Income Tax Appellate Tribunal - Pune
The Sindhudurg District Central Co.Op. ... vs Department Of Income Tax on 24 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV,
JUDICIAL MEMBER, AND
SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA No.407/PN/2013
A.Y. 2009-10
Dy. Commissioner of Income Tax,
Circle 2, Kolhapur Appellant
Vs.
The Sindhudurg District Central Co.Op. Bank Ltd.,
A/P: Sindhudurg Nagari,
Tal-Kudal, Sindhudurg Dist.
PAN:AABAT4262F Respondent
Appellant by : Shri Walimbe
Respondent by : Shri Sushant Phadnis
Date of Hearing: 24.10.2013
Date of order : 28.10.2013
ORDER
PER SHAILENDRA KUMAR YADAV, JM
This appeal has been filed by revenue against the order of Commissioner of Income Tax (Appeals) [(in short CIT(A)], Kolhapur, dated 27-11-2012 for A.Y. 2009-10 on the following grounds:
1. On the facts and in the circumstances of the case the Hon'ble CIT (A) is not justified in allowing the claim of assessee regarding amortization of premium paid on Government Securities purchased in accordance with the Reserve Bank of India guidelines and Master Circular on 2 investment issued by Reserve Bank of India on 02-07-2006 which, in fact do not supersede the provisions of Income Tax Act and are not binding on the Department.
2. On the facts and in the circumstances of the case, the CIT (A) erred in allowing depreciation on investment in Government Securities which can be claimed only on business assets and not on investment ignoring the department's consistent stand that depreciation in value of securities is allowable in cases where securities are held as stock in trade and not as capital investment in the form of HTM.
3. On the facts and in the circumstances of the case of the CIT (A) erred in allowing amortization of premium paid on Government Securities purchased by assessee ignoring the legal provisions that all capital assets are to be valued at cost only and no part thereof can be claimed as revenue expenditure in computing total income.
4. The appellant prays that the order of the Commissioner of Income Tax (Appeals), Kolhapur be vacated and that of the Assessing Officer be restored.
2. The assessee bank is engaged in the business of banking. The only issue before us relates with regard to addition of Rs.38,25,000/- on account of amortization of securities as per Reserve Bank of India directions. Assessing Officer disallowed the same and made addition of Rs.38,25,000/- on account of amortization of securities. In appeal, CIT(A) deleted the addition in question by observing that as per guidelines of Reserve Bank of India, the claim of assessee towards provision of depreciation on fresh investment over the life of security purchased and 3 amortized and premium in respect of security shifted to HTM category is allowable as deductable expenses. This view is also fortified by the decision of ITAT, Pune Bench "B" in ITA No.1254/PN/2011 in case of Dy. CIT, Circle-1, Nashik Vs. Nashik Merchant Co-operative Bank Ltd., wherein, similar issue has been decided in favour of assessee by holding as under:
"8. The ITAT, Mumbai Bench, in the case of ACIT Vs. The Bank of Rajasthan Ltd., (2011) TIOL-35-ITAT-Mumbai, has held that in case of banks, the premium paid in excess of face value of investments classified under HTM category which has been amortised over the period till maturity is allowable as revenue expenditure since the claim is as per RBI Guidelines and CBDT also has directed to allow such premium. It has also been held in the case of Catholic Syrian Bank Ltd. Vs. ACIT that amortization on purchase of Government securities was made as per prudential norms of the RBI and same was allowable deduction. In view of above, assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition of Rs.17,91,659/- made by the Assessing Officer by disallowing amount towards amortization of Government Securities (HMT) was 6 deleted. This reasoned factual and legal finding of the CIT(A) needs no interference from our side. We uphold the same.
9. As a result, the appeal filed by the Revenue is dismissed."
Nothing contrary was brought to our knowledge on behalf of revenue. Facts being similar, so following the same reasoning, 4 we are not inclined to interfere in the findings of CIT(A), who had deleted the addition made by Assessing Officer by disallowing amount towards amortization of government securities (HMT).
3. In the result, the appeal of the Revenue is dismissed.
Pronounced in the open Court on the day of 28th October 2013.
Sd/- Sd/-
(R.K. PANDA) (SHAILENDRA KUMAR YADAV)
Accountant Member Judicial Member
Pune, Dated: 28th October 2013
GCVSR
Copy to:-
1) Department
2) Assessee
3) The CIT(A), Kolhapur
4) The CIT, Kolhapur
5) The DR, "B" Bench, I.T.A.T., Pune.
6) Guard File
//True copy//
By Order
Senior Private Secretary,
I.T.A.T., Pune