Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
Both the appeals filed by Revenue are against consolidated order of CIT(A)-1, Kolhapur, dated 20.09.2016 relating to assessment years 2007-08 & 2008-09 against respective orders passed under section 143(3) of the Income- tax Act, 1961 (in short ‘the Act’).
ITA Nos.2713 & 2714/PUN/2016 2 Jath Urban Co-op. Bank Ltd.
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
ITA Nos.2713 & 2714/PUN/2016 3 Jath Urban Co-op. Bank Ltd.
to why the same should be allowed. The assessee explained that Government Securities Available For Sale (AFS) were stock-in-trade of the assessee and the same had to be declared at cost or market price, whichever was less. Since the market price was less, the same was treated as depreciation and was debited to Profit and Loss Account. This provision was made as per Reserve Bank of India Guidelines and Resolution passed by the Board. The Assessing Officer did not accept the plea of assessee and rejected the same and made an addition of ₹ 14,21,074/- and also disallowed ₹ 1,43,515/-.
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
ITA Nos.2713 & 2714/PUN/2016 4 Jath Urban Co-op. Bank Ltd.
High Court in the case of CIT Vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom), wherein it was held that amortization of premium paid on Government securities Held to Maturity was allowed. The Revenue is in appeal against the order of CIT(A) in not only allowing the claim of assessee but also accepting the plea of assessee that the investments were in the nature of HTM category, wherein the assessee had made change of stand that investments in securities were AFS and HFT category. We find no merit in the issues raised by the Revenue in this regard, wherein similar issue has been allowed by the Tribunal in assessee’s own case in assessment year 2009-10 and also settled by the decision of the Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd. (supra). Following the same parity of reasoning, we allow the claim of assessee since it is an explanation which was filed before the CIT(A), which has been elaborately considered in paras 8 to 14 of the appellate order. Upholding the same, we dismiss the grounds of appeal raised by the Revenue.
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.
Order pronounced on this 23rd day of March, 2018.
Sd/- Sd/- (D.KARUNAKARA RAO) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 23rd March, 2018. GCVSR
ITA Nos.2713 & 2714/PUN/2016 5 Jath Urban Co-op. Bank Ltd.
आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-1, Kolhapur; 4. The CIT-1, Kolhapur; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune