DEPUTY COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN , MUMBAI V. JANAKALYAN SAHAKARI BANK LTD, MUMBAI

ITA 3988/MUM/2024

AI Insights

The case revolves around the dispute concerning the amortization of premium on government securities classified under the 'Held to Maturity' (HTM) category by Janakalyan Sahakari Bank Ltd. The Deputy Commissioner of Income Tax (DCIT) had disallowed the amortization, treating the securities as investments, which should not have their premiums amortized. However, the CIT(A) reversed this decision, allowing the amortization and characterizing the securities as stock-in-trade. The Revenue appealed against this decision, leading to the current judgment by the Income Tax Appellate Tribunal, which upheld the CIT(A)'s decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471357 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Other Referred Cases: Lord Krishna Bank vs. HDFC Bank, Southern Technologies Ltd. vs. JCIT, HDFC Bank Ltd. vs. CIT, Nedungadi Bank Ltd. vs. CIT, Kalyan Janata Sahakari Bank vs. CIT, DCIT vs. M/s Yes Bank Ltd.
• Laws Referred To: Income Tax Act, 1961, RBI Guidelines on classification and valuation of investments, CBDT Instruction No. 17 dated 26.11.2008, ICDS VIII (Income Computation Disclosure Standards)
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KANUPRIYA DAMOR; ISSUING; ISSUING
• Assessee Lawyers: VISHWAS MEHENDALE
• Keywords: Set aside; Business income; Revenue expenditure; Cost of acquisition
• Section: 143(3); 43; 14A; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 3988/MUM/2024 Assessment Year: 2018-19 Dy. CIT, Room No. 535, 5th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. Janakalyan Sahakari Bank Ltd., Vikhroli Parksite 664, C/1-1, Gr. Floor, BMC Colony Vikhroli (W), Mumbai-400079. PAN NO. AACFJ 6244 R Appellant Respondent Assessee by : Mr. Vishwas Mehendale Revenue by : Ms. Kanupriya Damor, Sr. DR Date of Hearing : 01/01/2025 Date of pronouncement : 30/01/2025 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the Revenue against order dated 29.04.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19. In the original Form No. 36 filed by the Revenue, the grounds raised were inconsistent with the authorization memo issued by the respective Pr. Commissioner of Income-tax and therefore, the Revenue has filed revised Form No. 36 which is placed on record. 2. The ground raised in rev under: 1. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/ appreciating that assessee failed to demonstrate how the facts involved in the case of Lord Krishna Bank and HDFC Bank in income Tax. 2. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/ appreciating that the assessee has not complied wit Guidelines on classification and valuation of investments dated 12.07.2006 3. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/ appreciating that the said investments are not h Maturity Category, rather all the securities are held by the assessee as stock in trade. 4. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/ appreciating that as per CBDT 26.11.2008 amortization is allowable only on securities held under Hold-to 5. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored. 3. The Ld. Departme that this appeal has been filed with a delay of 42 days. He submitted that the Ld. CIT(A) has passed the order on 29.04.2024 and appeal was due to filed on 09.04.2024. submitted that delay was partly due to Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 tax and therefore, the Revenue has filed revised Form No. 36 which is placed on record. The ground raised in revised Form No. 36 are reproduced as 1. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/- on account of Amortization of securities without appreciating that assessee failed to demonstrate how the facts involved in the case of Bombay High Court order in case of Lord Krishna Bank and HDFC Bank in income Tax. 2. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/- on account of Amortization of securities without appreciating that the assessee has not complied with the RBI Guidelines on classification and valuation of investments dated 12.07.2006 3. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/- on account of Amortization of securities without appreciating that the said investments are not held in Held Maturity Category, rather all the securities are held by the assessee as stock in trade. 4. The CIT(A) has erred in deleting the disallowance of Rs. 2,72,78,950/- on account of Amortization of securities without appreciating that as per CBDT Instruction No. 17 dated 26.11.2008 amortization is allowable only on securities held to-Maturity category. 5. