TMI Blog2019 (11) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... mortized expenditure on premium on Government Securities is allowable as expenditure. In the case of CIT-Rajkot-2 v. Rajkot District Co-Operative bank Ltd. . [ 2014 (3) TMI 110 - GUJARAT HIGH COURT] wherein it was held that in terms of Circular No. 17 dated 26.11.2008, where Co-operative Bank Ltd. purchases certain Government Securities in order to maintain statutory liquidity ratio (SLR) at a price higher than their face value, premium so paid has to be amortized for remaining period of maturity. In the light of above facts and circumstances, we are of the considered opinion, the amortization expenditure on government securities held as HTM are allowable as deduction. - Decided in favour of assessee Unexplained investment in Multi/National Stock Exchange - CIT-A deleted the addition - HELD THAT:- 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. Therefore, these grounds of appeal is therefore dismissed. - I.T.A.No.2573/AHD/2014, I.T.A.No.1726/AHD/2016 - - - Dated:- 3-10-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment. 2. 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. 3. 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. 4. 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. I.T.A.No. 2573/AHD/2014/ by the Revenue: 4. Ground No.1 ,3 and 4 states that the CIT (A) has erred in law in deleting addition of ₹ 1,66,57,951/- on account of amortisation of premium paid on investment and wrongly applying the provisions of section 36(1)(vii) of the Act and wrongly referred CBDT Instruction No. 17 of 2008 for wrongly expenditure cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right in disallowing the said expense. 9. Per contra, the learned counsel for the assessee referred appeal order of CIT(A) wherein Ld. CIT (A) has allowed the amortization expenses on premium on government securities which has been provided under section 36 (1) (vii) of the Act and these provisions have been explained by the CBDT vide Instruction No. 17 of 2008 dated 26.11.2008. As per this clarification, 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, in which case, the premium should be amortized over the period remaining to maturity. The Tribunal in the case of State Bank of Saurashtra Bhavnagar v. DCIT 93 ITD 662 (Ahmedabad), Catholic Syrian Bank Ltd. v. ACIT [2010] 38 SOT 553 (Cochin) held that in view of Instruction No.17 of 2008 dated 26.11.2008, deduction of amortized expenditure on premium on Government Securities is allowable as expenditure. The learned counsel for the assessee further relied in the case of ACIT v. Chanasma Nagrik Sahkari Bank Ltd. [2017] 86 taxmann.com 8 (Ahmedabad-Tribunal) wherein it was held that loss on account of premium pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment of banks vide its Instruction No. 17/2008 dated 26.11.2008 (F. No. 228/3/3008 - ITA- III). Point no. VII of the said instruction- 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. In the case of HFT and AFS securities forcing stock in trade of the bank, the depreciation / appreciation is to be aggregated scrip wise and only net depreciation, if any, is required to be provided for in the accounts. The latest guidelines of the RBI may be referred to for allowing any such claims, In such circumstances, where the same method o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 ground of appeal is allowed to the extent that the loss is to be taken as business loss.' 6. The Ld. DR relied upon the order of the AO. In furtherance the Ld. DR submitted that when the assessee itself has classified the securities held by it under the head 'investment', the profit/ loss arising on sale of such securities held as investment have been rightly treated to be of capital nature by the AO. 7. The Ld.AR, on the other hand, relied upon the order of the CIT (A). The Ld. AR submitted that the assessee is in peculiar business of banking which is regulated by the RBI. The RBI has prescribed a format whereby the securities held are declared under the head 'investment' and further are classified as 'Held to maturity (HTM)' Held for trading (HFT)' and 'available for sale (AFS)' as per Reserve Bank of India's Instruction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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, in which case, the premium should be amortized over the period remaining to maturity. The Tribunal in the case of State Bank of Saurashtra Bhavnagar v. DCIT 93 ITD 662 (Ahmedabad), Catholic Syrian Bank Ltd. v. ACIT [2010] 38 SOT 553 (Cochin) held that in view of Instruction dated 26.11.2008, deduction of amortized expenditure on premium on Government Securities is allowable as expenditure. Further, Hon`ble Jurisdictional High Court in the case of CIT-Rajkot-2 v. Rajkot District Co-Operative bank Ltd. [2014] 43 taxmann.com 161 (Gujarat) wherein it was held that in terms of Circular No. 17 dated 26.11.2008, where Co-operative Bank Ltd. purchases certain Government Securities in order to maintain statutory liquidity ratio (SLR) at a price higher than their face value, premium so paid has to be amortized for remaining period of maturity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Therefore, these grounds of appeal is therefore dismissed. 18. In the result, appeal of the Revenue is dismissed. I.T.A.No. 1726/AHD/2016/A.Y. 2012-13 / by the Revenue: 19. Ground No.1 to 4 states that the CIT (A) has erred in law in deleting addition of ₹ 1,66,57,951/- on account of amortisation of premium paid on investment and wrongly applying the provisions of section 36(1)(vii) of the Act and wrongly referred CBDT Instruction No. 17 of 2008 for wrongly expenditure claimed by the assessee. 20. We have heard the rival submissions and perused the relevant material on record. Both parties have agreed that the facts are identical as in assessment year 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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