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TMI Blog2013 (8) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... The briefly stated facts are as under. The assessee is a Cooperative Bank functioning at Shahada, a backward place in Nandurbar district. The assessee bank has filed return of income declaring total income of Rs. 34,14,49,955/- for the A.Y. 2009-10. But subsequently revised the said return by declaring the total loss of Rs. 1,33,473/-. So far as the issue of depreciation on the securities of Rs. 50,24,000/- is concerned, the Assessing Officer has noted that the assessee has claimed deduction of Rs. 48,85,000/- on account of depreciation on investment and Rs. 1,39,000/- on account of other risk provisions, as per the RBI report. In the opinion of the Assessing Officer the depreciation claimed by the assessee was not allowable u/s. 32 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the assessee has classified the securities in the three categories (a) Held till Maturity (HTM), (b) Available for sale (AFS) and (c) Held for trading (HFT). The Assessing Officer was of the opinion that the loss on diminution of the value of the securities cannot be charged to the profit and loss account in the case of securities held under the category of HTM. We find that the assessee bank has followed the RBI guidelines and as per the RBI guidelines the assessee has made the provision of Rs. 9.45 crores on account of diminution in value of securities. In this case, an amount of Rs. 1,48,96,027/- being amortization in respect of diminution in the value of those securities attributable to financial year 2003-04 was added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in past. 7. So far as the securities held under the HTM category the I.T.A.T., Pune has taken a view in the case of Latur Urban Cooperative Bank Ltd. Vs. ACIT ITA Nos. 778 and 792/PN/2011 order dated 31-08-2012 that all the securities held by the assessee are part of the stock-in-trade irrespective of their classification. So far as the treatment of the assessee in classifying the securities, in our opinion the securities classified under HTM category is also part of the stock-in-trade. There is RBI circular as per which the assessee can amortize the depreciation or loss on the conversion of securities from FST category to HTM category. We, therefore, do not agree with the view taken by the Ld. CIT(A) that the securities held under HTM are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. We further find that in the case of Bank of Baroda (supra) as well as Karur Vyasya Bank Ltd. (supra) it is held that the valuation is to be made at cost or market rate, whichever is lower. We further hold that the securities held under HTM category are part of stockin- trade of the bank and there is no justification to decline the claim of depreciation/loss on the valuation of the said securities. We accordingly allow the Ground No. 1 taken by the assessee. So far as the Ground No. 2 is concerned it is only the supporting to the Ground No. 1 hence, no specific adjudication is required. 6. We, therefore, uphold the order of the Ld. CIT(A) on this issue following the above referred decisions and dismiss the ground taken by the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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