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored. The Ld. Departmental Representative (DR) also pointed out that this appeal has been filed with a delay of 42 days. He submitted that the Ld. CIT(A) has passed the order on 29.04.2024 and appeal was due to be filed latest by 24.08.2024 09.04.2024. In the affidavit, the Ld. Assessing Officer has submitted that delay was partly due to late receipt of Janakalyan Sahakari Bank Ltd 2 ITA No. 3988/MUM/2024 tax and therefore, the Revenue has filed revised Form No. ised Form No. 36 are reproduced as 1. The CIT(A) has erred in deleting the disallowance of Rs. on account of Amortization of securities without appreciating that assessee failed to demonstrate how the facts Bombay High Court order in case of 2. The CIT(A) has erred in deleting the disallowance of Rs. on account of Amortization of securities without h the RBI Guidelines on classification and valuation of investments 3. The CIT(A) has erred in deleting the disallowance of Rs. on account of Amortization of securities without eld in Held-To- Maturity Category, rather all the securities are held by the 4. The CIT(A) has erred in deleting the disallowance of Rs. on account of Amortization of securities without Instruction No. 17 dated 26.11.2008 amortization is allowable only on securities held 5. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored. ntal Representative (DR) also pointed out that this appeal has been filed with a delay of 42 days. He submitted that the Ld. CIT(A) has passed the order on 29.04.2024 filed latest by 24.08.2024, but same is he Ld. Assessing Officer has late receipt of authorization memo from the office of the PCIT and thereafter additional charge, due to and other work, delay Officer submitted that there was no intention delay in filing the appeal. There was no objection from the opposite side for condoning the delay. In vie delay of 42 days in filing appeal for adjudication. 3. Briefly stated, facts of the case are that the assessee is co operative bank, engaged in the business of the banking. For the year under consideration, the assessee filed return of income on 09.10.2018 declaring a loss of Rs.4,12,03,084/ income filed by the assessee was selected for scrutiny assessment and order u/s 143(3) of the Income was passed on 02.03.2021 determining loss at Rs.21,62,226/ making addition of Rs.2,72,78,950/ amortization of premium on held to maturity security and Rs.117,60,908/ of the Act. On further appeal, the Ld. CIT(A) deleted the disallowance in respect of amortization of the HTM premium on Government Securities. Aggrieved the Revenue is in appeal challenging the finding of the Ld. CIT(A) on the issue of amortization of premium allowed as revenue expenditure. Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 memo from the office of the PCIT and thereafter because of holding due to pressure of time baring, judicial matters delay occurred in filing the appeal. The Assessing Officer submitted that there was no intention behind filing the appeal. There was no objection from the opposite the delay. In view of the bona of 42 days in filing appeal is condoned and appeal is admitted Briefly stated, facts of the case are that the assessee is co operative bank, engaged in the business of the banking. For the consideration, the assessee filed return of income on 09.10.2018 declaring a loss of Rs.4,12,03,084/-. The return of income filed by the assessee was selected for scrutiny assessment and order u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) s passed on 02.03.2021 determining loss at Rs.21,62,226/ making addition of Rs.2,72,78,950/- on account of d amortization of premium on held to maturity (HTM) security and Rs.117,60,908/- on account of disallowance u/s 14A f the Act. On further appeal, the Ld. CIT(A) deleted the disallowance in respect of amortization of the HTM premium on Government Securities. Aggrieved the Revenue is in appeal challenging the finding of the Ld. CIT(A) on the issue of amortization um allowed as revenue expenditure. Janakalyan Sahakari Bank Ltd 3 ITA No. 3988/MUM/2024 because of holding judicial matters in filing the appeal. The Assessing behind causing the filing the appeal. There was no objection from the opposite w of the bonafide reason the is condoned and appeal is admitted Briefly stated, facts of the case are that the assessee is co- operative bank, engaged in the business of the banking. For the consideration, the assessee filed return of income on . The return of income filed by the assessee was selected for scrutiny assessment tax Act, 1961 (in short ‘the Act’) s passed on 02.03.2021 determining loss at Rs.21,62,226/- after on account of disallowance of (HTM) Government on account of disallowance u/s 14A f the Act. On further appeal, the Ld. CIT(A) deleted the disallowance in respect of amortization of the HTM premium on Government Securities. Aggrieved