Kopergaon Peoples Co-Op Bank Ltd.,, Ahmednagar v. Dy. CIT, Ahmednagar Circle, Ahmednagar

ITA 877/PUN/2013 | 2009-2010
Pronouncement Date: 16-04-2014 | Result: Allowed

Appeal Details

RSA Number 87724514 RSA 2013
Assessee PAN AAAAK2255J
Bench Pune
Appeal Number ITA 877/PUN/2013
Duration Of Justice 11 month(s) 29 day(s)
Appellant Kopergaon Peoples Co-Op Bank Ltd.,, Ahmednagar
Respondent Dy. CIT, Ahmednagar Circle, Ahmednagar
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 16-04-2014
Assessment Year 2009-2010
Appeal Filed On 17-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO.877/PN/2013 (ASSESSMENT YEAR : 2009-10) KOPERGAON PEOPLES CO-OP BANK LTD. BANK ROAD KOPERGAON AHMEDNAGAR 423 601. PAN : AAAAK2255J . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX AHMEDNAGAR CIRCLE. . RESPONDENT ASSESSEE BY : MR. C. H. NANIWADEKAR DEPARTMENT BY : MR. S. P. WALIMBE DATE OF HEARING : 10-04-2014 DATE OF PRONOUNCEMENT : 16-04-2014 ORDER PER G. S. PANNU AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I PUNE DA TED 14.02.2013 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 25.10.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL THE ONLY GRIEVANCE OF THE ASSESS EE IS AGAINST THE ACTION OF THE CIT(A) IN SUSTAINING THE DISALLOWANCE OF RS. 18 51 705/- WHICH WAS CLAIMED BY THE ASSESSEE AS AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES. 3. BRIEFLY PUT THE CIT(A) HELD THAT THE AMORTIZATI ON OF PREMIUM PAID ON GOVERNMENT SECURITIES WAS NOT AN ALLOWABLE DEDUCTIO N BECAUSE THE SECURITIES ACQUIRED BY THE ASSESSEE IN QUESTION WERE CLASSIFIE D AS HELD TILL MATURITY (I.E. HTM) SECURITIES WHICH ACCORDING TO THE CIT(A ) WERE CAPITAL IN NATURE. AS PER THE CIT(A) ACQUISITION OF HTM SECURITIES IS A CAPITAL INVESTMENT AS SUCH ITA NO.877/PN/2013 A.Y. 2009-10 SECURITIES ARE NORMALLY HELD BY THE BANKS UNTIL MAT URITY. ACCORDING TO HER SINCE THE SAID SECURITIES WERE PERMANENT SECURITIES AND IN THE NATURE OF A CAPITAL INVESTMENT THE PREMIUM PAID TOWARDS THEIR ACQUISITION WOULD FORM AN INTEGRAL PART OF THE COST OF A CAPITAL ASSET AND TH E SAME COULD NOT BE ALLOWED AS A REVENUE DEDUCTION. THE ASSESSEE IS NOT SATISF IED WITH THE ORDER OF THE CIT(A) AND HENCE THE PRESENT APPEAL OF THE ASSESSE E BEFORE US. 4. BEFORE US IT WAS A COMMON POINT BETWEEN THE PAR TIES THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUN AL IN THE CASE OF NAGAR URBAN CO-OP BANK LTD. VS. ADDL.CIT VIDE ITA NO.711 /PN/2013 ORDER DATED 27.11.2013 AND IT HAS BEEN HELD THAT AMORTIZATION O F THE PREMIUM PAID FOR ACQUIRING OF HTM SECURITIES IS ALLOWABLE AS A REVEN UE EXPENSE. MOREOVER SIMILAR ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BANK OF RAJASTHAN LTD. VIDE ITA NO.3238/MUM/2011 ORDER DATED 09.09.2011 AND ALSO BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SRI SUBRAMANYESWARA COOPERATIVE BANK LTD. VS. ACIT VIDE ITA NO.488/BANG/2011 ORDER DATED 06.06.20 12. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS REITERATED THE STAND OF THE LOWER AUTHORITIES BUT NO CONTRARY DECISION HAS BEEN PLACED IN SUPPORT OF THE CASE OF THE REVENUE. 