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TMI Blog2019 (11) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- on account of unexplained investment in Multi/National Stock exchange. 3. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A) has wrongly applied the provisions of Sec.36(1)(vii) of the Act for granting relief for allowability of expenditure claimed on account of amortization. 4. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A) has wrongly referred the CBDT's Instruction No.17 of 2008 for allowing the expenditure claimed by the assessee on account of amortization. 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in allowing appeal of the assessee, when the AIR information in possession of the Department that the assessee had made investment in National/Multi Commodity Exchange. 6. On the facts and in the circumstances of the case and in law, the Ld.CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld.CIT(A), Surat may be set aside and that of the Assessing Officer's order may be restored." 3. Grounds raised by the Revenue in ITA No.1726/Ahd/2016 read as under: "1. On the facts and in the circumstances of the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er this clarification, investment of banks classified under HTM category, need not be marked to market and are carried at acquisition cost, unless there are more than face value, in which case, the payment should be amortised over the period remaining to maturity. On the basis of this instruction, different tribunals, as mentioned by the assessee have allowed the amortised expenditure. The AO has ignored the provisions of instruction which is binding on him while deciding the issue of deduction of the expenditure. Therefore, the expenditure claimed by the assessee was the deleted. 7. Being aggrieved, the Revenue has filed this appeal before the Tribunal. 8. The learned D.R. submitted that the reasons given by the Ld.CIT(A) that amortisation of expenditure is covered by sections 36(1)(vii) of the Act is not correct as there is no provision in the said section. Further, as per CBDT Instruction No.17 of 2008, securities categorised as held to maturity to be amortised over the period remaining to maturity, but there is no mention of its allowability under the Income Tax Act as held in the order. Therefore, the AO was right in disallowing the said expense. 9. Per contra, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, Investment activities is the normal banking activity and should be treated as banking stock in trade. The format of the balance sheet has been prescribed by the legislature and bank has to report their financial result in that format only. As per this format the Investment in Non-SLR Securities though treated as banking assets (stock in trade) has to be shown in the balance sheet as Investment. (2) The above position has also been clarified by Circular no. 665 of the CBDT dated 05-10-1993. "The question whether a particular item of investment in securities constitutes stock-in-trade or a capital asset is a question of fact In fact, the banks are generally governed by the instructions of the Reserve Bank of India from time to time with regard t:o the classification of assets and also the accounting standards for investments, The Board has, therefore, decided that the Assessing Officers should determine on the facts and circumstances of each case as to whether any particular security constitutes stock-in-trade or investment taking into account the guidelines issued by the Reserve Bank of India in this regard from time to time." CBDT has further issued instruction for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost only for showing the income in its returns. In nut shell, as discussed above, the bank has claimed loss in respect of securities which it had always meant to hold as trading assets and shown as AFS as per RBI's guidelines and classifications. Just because the banks have to keep them for longer times because of the nature of their business, it would not change the nature of the asset. Further, as held by Hon'ble Mumbai High court in the case of GIT v. Bank of Baroda (2003) 262 ITR 334; the mere fact that the banks are required as per RBI's guidelines to show I these in the balance sheet as investment would not affect the nature of the asset. The banks by the very nature of the business may have to park surplus trading funds in securities and although intended to be trading assets may have to keep them for longer periods if funds are not required. The treatment of securities of AFS categories has to be seen in contradiction and contrast with securities of HTM category which are purchased and held for the purpose of Investment only. The circular and instruction of the CBDT being squarely applicable, leaves no doubt on the allowability of the assessee's claim. The g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the order of the CIT (A) dealing with the issue is consistent with the CBDT instruction as well as the facts of the case and does not require any elaboration. Accordingly, we decline to interfere with the order of the CIT(A)." 11. We find that the Government securities from the market which has been classified as "held to maturity" (HTM) category and therefore, premium paid over and above the face value of Rs. 79,05,467/- over the remaining period of maturity and same is allowable as deduction. As per RBI guidelines dated 16th October 2000, the Investment portfolio of the banks is required to be classified under three categories viz. Held to Maturity (HTM), Held for Trading (HFT) and Available for Sale (AFS). Investments classified under HTM category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case the premium should be amortized over the period remaining to maturity. This was explained by the CBDT vide Instruction No. 17 of 2008 dated 26.11.2008 according which investment of banks clarified under HTM category need not be marked to market and are carried at cost unless these are more than face value, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such as, nature of transaction, number of transactions, the company in which such investment is made is provided to the assessee it cannot explain the said transaction. In the case of appellant, no details have been provided to it in respect of alleged transactions, therefore the action of the Assessing Officer is not supported by any evidence, hence said addition was deleted. 15. Being aggrieved, the Revenue has filed this appeal before this Tribunal. The ld.Senior Departmental Representative relied on the orders of the Assessing Officer. 16. Per contra, the ld.Counsel for the assessee relied on the order of the ld.CIT(A) and submitted that the assessee is being a Co-operative Bank there was no point to make unexplained investment for it nor the Assessing Officer has provided the information and which addition was made, therefore ld.CIT(A) has rightly deleted the said addition. 17. We have heard the rival submissions and fid that the addition is made without providing information to the assessee for rebuttal and details of transactions nature and company in which investment is made. Therefore, we do not find any error in the order of ld.CIT(A), accordingly same is upheld. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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