the Revenue is in appeal challenging the finding of the Ld. CIT(A) on the issue of amortization 4. We have heard rival submissions of the parties and perused the relevant materials on record respect of amortization of the premium paid by the assessee on Government Securities over th assessee has claimed premium paid over the government securities as revenue expenditure treating the government securities as stock Officer is of the view that said gover nature of the investment and therefore, the assessee is entitled for said expenditure only at the time of the sale of such securities. It was contested by the assessee that said treatment of the amortization premium norms following the ICDS Rules issued by the Assessing Officer relying on the decision of the various decisions cited in the assessment order assessee. But the Ld. CIT(A) has deleted t under: “7.1.1 The appellant in its Ground of Appeal No. 1 assailed the AO in disallowing the claim for amortization of premium on investment under Held to maturity category of Rs. 2,72,78,950/ Income Tax Act, 1961. Th it has investments in Held To Maturity (HTM) category Government securities and classified the same as per Reserve Bank of India guidelines, by amortizing premium on HTM securities over the residual period of matu value of the investments. The said amortized premium is taken as allowable deduction while calculating taxable income. The classification and valuation of these securities is done as per RBI norms and also a CBDT Instructions and also ICDS VIll (Income Computation Disclosure standards) which states that securities shall be Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 We have heard rival submissions of the parties and perused the relevant materials on record. The sole issue in dispute respect of amortization of the premium paid by the assessee on Government Securities over the period of the maturity. Thus the assessee has claimed premium paid over the face value government securities as revenue expenditure treating the government securities as stock-in-trade. Whereas, Officer is of the view that said government securities are in the nature of the investment and therefore, the assessee is entitled for said expenditure only at the time of the sale of such securities. It was contested by the assessee that said treatment of the premium expenses has been given under the RBI norms following the ICDS Rules issued by the CBDT Assessing Officer relying on the decision of the various decisions cited in the assessment order, rejected the contention of the assessee. But the Ld. CIT(A) has deleted the addition observing as The appellant in its Ground of Appeal No. 1 assailed the AO in disallowing the claim for amortization of premium on investment under Held to maturity category of Rs. 2,72,78,950/ Income Tax Act, 1961. The appellant bank in his reply claimed that it has investments in Held To Maturity (HTM) category Government securities and classified the same as per Reserve Bank of India guidelines, by amortizing premium on HTM securities over the residual period of maturity if acquisition cost is higher than the face value of the investments. The said amortized premium is taken as allowable deduction while calculating taxable income. The classification and valuation of these securities is done as per RBI norms and also accepted by Income Tax department by issuing CBDT Instructions and also ICDS VIll (Income Computation Disclosure standards) which states that securities shall be Janakalyan Sahakari Bank Ltd 4 ITA No. 3988/MUM/2024 We have heard rival submissions of the parties and perused . The sole issue in dispute is in respect of amortization of the premium paid by the assessee on the maturity. Thus the face value of the government securities as revenue expenditure treating the , the Assessing nment securities are in the nature of the investment and therefore, the assessee is entitled for said expenditure only at the time of the sale of such securities. It was contested by the assessee that said treatment of the been given under the RBI CBDT. But the Assessing Officer relying on the decision of the various decisions rejected the contention of the he addition observing as The appellant in its Ground of Appeal No. 1 assailed the AO in disallowing the claim for amortization of premium on investment under Held to maturity category of Rs. 2,72,78,950/- u/s 37(1) of e appellant bank in his reply claimed that it has investments in Held To Maturity (HTM) category Government securities and classified the same as per Reserve Bank of India guidelines, by amortizing premium on HTM securities over the rity if acquisition cost is higher than the face value of the investments. The said amortized premium is taken as allowable deduction while calculating