TMI Blog2013 (4) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... ities was made as per prudential norms of the RBI and same was allowable deduction. In view of above, assessee was justified in contending for amortisation of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition made by the Assessing Officer by disallowing amount towards amortisation of Government Securities (HMT) was correctly deleted. - Decided against revenue - ITA.No.1254/PN/2011, Co. 96/PN/2011 - - - Dated:- 29-4-2013 - Shri Shailendra Kumar Yadav, Judicial Member,and Shri G.S. Pannu, Accountant Member. For the Appellant : Shri Abhay Avchat For the Respondent : Shri Achal Sharma ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards the amortization of Government security. The assessee during assessment proceedings submitted that it was mandatory on its part to comply with the directions issued by RBI from time to time. Assessee had to park a certain percentage of its Net demand and Time liability in form of Statutory Liquid Ratio SLR with the RBI. This amount of SLR was maintained by assessee in form of investment in Government securities. Since the Government securities was through its SGL account (Electronic format) with MSC Bank Ltd. Further, the said investments were classified as HTM (Held to maturity) and so held in the portfolio of the bank. Assessee had procured these investments at a premium and such the redemption of the said securities would at all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The new clause (4) inserted by the Finance Act, 2006 w.e.f. 01-04-2007 reads as under : The provision of the section was not in relation to any cooperative bank other than agricultural credit society or primary cooperative agricultural and rural development bank . 5. The intention of the provision may be derived more precisely from relevant Para 166 of the budget speech which stated that : Co-operative banks, like any other bank, are lending institutions and should pay tax on their profits, Primary Agricultural 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 HTM These are carried at acquisition cost unless the cost is more than the face value, in which case the premium should be amortised over the period remaining to maturity. The premium is required to be amortised over the period remaining to maturity. This apart, any permanent diminution in value shall FV shall go on to reduce cost of 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, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Catholic Syrian Bank Ltd. vs. ACIT that amortisation on purchase of Government securities was made as per prudential norms of the RBI and same was allowable deduction. In view of above, assessee was justified in contending for amortisation of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition of ₹ 17,91,659/- made by the Assessing Officer by disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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