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2016 (5) TMI 970

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..... Tax (Appeals)-III, Pune dated 23-10-2013 for the assessment year 2010-11. 2. The appeal has been filed with the delay of 237 days. The assessee has filed an application for condonation of delay in filing of appeal supported by an affidavit. The reason for delay in filing of appeal as given in the affidavit is, that the assessee had filed an application for rectification u/s. 154 before the Assessing Officer. The Assessing Officer rejected the same vide order dated 30-09-2014. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) against the rejection of application u/s. 154. The said appeal of the assessee is still pending before the Commissioner of Income Tax (Appeals) for final adjudication. The assessee had also .....

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..... 3(2) was issued to the assessee on 31-08-2012. During the course of scrutiny assessment the Assessing Officer observed that the assessee had claimed broken period interest paid on purchase of Govt. Securities and amortization of premium on Govt. Securities. The Assessing Officer inter alia disallowed the above claim of the assessee vide order dated 18-12- 2012. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by placing reliance on the decision rendered by the Hon'ble Supreme Court of India in the case of Vijaya Bank Vs. CIT reported as 187 ITR 541 (SC) and the decision of Hon'ble Rajasthan High Court in the case of CIT Vs. Bank of Rajasthan Ltd. repo .....

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..... other hand Shri D.N. Parakh representing the Department vehemently supported the findings of authorities below. The ld. DR contended that the Assessing Officer as well as Commissioner of Income Tax (Appeals) had disallowed broken period interest by following the decision of Hon'ble Supreme Court of India in the case of Vijaya Bank Vs. CIT (supra). Similarly, in respect of amortization of premium on Govt. Securities the authorities below have disallowed the same by following the decision of Hon'ble Supreme Court of India in the case of Southern Technologies Ltd. Vs. Joint CIT (supra). The ld. DR vehemently supported the order of authorities below and prayed for dismissing the appeal of the assessee. 6. Both sides heard. Orders of .....

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..... facts and circumstances of the case, the CIT(A) is justified in deleting the disallowance of the claim for payment of broken period interest of ₹ 1,55,98,062/-. We have heard the ld DR as well as ld AR of the assessee and considered the relevant material on record. At the outset, the ld AR has pointed out that this issue is covered in favour of the assessee and against the revenue by the decision of the Jurisdiction High Court in the case of American Express International Banking Corpn Ltd vs CIT reported in 258 ITR 601 (Bom). The ld DR, on the other hand, relied upon the decision of the Hon ble Rajasthan High Court in the case of CIT vs The Bank of Rajasthan Ltd, reported in 316 ITR 391 (Raj). Though, the Hon ble Ra .....

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..... interest expenditure only relatable to interest income taxed on accrual basis for the year under consideration. The Assessing Officer is, therefore, directed to verify and allow the same accordingly. Appellant s appeal on this ground is allowed subject to verification. Since the jurisdictional High Court has decided the issue in favour of the assessee; therefore, we do not find any error or illegality in the order of the ld CIT(A), qua, this issue. 8. When the Department carried the matter in appeal before the Hon'ble Bombay High Court the following question was framed: (B) Whether the Income-tax Appellate Tribunal was correct in law in holding that the broken period interest is allowable as a deduction, in spite of th .....

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..... d to amortization of premium expenses. The issue relating to amortization of premium expenses on Govt. Securities was also decided by the Jurisdictional High Court in the case of CIT Vs. HDFC Bank Ltd. (supra). The issue before the Hon'ble Court was : (C) Whether the Income-tax Appellate Tribunal is right in law in holding that the assessee is entitled for deduction with respect to the diminution in value of the investment and amortization of premium on investment held to maturity on the ground of mandate by the RBI guidelines thereby ignoring the decision of the Supreme Court in the case of Southern Technologies Ltd. v. Joint CIT [2010] 32o ITR 577 (SC)? 11. The Hon'ble High Court decided this issue in favour of the asse .....

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