taxable income. The classification and valuation of these securities is done as per RBI ccepted by Income Tax department by issuing CBDT Instructions and also ICDS VIll (Income Computation Disclosure standards) which states that securities shall be classified, recognized and measured in accordance with the guidelines issued by the RBI. The cl respect of the amortization of premium paid on acquisition of Government Securities classified under HTM category on the ground of the mandate of the RBI, a proposition which is supported by the judgment of the Hon'ble Bombay Hi Bank (supra). Thus, the appellant claimed that decision of Hon'ble Supreme Court in Southern Technologies Ltd. is not applicable in Appellants case. The appellant requested to delete the addition made in respect of amortized pr basis of facts mentioned by him in his reply. 7.1.2 The AO in assessment order noted that in respect of HTM securities, the assessee follows two different systems which are inconsistent with each other. When the purchase pric the face value at which the security is ultimately sold. the difference is booked as profit only in the year of sale. But when the cost price is more than the face value, the loss is not booked in the year of sale but is spread over the peri held as investment, there is no question of allowance of any amount till such time as they are sold or redeemed. Even if these securities are held as stock suffered on sale of redemption of securities that will constitute the loss of the year in which they are sold or redeemed. In between, no amount can be allowed under the provisions of section 145. The AO further relied on findings given by Hon'ble Supreme Court in judgment delivered in January, 2010 in the case of M/s. Southern Technologies Ltd. vs. JCIT in Civil Appeal No. 1337/ 2003, the assessee which is an NBFC had created a provision for NPA, which in terms of RBI guidelines was debited to Profit & Loss Account a was claimed in the Income Tax Return. The Hon'ble Supreme Court has held that the above provision is not allowable. Accordingly, the AO disallowed and added back the in respect of HTM securities of Rs. 2,72,78,950/ the appellant. 7.1.3 The reply of the appellant, assessment order and case laws relied upon by the appellant and the AO has been considered. The appellant's claim is considered in the background of the decision delivered by ITAT Mumbai in case Ka September 2015, it was discussed as following: \"assessee's claim for amortization of premium paid on the purchase of Government securities classified as HTM is consistent with the prudential norms issued by the RBI. It is also undeniable that the acquisition of the Government securities under the HTM c has been undertaken by the assessee in the course of carrying on Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 classified, recognized and measured in accordance with the guidelines issued by the RBI. The claim made by Appellant is in respect of the amortization of premium paid on acquisition of Government Securities classified under HTM category on the ground of the mandate of the RBI, a proposition which is supported by the judgment of the Hon'ble Bombay High Court in the case of HDFC Bank (supra). Thus, the appellant claimed that decision of Hon'ble Supreme Court in Southern Technologies Ltd. is not applicable in Appellants case. The appellant requested to delete the addition made in respect of amortized premium on HTM securities on the basis of facts mentioned by him in his reply. 7.1.2 The AO in assessment order noted that in respect of HTM securities, the assessee follows two different systems which are inconsistent with each other. When the purchase pric the face value at which the security is ultimately sold. the difference is booked as profit only in the year of sale. But when the cost price is more than the face value, the loss is not booked in the year of sale but is spread over the period of holding. If the securities are held as investment, there is no question of allowance of any amount till such time as they are sold or redeemed. Even if these securities are held as stock-in-trade, as per RBI's guidelines, whatever loss is sale of redemption of securities that will constitute the loss of the year in which they are sold or redeemed. In between, no amount can be allowed under the provisions of section 145. The AO further relied on findings given by Hon'ble Supreme Court in dgment delivered in January, 2010 in the case of M/s. Southern Technologies Ltd. vs. JCIT in Civil Appeal No. 1337/ 2003, the assessee which is an NBFC had created a provision for NPA, which in terms of RBI guidelines was debited to Profit & Loss Account a was claimed in the Income Tax Return. The Hon'ble Supreme Court has held that the above provision is not allowable. Accordingly, the AO disallowed and added back the amount of premium amortized in respect of HTM securities of Rs. 2,72,78,950/- in total the appellant. 