ASSISTANT COMMISSIONER OF INCOME TAX vs. JATH URBAN CO-OP BANK LTD,, SANGLI

Both the appeals filed by Revenue relating to same assessee on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. In order to adjudicate the issues, reference is being made to the facts in ITA No.2714/PUN/2016, relating to assessment year 2008-09.

The Revenue in ITA No.2714/PUN/2016, relating to assessment year 2008-09 has raised the following grounds of appeal:- 1. On the facts and circumstances of the case and in law, the CIT(A) erred in deleting the addition of ₹ 14,21,074/- on account of provision for depreciation on securities held under HTM category. 2. On the facts and circumstances of the case and in law, the CIT(A) has not brought on record any facts to show the securities categorized as "Held to Maturity were shifted to the category of "available for sale" or held for trading and vis-a-versa by giving effect in audited accounts and notes on accounting policy. 3. The CIT(A) was not justified in ignoring the fact that the assessee during the course of assessment proceedings and statement of facts submitted that the investments were of the nature of HTM category. The CIT(A) without providing opportunities to the AO as per Rule 46(A)(3) of I.T. Rules, 1962 admitted change of stand that investment in securities were "AFS" and "HFT" Category. 4. On the facts and circumstances of the case and in law, the CIT(A) erred in allowing the deduction in the form of provision for depreciation without examining the market value and its basis of valuation at the end of relevant financial year.

The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the orders of Tribunal in assessee’s own case in assessment year 2009-10.

Briefly, in the facts of the case, the assessee is a Co-operative Bank. For the year under consideration, the assessee had claimed deduction on account of premium paid on Government Securities at ₹ 1,43,515/- and depreciation on securities at ₹ 14,21,074/-. The assessee was show caused as

The CIT(A) allowed the claim of assessee being depreciation in value of securities to the tune of ₹ 14,21,074/- on account of shifting of securities from Available For Sale (AFS) & Held For Trade (HFT) category to Held To Maturity (HTM) category of investments. The CIT(A) in this regard placed reliance on the orders of Tribunal on the same issue.

The Revenue is in appeal against the order of CIT(A).

We find that similar issue of amortization of premium paid on Government Securities arose before the Tribunal in assessee’s own case in ITA No.43/PN/2015, relating to assessment year 2009-10. The Tribunal vide order dated 17.11.2016 in turn, relying on the decision of Pune Bench of Tribunal in ACIT Vs. The Ahmednagar District Central Co-op. Bank Ltd. in ITA No.1983/PN/2013, relating to assessment year 2010-11, order dated 20.02.2015, held that premium paid on investments classified under HTM category which had been amortized over the period till maturity, was allowable as business expenditure. Consequently, the appeal of assessee was allowed. Further, reliance was placed on the ratio laid down by the Hon’ble Bombay

The facts and issues in ITA No.2713/PUN/2016 are identical to the facts and issues in ITA No.2714/PUN/2016 and our decision in ITA No.2714/PUN/2016 shall apply mutatis mutandis to ITA No.2713/PUN/2016.

In the result, both the appeals of Revenue are dismissed.