfied with the assessee s version on the ground that merely because provision against unrealized interest was made as per the directive of the RBI and, accordingly, held that the provision was a kind of a reserve which was maintained by different business entities to sustain future losses and, thus, the provision of ₹ 1.66 lakhs was contingent in nature and, therefore, was not available as revenue expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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