7.1.3 The reply of the appellant, assessment order and case laws relied upon by the appellant and the AO has been considered. The appellant's claim is considered in the background of the decision delivered by ITAT Mumbai in case Kalyan Janata Sahakari Bank in September 2015, it was discussed as following: \"assessee's claim for amortization of premium paid on the purchase of Government securities classified as HTM is consistent with the prudential norms issued by the RBI. It is also undeniable that the acquisition of the Government securities under the HTM c has been undertaken by the assessee in the course of carrying on Janakalyan Sahakari Bank Ltd 5 ITA No. 3988/MUM/2024 classified, recognized and measured in accordance with the aim made by Appellant is in respect of the amortization of premium paid on acquisition of Government Securities classified under HTM category on the ground of the mandate of the RBI, a proposition which is supported by the gh Court in the case of HDFC Bank (supra). Thus, the appellant claimed that decision of Hon'ble Supreme Court in Southern Technologies Ltd. is not applicable in Appellants case. The appellant requested to delete the addition emium on HTM securities on the 7.1.2 The AO in assessment order noted that in respect of HTM securities, the assessee follows two different systems which are inconsistent with each other. When the purchase price is less than the face value at which the security is ultimately sold. the difference is booked as profit only in the year of sale. But when the cost price is more than the face value, the loss is not booked in the year of od of holding. If the securities are held as investment, there is no question of allowance of any amount till such time as they are sold or redeemed. Even if these securities trade, as per RBI's guidelines, whatever loss is sale of redemption of securities that will constitute the loss of the year in which they are sold or redeemed. In between, no amount can be allowed under the provisions of section 145. The AO further relied on findings given by Hon'ble Supreme Court in dgment delivered in January, 2010 in the case of M/s. Southern Technologies Ltd. vs. JCIT in Civil Appeal No. 1337/ 2003, the assessee which is an NBFC had created a provision for NPA, which in terms of RBI guidelines was debited to Profit & Loss Account and was claimed in the Income Tax Return. The Hon'ble Supreme Court has held that the above provision is not allowable. Accordingly, the amount of premium amortized in total income of 7.1.3 The reply of the appellant, assessment order and case laws relied upon by the appellant and the AO has been considered. The appellant's claim is considered in the background of the decision lyan Janata Sahakari Bank in \"assessee's claim for amortization of premium paid on the purchase of Government securities classified as HTM is consistent with the prudential norms issued by the RBI. It is also undeniable that the acquisition of the Government securities under the HTM categories has been undertaken by the assessee in the course of carrying on the 'banking business' under the mandate of RBI. Ostensibly, the predominant motive to purchase securities is to maintain the statutory liquidity ratio prescribed by the RBI. The Ce Direct Taxes vide its circular No.665 dated 5/10/1995 also provides that the question as to whether any particular securities constitute stock determined, inter RBI from time to time. In this background, it would be relevant to refer to the judgment of the Hon'ble Kerala High Court in the case of Nedungadi Bank Ltd. (supra), wherein it has been held that securities held by a Co banking would constitute the 'stock said society. Therefore, in the context of the present assessee, which is also a Cooperative society engaged in the business of banking, the impugned Govern considered as the stock considering the aforesaid fact RBI, the amortization of premium paid on purchase of securities classified under HTM ca while computing the business income of the assessee bank. At this point, it would also be appropriate to refer to the judgment of the Hon'ble Jurisdictional High Court in the case of C/T v. HDFC Bank Ltd. [2014] 366 ITR 505/49 taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), wherein the assessee bank was held entitled for deduction with respect to the amortization of premium paid on acquisition of securities classified as HTM category on the ground of the mandate b aforesaid judgment of the Hon'ble Bombay High Court clearly supports the inference reached by the CIT(A), which we hereby affirm. In view of the clear finding