Dy.CIT, Circle-2,, Kolhapur v. Kolhapur District Central Co.op. Bank Ltd.,, Kolhapur

ITA 406/PUN/2013 | 2008-2009
Pronouncement Date: 28-10-2013 | Result: Dismissed

Appeal Details

RSA Number 40624514 RSA 2013
Assessee PAN AAAAK1037G
Bench Pune
Appeal Number ITA 406/PUN/2013
Duration Of Justice 8 month(s) 19 day(s)
Appellant Dy.CIT, Circle-2,, Kolhapur
Respondent Kolhapur District Central Co.op. Bank Ltd.,, Kolhapur
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 28-10-2013
Assessment Year 2008-2009
Appeal Filed On 08-02-2013
Judgment Text
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.406/PN/2013 A.Y. 2008-09 DY. COMMISSIONER OF INCOME TAX CIRCLE 2 KOLHAPUR APPELLANT VS. KOLHAPUR DISTRICT CENTRAL CO.OP. BANK LTD. 1092 E WARD SHAHUPURI SYKES EXTENSION KOLHAPUR PAN:AAAAK1037G RESPONDENT APPELLANT BY : SHRI WALIMB E RESPONDENT BY : SHRI SUS HANT 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 05-11-2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HON'BLE CIT (A) IS NOT JUSTIFIED IN DELETING THE AD DITION MADE BY THE AO ON ACCOUNT OF DEPRECIATION ON INVESTMENT IN GOVERNMENT SECURITIES OF RS.2 80 69 000/- HOLDING AS IT IS ALLOWABLE AS DEDUCTIBLE EXPENSES IN ACCORDANCE WITH THE 2 RESERVE BANK OF INDIA GUIDELINES AND MASTER CIRCULA R ON INVESTMENT ISSUED BY RESERVE BANK OF INDIA ON 02.07 .2006 WHICH IN FACT DO NOT SUPERSEDE THE PROVISIONS OF I NCOME TAX ACT AND ARE NOT BINDING ON THE DEPARTMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (A) IS NOT JUSTIFIED IN ALLOWING DEPRECIATION O N INVESTMENT IN GOVERNMENT SECURITIES WHICH CAN BE CL AIMED ONLY ON BUSINESS ASSETS AND NOT ON INVESTME NT 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 O F THE CIT (A) IS NOT JUSTIFIED IN DELETING THE ADDITION O N ACCOUNT OF DEPRECIATION ON INVESTMENT IN GOVERNMENT SECURITIES IGNORING THE LEGAL PROVISIONS THAT ALL CAPITAL ASSE TS ARE TO BE VALUED AT COST ONLY AND NO PART THEREOF CAN BE CLAI MED AS REVENUE EXPENDITURE IN COMPUTING TOTAL INCOME. THIS PRINCIPLE HAS BEEN UPHELD BY THE HON. SUPREME COURT IN THE CASE OF VIJAYA BANK LTD. V/S ADDL. CIT (187 ITR 541). 4. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) KOLHAPUR BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 2. THE ASSESSEE BANK IS ENGAGED IN THE BUSINESS OF BANKING. ONLY ISSUE IN THE APPEAL RELATES TO ADDITION OF RS. 2 80 69 000/- ON ACCOUNT OF INVESTMENT DEPRECIATION FUND. THE AS SESSING OFFICER MADE ADDITION OF RS.2 80 69 000/- TO THE TO TAL INCOME OF ASSESSEE ON ACCOUNT OF INVESTMENT DEPRECIATION FUND DEBITED BY BANK FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN APPEAL 3 CIT(A) GRANTED THE RELIEF. IN FACT CIT(A) FOLLOWI NG THE KALLAPPANNA AWADE ICHALKARANJI JANATA SAHAKARI BANK LTD. FOR A.Y. 2008-09 HAS DELETED ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION OF INVESTMENT AND GOVERNMEN T SECURITIES OF RS.2 80 69 000/- BECAUSE IT IS ALLOWABLE AS DEDU CTABLE EXPENSES IN ACCORDANCE WITH THE RESERVE BANK OF IND IA GUIDELINES AND MASTER CIRCULAR OF INVESTMENT ISSUED BY RESERVE BANK OF INDIA ON 02-07-2006. THIS VIEW IS ALSO FOR TIFIED BY THE DECISION OF ITAT PUNE BENCH B IN ITA NO.1254/PN/ 2011 IN CASE OF DY. CIT CIRCLE-1 NASHIK VS. NASHIK MERCHA NT CO- OPERATIVE BANK LTD. WHEREIN SIMILAR ISSUE HAS BEE N 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 EXC ESS OF FACE VALUE OF INVESTMENTS CLASSIFIED UNDER HTM CATE GORY WHICH HAS BEEN AMORTISED OVER THE PERIOD TILL MATUR ITY 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 CATH OLIC SYRIAN BANK LTD. VS. ACIT THAT AMORTIZATION ON PURC HASE OF GOVERNMENT SECURITIES WAS MADE AS PER PRUDENTIAL NO RMS OF THE RBI AND SAME WAS ALLOWABLE DEDUCTION. IN VI EW OF ABOVE ASSESSEE WAS JUSTIFIED IN CONTENDING FOR AMO RTIZATION OF PREMIUM PAID IN EXCESS OF FACE VALUE OF SECURITI ES HELD TO MATURITY (HTM) CATEGORY OR PERIOD REMAINING TILL MA TURITY WAS FOUND REASONABLE BY THE CIT(A). ACCORDINGLY AD DITION OF RS.17 91 659/- MADE BY THE ASSESSING OFFICER BY DISALLOWING AMOUNT TOWARDS AMORTIZATION OF GOVERNME NT SECURITIES (HMT) WAS 6 DELETED. THIS REASONED FACT UAL AND LEGAL FINDING OF THE CIT(A) NEEDS NO INTERFERENCE F ROM OUR SIDE. WE UPHOLD THE SAME. 4 9. AS A RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BE HALF OF REVENUE. FACTS BEING SIMILAR SO FOLLOWING THE SAM E REASONING WE ARE NOT INCLINED TO INTERFERE IN THE FINDINGS OF CIT(A) WHO HAD DELETED THE ADDITION MADE BY ASSESSING OFFICER BY D ISALLOWING AMOUNT TOWARDS AMORTIZATION OF GOVERNMENT SECURITIE S (HMT). 3. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 28 TH OCTOBER 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 28 TH 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