TMI Blog2019 (1) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party, there is no diversion. As already stated, there is no payment in the year of losses. Therefore, payment u/s 63(1)(b) is only an appropriation of profit. Moreover, this amount paid during the year is also not out of the profits of their year but profits of earlier year. Therefore, on that count also amount cannot be allowed as deduction during the year. For these reasons, we uphold the order of the authorities and reject assessee’s grounds on the issue. Disallowance of an amount towards depreciation of HTM Securities - Held that:- In assessee’s own case for AY 2006-07, deleted the disallowance made on account HTM securities depreciation It is stated that marking to market the entire portfolio eliminates the incentive for imprud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Disallowance u/s 14A ₹ 11,07,108/- 2. Disallowance on contribution to Education Fund ₹ 20,48,979/- 3. Depreciation on Investment in HTM Rs. ₹ 16,53,49,000/- 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). Ld. CIT(A) following the decision of the coordinate bench of ITAT, Hyderabad in assessee s own case, confirmed the addition made towards contribution to Education Fund and deleted the addition made towards depreciation on investment in HTM. 4. Aggrieved by the order of CIT(A), both the assessee and revenue are in appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in assessee's own case for the asst year 2006-07 is pending adjudication by the Hon'ble High Court. 5. Any other ground that may be urged at the time of hearing. 5. As regards assessee s grounds of appeal relating to disallowance of claim for deduction of ₹ 20,48,979/-, the AO observed that the assessee had subtracted an amount of ₹ 20,48,979/- towards education fund in the computation of taxable income. The AR explained that as per the Multi-State Cooperative Act, 2002, the assessee is obliged to credit 1% of its net profit to the cooperative education fund maintained by the National Cooperative Union, New Delhi and hence it is allowable expenditure u/s 37 of the Act. 5.1 Rejecting the submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly an appropriation of profit. Moreover, this amount paid during the year is also not out of the profits of their year but profits of earlier year. Therefore, on that count also amount cannot be allowed as deduction during the year. For these reasons, we uphold the order of the authorities and reject assessee s grounds on the issue. 7. Considered the rival submissions and perused the material on record. We do not find any infirmity in the order of the CIT(A) as the decision taken by him is in consonance with the order of ITAT, hence, we uphold the order of CIT(A) on this issue and dismiss the grounds raised by the assessee in this regard. 8. As regards ground raised by the revenue relating to deletion of disallowance of an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, which are as under: In the case of assessee other than banks, the normal approach to arrive at a conclusion as to whether a particular investments for the purpose of investment per se or for trade, is to consider the intention of the assessee. Moreover, as held by the Supreme Court in the case of CIT Vs. H. Holck Larsen (160 ITR 67), the real question was not whether the transaction of buying and selling the shares lacks the element of trading, but whether the later stages of the whole operation show that the first step the purchase of shares was not taken as, or in the course of, a trading transaction. However, this proposition does not apply to the banks in view of the peculiar nature of their activities. In the case of banks, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of holding of such securities. In fact, while prescribing the classification of securities into three categories as mentioned earlier, the avowed policy declared was that 100% of the banks investment should be marked to market and this process should be completed within the next three years. Even in the erstwhile policy of classifying the investments into permanent and current categories, the banks had the flexibility to transfer the securities from one category to another. Thus, even if the securities held as HTM securities are expected to be held till maturity, the banks are not precluded or prohibited from selling them before maturity. It has been the intention of the Reserve Bank of India(RBI) to encourage the banks to trade in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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