of Hon'ble Jurisdictio the case of CI taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), addition made for amortization of premium on investment under Held to maturity category of Rs. 2,72,78,950/ deleted The grou 4.1 In view of the above decision, the characterized the nature of the government securities as stock in trade in view of guidelines issued by the RBI. The relied on the decision of the the case of CIT v. HDFC Bank Ltd. (supra). Further, Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 the 'banking business' under the mandate of RBI. Ostensibly, the predominant motive to purchase securities is to maintain the statutory liquidity ratio prescribed by the RBI. The Central Board of Direct Taxes vide its circular No.665 dated 5/10/1995 also provides that the question as to whether any particular securities constitute stock-in-trade or investment in the case of a bank shall be determined, inter-alia, having regard to the guidelines issued by RBI from time to time. In this background, it would be relevant to refer to the judgment of the Hon'ble Kerala High Court in the case of Nedungadi Bank Ltd. (supra), wherein it has been held that securities held by a Co-operative society engaged in the business of banking would constitute the 'stock-in-trade' of the business of the said society. Therefore, in the context of the present assessee, which is also a Cooperative society engaged in the business of banking, the impugned Government securities are liable to be considered as the stock-in-trade of its business of banking. Thus, considering the aforesaid fact-situation and also the mandate of the RBI, the amortization of premium paid on purchase of securities classified under HTM category is liable to be allowed as a deduction while computing the business income of the assessee bank. At this point, it would also be appropriate to refer to the judgment of the Hon'ble Jurisdictional High Court in the case of C/T v. HDFC Bank ] 366 ITR 505/49 taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), wherein the assessee bank was held entitled for deduction with respect to the amortization of premium paid on acquisition of securities classified as HTM category on the ground of the mandate by RBI guidelines, In our considered opinion, the aforesaid judgment of the Hon'ble Bombay High Court clearly supports the inference reached by the CIT(A), which we hereby In view of the clear finding of Hon'ble Jurisdictional High Court in of CIT v. HDFC Bank Ltd. [2014] 366 ITR 505/49 taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), addition made for amortization of premium on investment under Held to maturity category of Rs. 2,72,78,950/- U/s 37(1) of Income Tax Act, 1961 is deleted The grounds of appeal is allowed.” In view of the above decision, the ld cIT(A) characterized the nature of the government securities as stock in trade in view of guidelines issued by the RBI. The ld CIT(A) relied on the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. HDFC Bank Ltd. (supra). Further, Janakalyan Sahakari Bank Ltd 6 ITA No. 3988/MUM/2024 the 'banking business' under the mandate of RBI. Ostensibly, the predominant motive to purchase securities is to maintain the statutory liquidity ratio prescribed by the RBI. The Central Board of Direct Taxes vide its circular No.665 dated 5/10/1995 also provides that the question as to whether any particular securities trade or investment in the case of a bank shall be guidelines issued by RBI from time to time. In this background, it would be relevant to refer to the judgment of the Hon'ble Kerala High Court in the case of Nedungadi Bank Ltd. (supra), wherein it has been held that ety engaged in the business of trade' of the business of the said society. Therefore, in the context of the present assessee, which is also a Cooperative society engaged in the business of ment securities are liable to be trade of its business of banking. Thus, situation and also the mandate of the RBI, the amortization of premium paid on purchase of securities tegory is liable to be allowed as a deduction while computing the business income of the assessee bank. At this point, it would also be appropriate to refer to the judgment of the Hon'ble Jurisdictional High Court in the case of C/T v. HDFC Bank ] 366 ITR 505/49 taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), wherein the assessee bank was held entitled for deduction with respect to the amortization of premium paid on acquisition of securities classified as HTM category on the ground of y RBI guidelines, In our considered opinion, the aforesaid judgment of the Hon'ble Bombay High Court clearly supports the inference reached by the CIT(A), which we hereby nal High Court in HDFC Bank Ltd. [2014] 366 ITR 505/49 taxmann.com 335/226 