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TMI Blog2013 (5) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... in the value of securities of Rs. 9.45 crores, in respect of securities classified as 'Held till maturity' category, made by the assessing officer. 2. Whether, on facts and in the circumstances of the case and in law, the assessing officer is justified in estimating Rs. 2.70 lacs as expenditure pertaining to tax free income u/s. 14A and disallowing the same. The appellant submits that, since the facts are similar, the same be allowed as allowed by Tribunal A Bench, Pune in ITAT No. 1844/PN/05 A.Y. 2002/03 order dtd. 26the Sept. 2008, in appellant's appeal. 3. The assessing officer has erred in disallowing part of expenses as under, as "personal nature" on estimate basis- Telephone expenses Rs.17,500/- Vehicle expenses Rs.35,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of securities in the computation of income was correctly added by the Assessing Officer. Now the assessee is in appeal before us. We have heard the parties and perused the record. 4. We 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is added back when the securities are sold. Another aspect we are to consider is that the method and practice adopted by the assessee was never changed by the Assessing Officer 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 Co-operative 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 depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurities at Rs. 32,67,090/- which is 94% of the total expenses. However, the disallowance has been made by the A.O at 10% of Rs. 32,67,090/- i .e. Rs. 3,26,700/-. It was claimed that there is no provision in the Act that proportionate expenses should be disallowed. However, the A.O did -not agree with the contention of the assessee. 13. On an appeal , the CIT(A) confirmed the action of the A.O. 14. Aggrieved, the assessee is in appeal before us. 15. We have heard the content ions of both the parties. U/s 14A petty expenditure which has been proved to have been incurred in relation to earning of tax free income can be disallowed and section cannot be extended to disallow even the expenditure is permitted to have been incurred for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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