broken period interest as against similar interest paid by Bank in respect of sale of the securities i.e., the assessee received broken period interest ... disallow the broken period interest in respect of the permanent securities held as the investment and allow the interest for a broken period in respect
Bang/2011
i) Broken period interest paid to the sellers of the
securities for the assessment year 1999-00 -
Rs.42,190,806/-.
ii) Broken ... Adjustments on valuation of securities after considering
the Broken period interest of Rs.20,91,83,000/-
4. Briefly stated the facts of the case
erred in
deleting the disallowance of broken period interest on closing stock of security of
Rs. 19,74,79,149/- relying on the decision ... period to the P&L A/c as a revenue expenditure.
AO asked the assessee to explain why pre-acquisition broken period interest
trade.
5.1 The C.I.T.(Appeals) failed to observe that broken period interest paid at the
time of purchase of securities would be part ... Appeals), therefore, ought to have confirmed the broken period interest paid
towards securities (Current category treated as stock-in-trade) lying unsold as
closing stock
against the disallowance of `64,76,781 being
broken period interest on PSU bonds. The facts apropos this ground
are that up to assessment year ... assessee was following the
practice of including broken period interest paid on the purchase of
all securities and bonds in the cost of the security
securities it receives not only sale
value, but also the broken period interest which has
accrued on the securities till the date of sale. Thus ... price. The interest component for the broken period i.e. the period
prior to the due date for interest is only one of the factors
period and, therefore, interest income had
accrued as the assessee was following mercantile system of
accounting. Accordingly he assessed the interest for the broken ... lower authorities that interest accrued only on the due
dates and therefore interest could not be assessed for the broken
period as the assessee
first issue in the appeal is regarding disallowance
of broken period interest of Rs.58.51 Crores. The bank
which have purchased government securities have ... payment of interest upto the date
of the sale. The assessee claimed the amount of interest
paid for the broken period upto the date
stock-in-trade. It was also clarified that the
interest paid for broken period on the
21
purchase of securities must be regarded as
revenue ... Vijaya Bank Ltd. was
concerned only with the claim for broken
period interest and did not decide the issue
whether the securities constituted stock
closing stock securities valued at
cost or market value, the broken period interest received/paid on
purchase/sale of securities and resultant loss was claimed