Taxman 132 (Mag.) (Bom.), addition made for amortization of premium on investment under Held to maturity U/s 37(1) of Income Tax Act, 1961 is ld cIT(A) has correctly characterized the nature of the government securities as stock in ld CIT(A) has also Hon’ble Jurisdictional High Court in the case of CIT v. HDFC Bank Ltd. (supra). Further, the Ld. counsel for the assessee also supported the Hon’ble High Court of Gujarat in the case of CIT v. Rajkot District Co-operative Bank Ltd. [2014] 43 taxmann.com 161 (Gujarat) wherein Circular dated 26.11.2008 issued by the CBDT has been referred and Hon’ble High Court held that where a co bank purchases certain government securities in order to maintain statutory liquidity ratio (SLR) at a price higher than their face value, premium so paid has to be amortized for remaining period of maturity. In the instant case also the government securities have been purchased by the ratio. Further the Ld. counsel for the assessee also relied on the decision of the Hon’ble High Court of Delhi in the case of Punjab National Bank [2024] 169 taxmann.com 620 (Delhi) wherein it is held that security under HTM category are those that are held till its redemption/maturity and premium was paid for security over and above the face value or the redemption value of those securities, it would be apposite to amortize the same during the holding period. The Co case of DCIT v. M/s Yes Bank Ltd. in ITA No. 3239/M/2018 and 3501/M/2018 for assessment year 2014 finding. Respectfully, of the Tribunal as discussed above, w the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. accordingly dismissed. Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 for the assessee also supported the finding of ld CIT(A) Hon’ble High Court of Gujarat in the case of CIT v. Rajkot District Bank Ltd. [2014] 43 taxmann.com 161 (Gujarat) dated 26.11.2008 issued by the CBDT has been referred and Hon’ble High Court held that where a co bank purchases certain government securities in order to maintain ratio (SLR) at a price higher than their face value, premium so paid has to be amortized for remaining period of maturity. In the instant case also the government securities have been purchased by the assessee for maintaining statutory rther the Ld. counsel for the assessee also relied on the decision of the Hon’ble High Court of Delhi in the case of Punjab National Bank [2024] 169 taxmann.com 620 (Delhi) wherein it is held that security under HTM category are those that are held till s redemption/maturity and premium was paid for security over and above the face value or the redemption value of those securities, it would be apposite to amortize the same during the holding period. The Co-ordinate Bench of the Tribunal in case of DCIT v. M/s Yes Bank Ltd. in ITA No. 3239/M/2018 and 3501/M/2018 for assessment year 2014-15 also gave , following the finding of the Co- he Tribunal as discussed above, we do not find any infirm the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground raised by the Revenue are accordingly dismissed. Janakalyan Sahakari Bank Ltd 7 ITA No. 3988/MUM/2024 finding of ld CIT(A) relying on Hon’ble High Court of Gujarat in the case of CIT v. Rajkot District Bank Ltd. [2014] 43 taxmann.com 161 (Gujarat) dated 26.11.2008 issued by the CBDT has been referred and Hon’ble High Court held that where a co-operative bank purchases certain government securities in order to maintain ratio (SLR) at a price higher than their face value, premium so paid has to be amortized for remaining period of maturity. In the instant case also the government securities have maintaining statutory liquidity rther the Ld. counsel for the assessee also relied on the decision of the Hon’ble High Court of Delhi in the case of Punjab National Bank [2024] 169 taxmann.com 620 (Delhi) wherein it is held that security under HTM category are those that are held till s redemption/maturity and premium was paid for acquiring said security over and above the face value or the redemption value of those securities, it would be apposite to amortize the same during ordinate Bench of the Tribunal in the case of DCIT v. M/s Yes Bank Ltd. in ITA No. 3239/M/2018 and also gave a similar -ordinate Bench e do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly The ground raised by the Revenue are 5. In the result appeal of the Revenue is dismissed. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 30/01/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Janakalyan Sahakari Bank Ltd ITA No. 3988/MUM/2024 5. In the result appeal of the Revenue is dismissed. nounced in the open Court on 30/ - RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Janakalyan Sahakari Bank Ltd 8 ITA No. 3988/MUM/2024 /01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "