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2016 (4) TMI 33 - ITAT PUNE

2016 (4) TMI 33 - ITAT PUNE - TMI - Disallowance in respect of amortization of premium paid on Government Securities - Held that:- Identical issue had come up before the Tribunal in assessee’s own case in an appeal filed by the Revenue wherein the order of the CIT(A) upheld in allowing the deduction on account of amortization of premium paid on HTM securities and hold that amortization premium paid on Govt. Securities debited to Profit and Loss Account, as per RBI guidelines has to be allowed be .....

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me of the assessee though some of the amounts may not be recoverable by application of provisions of Limitation Act. - Decided in favour of assessee - ITA No.280 & 281/PN/2015 - Dated:- 12-2-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : None For The Revenue : Shri Hitendra Ninawe ORDER PER VIKAS AWASTHY, JM : These two appeals have been filed by the assessee. In ITA No.280/PN/2015 the assessee has assailed the order of Commissioner of Income Tax (Appeals)-II, Pune date .....

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377; 15,11,333/- in respect of amortization of premium paid on Government Securities held under HTM category. The AO held that HTM securities are in the nature of capital assets. Amortization of premium on HTM Securities is not allowable under the provisions of Income Tax Act, 1961, as all capital assets are to be valued at cost only and no part thereof can be claimed as revenue expenditure in computing total income. 3. Aggrieved by the assessment order dated 29-11-2010 the assessee preferred an .....

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d. Departmental Representative submitted that earlier this issue had travelled upto the Tribunal in the impugned assessment year in ITA No.1894/PN/2012. The Tribunal remitted the issue back to the file of the AO vide order dated 04-11-2013 to decide it afresh on merits. In the second round, the AO made disallowance of ₹ 15,11,333/-. In the first appeal, the CIT(A) confirmed the findings of the AO. The Ld. Departmental Representative fairly submitted that the issue relating to amortization .....

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debited to the profit and loss account under the head amortization of premium paid on Government Securities . We find an identical issue had come up before the Tribunal in assessee s own case in an appeal filed by the Revenue in ITA No.1982/2013. The Tribunal decided the issue in favour of the assessee with the following observations : 21. The issue in grounds of appeal No.2 to 6 is against the deletion of addition made by the Assessing Officer on account of premium paid on investment in Govern .....

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urities at ₹ 22,69,144/-. The Pune Bench of the Tribunal in assessee s own case in ITA No.712/PN/2013, relating to assessment year 2009-10 vide order dated 27.11.2013 had allowed the claim of assessee, in turn relying on the order of Tribunal in Nagar Urban Cooperative Bank Ltd. in ITA No.306/PN/2012, observing as under:- 2. The only issue is with regard to addition made by Assessing Officer who has disallowed the amortization premium paid on Govt. Securities of ₹ 23,13,525/-. At the .....

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792/PN/2011, order dated 31-8-2012. The relevant discussion and finding of the Tribunal on the issue is as under. 13. So far as Ground No. 2 is concerned, it is in respect of the disallowances on the loss on sale of surplus of ₹ 14,70,000/-. The A.O has observed that an amount of ₹ 14,70,000/- is debited to the Profit & Loss A/c on account of loss on sale of securities. The A.O has further observed that the assessee in its submission has stated that securities of the Bank are hel .....

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n the case of Bank of Baroda (2003) 262 ITR 334 (Bom), the issue before their Lordship was whether the assessee was entitled for deduction on account of depreciation in the value of investments. The method of valuation followed by the assessee Bank was to value investments at cost or market value whichever was lower. The assessee had claimed the depreciation to the tune of ₹ 11,82,35,007/- and the said depreciation was claimed as a deduction which was disallowed by the A.O, but the assesse .....

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fore the Hon ble Supreme Court. In the case of the assessee, the issue is regarding allowability of the loss on the sale of the Securities. Merely because the Securities are kept under the head till the maturity, the said Security cannot be treated as a purely investment. Law is well settled that the Securities held by the Bank are in the nature of Stock-in-Trade. We may like to quote here the decision of the Hon ble High Court of Kerala in the case of CIT Vs. Nedungadi Bank Ltd., 264 ITR 545. I .....

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ecided in favour of the assessee by other co-ordinate Bench in the following cases: i) Decision of Bangalore Bench of the Tribunal in the case of Krishna Grameena Bank Vs. Addl. CIT (ITA No. 146/Bang/2011 and 224/Bang/2011 order dated 15-6- 2012. ii) Decision of Bangalore Bench of the Tribunal in the case of National Co-op. Bank Ltd. Vs. Jt. CIT Range 3 Bangalore (ITA No. 1090/Bang/2010 and 7/Bang/2011, order dated 11-5-2012). We therefore set aside the order of the CIT(A) on this issue and allo .....

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me parity of reasoning, we uphold the order of CIT(A) in allowing the deduction on account of amortization premium paid on Government securities. The grounds of appeal Nos.1 to 8 raised by the Revenue are thus, dismissed. 23. We find that the Tribunal had allowed the claim of the assessee, wherein, in turn, relying the order of the Tribunal in Nagar Urban Cooperative Bank Ltd. (supra). Following the same parity of reasoning, we uphold the order of the CIT(A) in allowing the deduction on account .....

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rder is set aside and the appeal of the assessee is allowed. ITA No.281/PN/2015 (A.Y. 2011-12) : 9. In ITA No.281/PN/2015 for A.Y. 2011-12 the only issue raised by the assessee is against the part relief granted by the CIT(A) on account of unclaimed liabilities. The AO made addition of ₹ 15,50,807/-. The CIT(A) confirmed the addition to the extent of ₹ 6,03,725/-. 10. During the course of scrutiny assessment the AO observed, that in the balance sheet under the head Sundry Liabilities .....

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conciliable and is not an income of the bank. It is an ascertained liability of the bank. The assessee furnished the details of accounts in respect of which uncleared cheques were deposited. Brushing aside the submissions of the assessee, the AO made addition of ₹ 15,50,807/-. The assessee took the matter in appeal before CIT(A). The CIT(A) after examining the details of unclaimed amounts furnished by the assessee, granted part relief by deleting the addition to the extent of ₹ 9,47, .....

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n. The Ld. Departmental Representative supported the findings of the CIT(A) on the issue. The Ld. Departmental Representative further pointed out that the issue raised in present appeal has been considered by the Tribunal in assessee s own case in ITA No.1861/PN/2013 for A.Y. 2010-11 decided on 20-05-2015. 12. We have heard the submissions made by Ld. Departmental Representative and have perused the orders of the authorities below. We have also considered the order of Tribunal in ITA No.1861/PN/ .....

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were not presented in the Bank. 12. We find that similar issue of recognition of unclaimed liability and its nontaxability arose before the Pune Bench of the Tribunal in The Ahmednagar Merchants Co-operative Bank Ltd. vs. JCIT vide ITA No.1863/PN/2013 and Other relating to assessment year 2010-11, order dated 29.04.2015, it was held as under:- 11. We have heard the rival contentions and perused the record. The assessee bank in the Balance Sheet filed for the year under consideration had shown u .....

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nt years. However, sum of ₹ 1,17,446/- was the amount pertaining to current year, which was paid in the succeeding year, hence the same amount was not added in the hands of the assessee and an addition of the balance amount of ₹ 26,39,605/- was made in the hands of the assessee on the premise that in view of the provisions of Limitation Act, there was no liability on the assessee to pay the said amounts. The issue arising before us is in relation to the treatment of said liability re .....

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