6. IN THE ABOVE CONTEXT WE REPRODUCE HEREINAFTER T HE FOLLOWING DISCUSSION IN THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BANK OF RAJASTHAN LTD. (SUPRA) WHEREIN AN IDENTICAL ISSUE HAS BEEN CONSIDERED :- 9. THE AMORTIZED AMOUNT OF PREMIUM PAID FOR SECURI TIES HELD UNDER HTM CATEGORY AMOUNTING TO RS.11.77 CRORES WAS CLAIMED BY THE ASSESSEE AS DEDUCTION IN ITS COMPUTATION OF TOTAL I NCOME. THE SAME HOWEVER WAS DISALLOWED BY THE ASSESSING OFFICER HOLDING THA T THE EXPENDITURE INCURRED ON PREMIUM PAID FOR SECURITIES HELD UNDER HTM CATEG ORY WAS A CAPITAL EXPENDITURE NOT ALLOWABLE AS DEDUCTION. HE HELD THA T THE SAID SECURITIES WERE IN THE NATURE OF INVESTMENT AND NOT STOCK IN TRADE. ON APPEAL THE LEARNED CIT(APPEALS) DELETED THE DISALLOWANCE MADE BY THE A O ON THIS ISSUE. BESIDES RELYING ON HIS OWN ORDER IN ASSESSEE'S OWN CASE ON A SIMILAR ISSUE FOR THE EARLIER YEAR THE LEARNED CIT(APPEALS) ALSO RELIED ON CBDT INSTRUCTION NO. 17/2008 DATED 26-11-2008 PUBLISHED IN 220 CTR (STAT UTE) PAGE 41. HE HELD THAT THE ASSESSEE COMPANY WAS BOUND TO CLASSIFY ITS INVESTMENT AS PER RBI ITA NO.877/PN/2013 A.Y. 2009-10 GUIDELINES DATED 16-10-2010 AND AS PER THE SAID GUI DELINES INVESTMENT CLASSIFIED UNDER HTM CATEGORY WAS REQUIRED TO BE CA RRIED AT ACQUISITION COST UNLESS IT WAS MORE THAN THE FACE VALUE. HE HELD THA T THE PREMIUM ON SUCH INVESTMENTS WAS ALSO REQUIRED TO BE AMORTIZED OVER THE PERIOD REMAINING TO MATURITY. HE HELD THAT THE CLAIM OF THE ASSESSEE TH US WAS AS PER RBI GUIDELINES AND CBDT INSTRUCTION WHICH CLARIFIED THA T PREMIUM AMORTIZED OVER THE PERIOD REMAINING TO MATURITY WAS LIABLE TO BE A LLOWED AS DEDUCTION. 10. AT THE TIME OF HEARING BEFORE US THE LEARNED R EPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS ALSO SQUAR ELY COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS ORDERS OF THE TRIBUNAL PASS ED IN ASSESSEE'S OWN CASE FOR EARLIER YEARS. COPIES OF THE SAID ORDERS A RE PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT IN ONE OF S UCH ORDERS DATED 22ND DEC. 2010 PASSED IN ASSESSEE'S OWN CASE FOR ASSESS MENT YEARS 2002-03 TO 2006-07 THE COORDINATE BENCH OF THIS TRIBUNAL HAS DIRECTED THE AO TO ALLOW THE PREMIUM AMORTIZED BY THE ASSESSEE OVER THE PERI OD REMAINING TO MATURITY HOLDING THAT THE SAME WAS CLAIMED AS PER THE RELEVA NT RBI GUIDELINES AND EVEN THE CBDT HAS ISSUED INSTRUCTIONS TO ALLOW THE SAME. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL IN ASSESSE E'S OWN CASE FOR EARLIER YEARS WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO . 3 OF THE REVENUE'S APPEAL. 7. FOLLOWING THE AFORESAID PRECEDENT WE SET-ASIDE THE ACTION OF CIT(A) IN SUSTAINING THE DISALLOWANCE OF RS.18 51 705/- REPRE SENTING AMORTIZATION OF PREMIUM PAID ON GOVERNMENT SECURITIES UNDER THE HTM CATEGORY AND ALLOW THE CLAIM OF THE ASSESSEE. THUS ON THIS ASPECT AS SESSEE SUCCEEDS. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED : 16 TH APRIL 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I PUNE; 4) THE CIT-I PUNE; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE